Applicability of gst on real estate - flat booked part payme

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Amrish Joshi (Querist)

23 May 2018 I have booked a flat with total consideration of About 38 Lakhs, out of which 4 lakh I have paid in advance. The builder had issued a demand of Rs 28 lakhs being the part payment of the above flat in March 2017. I have requested my bank to disburse RS 16 lakh from that demand and they have issued DD dated 30 June 2017 in favour of Builder.

The builder had charged 12% GSt on it rather Service tax 4.5% on the amount stating since the receipt in thier book is after 1 July 2017.

I understand that demand raised in March 2017 & DD issued on 30 June 2017 only hence GST should be applied on that part and service @4.5% should be charged.

Please clarify.

Regards
Amrish Joshi

CA Suresh Jain

CA Suresh Jain (Expert)

23 May 2018 As per The Point of Taxation Rules, 2011 as amended from time to time - the Point of Taxation is :
(a) the time when the invoice for the service provided or agreed to be provided is issued:
Provided that where the invoice is not issued within the time period specified in rule 4A of the Service Tax Rules,1994, the point of taxation shall be the date of completion of provision of the service.
(b) in a case, where the person providing the service, receives a payment before the time specified in clause (a), the time, when he receives such payment, to the extent of such payment.

After payment of booking amount and the amount paid of signing the contract in advance before even start of activity of construction, balance amount become payable as per achievement of milestones i.e. start or completion of the floor etc. In view the above definition, the Service tax become payable when invoice for service provided or to be provided is issued even if milestone is not achieved.
Therefore, in my opinion the builder is not justified in asking GST due to nonpayment of the invoice.
Disclaimer : The opinion can not be used for any legal action against any person and I shall not be in any way liable for any kind of action taken on the basis of this opinion. You are advised to take opinion of a consultant before taking any action

Amrish Joshi

Amrish Joshi (Querist)

23 May 2018 Sir Thanks for your reply,
However need more clarification in this regard , as the builder had said that They have not issued the invoice it was only demand letter issued from their side.

CA Suresh Jain

CA Suresh Jain (Expert)

24 May 2018 Please mail the copy of demand letter and agreement to construct

Amrish Joshi

Amrish Joshi (Querist)

24 May 2018 Sir I have sent you the agreement and demand letter on your maid ID group.blr@gmail.com

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