Clarification on vat and st on residentials flats -karnataka

This query is : Resolved 

18 December 2011

1.How can i find if the Real Estate company is registered for taking VAT taxes from Buyers?
2. The receipts which they had issued me earlier didnt had VAT number on that. and on request to they dont Provide me the VAT number, But asks me to pay VAT amount before registring the FLAT.
3.This VAT amount was NOT mentioned in my Sale Agreement ealier.
4. What is this ST(Service Tax ) and on what it should be applied? I didnt had any construction Agreement done, i had only Sale Agrrement, but still am i liable to pay VAT and ST?

Property is in Bangalore

MJ Krishnamurthy (Expert)
29 December 2011

Mr. Shankar,
I remember I have answered a query of same terms ,mostly from yourself. However,the answer for your query is as shown under:
1) Any person collecting VAT should issue a tax invoice. This invoice should contain particulars such as: Name of the registered dealer/company/firm with address who is selling a flat to you.It should show the total value,taxable value. tax rate, total tax collected, his TIN No,
details of the goods/flat sold. When someone is insisting on paying VAT you can demand for an invoice of the type described above.
2) Receipts and agreements are not invoices.Tax cannot be collected on these documents. They are issued for acnowledging your payments and registration only.Similarly , ST also can not be collected on these documents.Proper invoices are to be issued by the collector of taxes.
3) Payment made for an apartment consists of three components cost,construction material value and charges on labour and services.The first item is exempt from all taxes.The second part is taxable under VAT law and whereas,
ST is leviable on the last part.You can ask your real estate agent/builder to specify all these details and issue documents accordingly. If they refuse to furnish such papers you should refuse to pay such amounts mentioned as taxes.

shankar (Querist)
29 December 2011

Thanks sir, can you please suggest any good lawyer for this.....please let me know if you are lawyer...

I am writing a letter to Tax Commission, Can you please correct this.

Subject – Liability of VAT(Value Added Tax) and the ST(Service Tax) on
Purchase of Residential Apartment(FLAT in Bangalore – Karnataka)

Respected Sir,
Me and my wife (XXXX) purchased a FLAT C# XXX on 1st Floor having SBA
of 1650 Sq.ft in “XXXX Estate” constructed by builder “XXXX” in
Bangalore went into “Agreement To Sell” in Jan 2010 with Possession
Date of Dec 2010, Bangalore – XXXX. Note - We had only “Agreement To
Sell/Sale Agreement” done and did not had any construction agreement
at that time.

Total Apartment Floor to be constructed in the Project are – 10 Floors.
My Flat is on – 1st Floor, C Block, C # XXX
At the time of my Booking – 5 Floors were already constructed
(Electrical Wiring/Painting etc were done…I mean it was almost
finished when we booked the Flat in Jan 2010, But builder took more
time to construct remaining floors due to some issues and I am Not
Sure if they have taken the Occupancy Letter from BDA.
(Quick question here is does this property becomes “immoveable” , if
so I am not liable to pay VAT/ST right?please clarify)

Agreement Page 8i Says –
“If any further tax is liable to be PAID in respect of anything done
or deemed to be done under the agreement , in respect of “Schedule A”
property through any prevailing or future statue/law, and should any
authority raise any demand for any such payment, the PURCHASER hereby
agrees, promises and assures to make such payments.”

Sale Agreement was done on 21st Jan, 2010 with
Possession Date as Dec, 2010.
Current Situation – Not letting me know the Possession Date despite
many requests.

My sale agreement says to pay 51,11,500/- (Total as per Cost Sheet)
49,11,500/- – is towards (Basic Price+1 Covered Parking + BWSSB and
KEB + Club Membership)
2,00,000/- – is towards(Registration + Stamp duty)
Breakup of 49,11,500 is:
24,36,500/- – is towards component of undivided interests of Land AND
24,75,000/- – is towards Apartment and Other Facilities.

All disbursement details done by us through SBI Bank before JULY 2010
are given Below:
2-Jan-2010- 2,00,000/- Cheque was given.
17-Jan-2010- 3,00,000/- Cheque was given,
12-Mar-2010- 22,00,000/- Disbursed by XXX Bank
31-July-2010- 75,924/- Disbursed by XXX Bank
31-July-2010- 18,90,000/- Disbursed by XXX Bank

TOTAL Amount Paid to the Builder till Date - Rs 46,65,924/-
Note - , For the above PAID amount they Provided us all the INVOICES
which didn’t had any TIN/VAT Number( Has been enclosed herewith)…

I have already disbursed 46,65,924/- before JULY 2010 and now when I
ask them for Registration of FLAT the builder is asking me to pay 4%
VAT on 49,11,500 and 2.5% Service Tax on 49,11,500/- (This amount and
percentage is NOT being mentioned in my sale agreement) ,
i.e 6.5% of 49,11,500 comes around Rs 3,19,248/- according to builder.

Also Builder also charges me 2,19000/- as late payment – Disbursement
was delayed by bank to builder as there was no progress – Builder says
he can waive this off if I give him a letter saying I was having
financial problem – please advice

Builder asking me to pay VAT and ST amount as -
VAT and ST Amount of Rupees of 3,19,248 i.e 6.5% of Rs 49,11,500/-

I would Like to know few things –
1. Referring to Page 13 of my sale agreement , its an “Immovable”
property and according to the supreme court decision under section
(Raheja Development Decisions) I am NOT liable to pay any VAT and ST –
is this true? please clarify this as my FLAT was already ready when
we did our bookings(Till 5th Floor was already constructed, My Flat
is on 1st Floor).
2. Please suggest If I am Liable to Pay VAT and ST.
3. Builder also charges me 2,19000/- as late payment – Disbursement
was delayed by bank to builder as there was no progress – Builder says
he can waive this off if I give him a letter saying I was having
financial problem – please advice.
4. If I am Liable to pay VAT/ST under any section,Then let me know the
TAX calculation based on
a. Composition Tax – Under Section – 15 KVAT – I have verified with
TAX office the Builder is in this category.
b. Regular VAT method @ 12.5% – Based on the builder category, Still
I need input on this.
5. What should be the “Registration and Stamp Duty” amount to be paid
by me, Please let me know the calculation.
6. Any other Access amount which I/we may need to pay the govt. please
providing the detail calculation.
7. Also let me know if they have got Occupancy Certificate from BDA,
Else please guide me whom to approach for this.


MJ Krishnamurthy (Expert)
31 December 2011

Mr Shankar,
Just yesterday I answered this query in detail.Some more poits that can be added are :1) In the high courts and supreme court decisions on this subject it has been decided that even if a small amount is received as advance before completing the construction of an apartment then a works contract agreement is formed. You have started paying advances in Jan 2010 and the flat was to be handed over in Dec 2010. It means a lot of work was still pending, and therefore, it is not a sale of immoveable property but a works contract.So VAT and ST are applicable.Many a times BDA does not issue an occupancy certificate at all.It is only after obtaining this certificate a flat can be called as an immoveable property.
I am not a lawyer and not familiar with a lwaer who can take this civil case.
For more deatails please refer to my reply given yesterday from my web page of this site.

You need to be the querist or approved CAclub expert to take part in this query .

Click here to login now

Similar Resolved Queries :

close x
Download GST App    |    x