service tax for real estate developers

This query is : Resolved

vinod (Querist)
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06 December 2009 in the light of Circular No. 108/02/2009 – ST dated 29th January 2009, if a real estate developers construct an apartment for the purpose of sale.The property remains under the ownership of the seller (in the instant case, the promoters/builders/developers). It is only after the completion of the construction and full payment of the agreed sum that a sale deed is executed and only then the ownership of the property gets transferred to the ultimate owner. Therefore, any service provided by such seller in connection with the construction of residential complex till the execution of such sale deed would be in the nature of ‘self-service’ and consequently would not attract service tax.

QUERY:

in case the real estate developers have collected service tax from the buyers before the circular was issued by the service tax dept, can the real estate developer get the refund of the tax already paid by it?

Guest

Guest (Expert)

07 December 2009 The developer is a service provider who has collected service tax from the flat buyers and deposited with the Government. The developer has passed the burden of tax to the buyers hence not eligible for refund of tax as such claims will be hit by the bar of unjust enrichment.

Law provides that in such cases, the person who has borned the burden of tax may seek refund of tax within the prescribed time.