Sale of building

VAT will not be applicable since you are not a dealer in sale of building.

Instead capital gains would be attracted depending upon the period of holding of the capital asset.

OK....

   I agree with Harshal......MJK

54(k) purchases made  on  or  after  1st  April  2005  by  a  hotelier, which  are treated by himas capital assets  and  which do not  pertain to the  supply by  way  of or  as  part  ofservice  or  in  any  other  manner whatsoever of  goods,  being  food  or  any  other  article   for  human consumption or any  drink  (whether or not  intoxicating) where such supply or service  is made  or given  for cash,  deferred payment or other valuable consideration.]

This is what Rule says....which clearly says i can not take set off of VAT paid on Raw materials.....