Service tax on purchase of Flat from Builder

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Vikash Chandra

Service

27 Points Posted on 16 February 2009

I have purchased a Flat from a builder. Agreement to sell was executed and it was mentioned in the agreement that Service Tax would be paid by the buyer. After full payment the same was got registered and the clause that 'Service Tax would be paid by the buyer' was also inserted in the registry deed. The possession of the Flat is also given.

NowÂ the builder is demanding Service Tax from me @ 4.12 % ofÂ the value of the property quoting that Central Excise is demanding the same from him under notification No 32/2007 -S.T. dated 22.05.2007 and 7/2008 - S. T. dated 01.03.2008.

I have come to know that vide Circular No. 108/02/2009 - ST dated 29.01.2009 Commissioner (Service TAx), CBEC, New Delhi has made it clear that Flat buyers don't need to pay Service Tax. Is it true? Am I suppose to pay Service Tax @ 4.12 % of the value of the Flat or it is exempted?

Kindly solve my problem on urgent basis.

Replies (4)

Vikash Chandra

Service

27 Points Posted on 16 February 2009

Originally posted by :Vikash Chandra
"	Hi I have purchased a Flat from a builder. Agreement to sell was executed and it was mentioned in the agreement that Service Tax would be paid by the buyer. After full payment the same was got registered and the clause that 'Service Tax would be paid by the buyer' was also inserted in the registry deed. The possession of the Flat is also given. NowÂ the builder is demanding Service Tax from me @ 4.12 % ofÂ the value of the property quoting that Central Excise is demanding the same from him under notification No 32/2007 -S.T. dated 22.05.2007 and 7/2008 - S. T. dated 01.03.2008. I have come to know that vide Circular No. 108/02/2009 - ST dated 29.01.2009 Commissioner (Service TAx), CBEC, New Delhi has made it clear that Flat buyers don't need to pay Service Tax. Is it true? Am I suppose to pay Service Tax @ 4.12 % of the value of the Flat or it is exempted? Kindly solve my problem on urgent basis. Â	"

Rajesh Kumar

Advocate- Tax

6957 Points Posted on 17 February 2009

Firstly, you are no supposed to pay service tax as per agreement. Thus whatever is the legal position about leviability of service tax, you are not required to pay service tax.

Secondly, after the circular no service tax is payable at all so there is no question of any service tax.