Service tax on unregistered flat(only allotment letter is given)

zacksoniar (others) (21 Points)

17 December 2018  

Hi,

I had booked a flat in Nov-Dec 2015 in Nagpur, Maharashtra. I have paid 25% amount but NO REGISTRATION OR AGREEMENT IS DONE SO FAR. Only allotment letter is given to me.

Now in 2018, due to delay in project, I am cancelling the flat. Builder is saying that as per service tax rule Section 66B, he has paid service tax to government and he will deduct that amount from booking amount.
My CA is saying as there is no agreement done so as per Section Section 65B (44), no question of service tax arise here. So builder should refund all money.

My questions are:
1. As no registration/agreement is done so far, does Service Tax apply on booking amount?
2. As per Section 65B (44), Service doesn't include :
(44) “service” means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include-
(a) an activity which constitutes merely,–
(i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or
(ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of Article 366 of the Constitution; or
(iii) a transaction in money or actionable claim;
(b) a provision of service by an employee to the employer in the course of or in relation to his employment;
(c) fees taken in any Court or tribunal established under any law for the time being in force.

Since here allotment is actionable claim, transfer of title only and its only money transfer. Would service tax be applicable here.

Builder is not providing any proof for service tax paid and claiming its done through input tax credit.

Please advice.

Thanks.