Vat and S.T applicablity in Purchase of Flat

As far as my understanding of the topic related;

I) The thing is correct as VAT need to be paid on construction service contracts. However the VAT input is claimed by the construction firm, it will reduce the amount of VAT output receivable from the amount of VAT input payable. However whole 1% is charged from the purchaser of Flat.

2) Now with regards to Service tax, Construction companies fall in the ambit of services tax. Thus it shall charge service tax @ 10.3% on the contract.