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Service tax issue with the builder after 5 years of registration
25-Jan-2023 (In Tax Law)
Dear Sir, I have purchased a under construction flat in in December 2010 and now in after completing 5 years the builder claims that we have to pay the service tax as the registration was done after June 2010.I purchased the flat for 45,00,000rs and the service tax with interest builder claims with interest is 3,75,000 rs. The builder did not give any occupancy certificate. and when we are asking for occupancy certificate he is tying that to service tax. We are 14 to 18 flat owners who are facing this issue in our apartment.
It is the liability of the builder to pay service tax as stipulated. However your remedy will lie in how was your sale deed documented. was the price inclusive of all taxes are prices were per square feet plus taxes. Please check your sale deed. But one thing i can assure you. if the builder has not raised the demand on you in the year 2010, he cannot raise the demand on you now. for any liability the demand should have been raised with in 3 years from the date it becomes due. Moreover the builder is not the right person to give you occupancy certificate. The Occupancy certificate is issued by the MUnicipal corporation to the flat owner directly. If occupancy certificate is not issued for technical reasons one reason could be the deviation from approved plan.
32+
Adv. Rajagopalan
Hyderabad | 500+ Answers
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Thank you for your query.
What does Flat Purchase Agreement provides for payment of service tax and value of the land? how is construction value and property value are separated and valued?
I would like to inform you that Service Tax can only be levied on services and not on sale of good/immovable property.
In your case, Service Tax won't be levied on the value of land and would only be levied on the construction services provided by the Builder/Developer as per rates in force.
Further, Service Tax shall be collected if the Builder/Developer provides the purchase of land and the value of construction services separately.
There is also a notification in 2012 wherein it has been provided that Service Tax would be payable only on 25 % of the total purchase price as value of property and value of service of construction provided by the Builder/Developer are difficult to segregate.
I would be pleased to assist you and other flat owners in this matter. My contact details can be collected from Lawrato Admin.
35+
The builder is liable to deposit the service tax. He is just trying to leverage the occupancy certificate so that the liability which is due from his end (as he did not charge it from him at appropriate time) can be paid by you. The law was changed from 2012 when service tax was levied on the advance received by the builders. Let us know in case you require further clarification.
31+
Adv. Kanishk Agarwal
Delhi | 100+ Answers
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