Service tax issue with the builder after 5 years of registration

736 votes

Hi 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.

Advocate Rajagopalan LawRato

818 votes

Hello, 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.

LawRato LawRato

851 votes

Dear Querist 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.

Advocate Kanishk Agarwal LawRato