Service tax on residential property
I purchased an under-construction flat in Noida in 2012 for total cost of 60 lacs on construction linked plan. This included service tax cost of 2 lacs and relevant money was also paid to the builder with each demand. While the flat was still under construction I surrendered the flat, with the builders consent, in exchange for a bigger flat in the same project. By this time, the builder had not received Completion Certificate and I had paid 60 Lacs to the builder against the old unit. The total cost of the new flat was agreed at 70 Lacs
The builder has received Completion Certificate from the local authority and the paperwork for transfer of my flat from old unit to new unit is also complete. I had not paid the additional 10 Lacs since the paperwork for transfer was moving slowly at the builders end. Now that I am ready to pay the builder is demanding 12 lacs instead of the balance 10 Lacs since he claims that the 60 Lacs paid previously included ST of 2 Lacs which was paid against the earlier flat and since I chose to transfer the unit, the service tax paid for old flat cannot be considered and is therefore a sunk cost.
He claims that the ST was deposited with the authority with no benefit to him & the flat for which it was paid by me isn't the subject of the current agreement between me & the builder. He is trying to dissuade me by saying that I should consider the fact that since he has received CC, he won't also be charging GST on balance cost being paid for new flat.
Is he correct in his contention that while I had paid 60 Lacs, it included ST of 2 Lacs for an under-construction flat whereas the flat in question now is complete thus not attracting GST and since ST has been already been deposited, he cannot take any benefit for it
Even if I had originally purchased the bigger unit, I would have still paid ST on it while it was under-construction & then it would have been considered as part of total cost paid by me. Then is it correct not to consider it when a transfer has taken place? The builder would still have deposited the ST to the authority
Can someone please advice me on this? If there are specific clarifications that any professional needs, please let me know & I will respond
Regards
Asked 8 years ago in Taxation
Thank you gentlemen for your advice. I took up the service tax refund issue with the builder citing section 6(3) as advised by Mr. Sethi and received the below response from the builder. I seek your kind opinion on what my options are on below response from the builder. Can I claim refund of ST from the authority? What other options can I exercise? Consumer court?
QUOTE
We agree that this is a case where Service tax was paid by you for a specific service which was eventually not taken, however, when the flat is cancelled(or unit is shifted) after receipt of completion certificate from competent authority, the service of under construction property is deemed to be completed and hence the service tax refund cannot be claimed by the builder.
To claim service tax refund, we might be required to provide all cancellation documents to authorities which clearly show the date of request which is after completion certificate in your case, and hence it was never possible for us to claim service tax refund. However we may provide you required documents to claim service tax refund, You may ask for refund of service tax from service tax department on the basis of your tax consultant advise. You are the service recipient you may file the case that your service not completed and we give undertaking that we have deposit service tax collected from you with supporting documents
UNQUOTE
Kind response awaited.
Asked 8 years ago
