• Kvat on sale agreement

Dear Sir,

We booked an under-construction flat in april 2013, for which possesion was expected in Dec 2013.
There were 2 agreements done by the builder:

1. Agreement to Build (Cost approx 36 lacs)
2. Agreement to sale (18 lacs)

We cleared all the payments to the builder in March 2014 including registration/stamp duty and all applicable taxes as asked by the builder. VAT was calculated on agreement to build value i.e. 36lacs.

After getting the possession in April 2014, we have recieved a letter from the builder asking to pay VAT on Sale agreement Value also u/s 39(1) of KVAT. This Amount is calculated as 10% of sale agreement value by the builder.

Pls Suggest whether its a valid demand from the builder? And also is the calculation of this tax is correct.

Registration was done on December 2013.