service tax

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  1. Ratna Dasgupta

    Ratna Dasgupta New Member

    I understand you have idea on Service Tax.
    I bought a flat in Kolkata in 2014 from the Owner who had given the land for development and as per the Development Agreement they got flats in consideration.
    They sold their part of flat during under construction stage and registered Agreement to Sale was drawn where Developer was also a signatory.The final installment is still pending though Completion Certificate has come in March 16.
    I understand Delhi High has come up with some ruling on this that service Tax is not payable by Buyer but its not binding at Kolkata.
    I am told Central Govt has gone to Supreme Court against this order.
    I need your guidance if I can contact any competent expert to seek guidance whether I am suppose to pay service Tax now which they are pressing hard to pay up.
    Also If have to pay how do I ensure that this being Govt Tax to pay directly to the govt/service tax that too for related to my flat.What documents I am entitled to seek for them to so that if they collect payment on this head collect from me and not pay up and later the demand is raised on me to pay up.
    Can you please guide.
    Thanking you
    Mrs R Dasgupta
  2. ZED

    ZED Well-Known Member

    You need to pay ST on the subsequent installments (from the date you purchased the under construction property) till the date the completion certificate is received.

    For period prior to that, the person from whom you bought must have paid ST thereon. We do not need to go into that.

    If the ST amount is mentioned and the builders ST registration No. is given then its enough evidence for you. You do not need to investigate as to whether the same has been credited to the C.G or not.
    If the amount is not credited to C.G then it will take steps to recover it from the builder (not from you).
  3. Ratna Dasgupta

    Ratna Dasgupta New Member

    Thank you for the reply
    So you mean we have no respite from the recent Delhi High Court Ruling or if Central Govt has gone to Supreme Court against the Ruling.
    Further I want to stay that owner has not yet paid the the service tax and still demanding from us.Owner said in march that Service Tax registration application is made.We are paying to four owner so should be have separate Service tax registration details of all of them with Invoices.
    The completion certificate came in end March 16 and if their Service Tax Registration is not there/or after the CC date is it still payable?
    Should we insist to have invoice with s Registration details?
    Pl advise.
  4. ZED

    ZED Well-Known Member


    If any amount was paid by you before the date of receipt of completion certificate then yes, service tax is payable by you.

    The builder would normally give the details of his ST registeration no. , if its not mention then do ask.
  5. Ratna Dasgupta

    Ratna Dasgupta New Member

    Thank you for guiding.But in my case Builder is not asking but the owner is asking for Service Tax to pay up.Also just giving letters but are we not liable to get Invoice with Service Tax registration no to pay.Also if there are four owners are we not suppose to get four separate Invoices with each s separate Service Tax Registration no.Can any one of them holding the Power of Attorney claim this for all of four?SEC 4 A
    The Land belongs to four owners and they gave the land to develop for which they have given some flats to owners.They sold me their owner part during the construction stage.The complex has 9 flat and is this not applicable for flats more than 12 units: sec 66 91-A
    Are we suppose to deduct 1% TDS for the payment made to them against their PAN no for depositing.We have taken Home Loan and the property is above 70 lakhs.
  6. ZED

    ZED Well-Known Member

    TDS provisions are applicable and you are required to deduct tax @ 1%.

    It appears to be a case of development agreement and it will depend upon the agreement as to whether the land owner can charge it from you or not.

    Generally, the landowner execute GPA in favour of builder and it is the builder who sells the property. In such a case, the ST would be levied by builder only.

    However, it is possible that the landowner retain the right to transfer the properties and in such case possibility of charging ST by landowner is possible.

    Check the agreement you entered into, who are the parties to the contract?

    If the property in question is a complex, then ST is leviable , if its not a complex then ST is also not leviable.

    If the each unit can be sold independently, then it is not a single residential unit and units which are not a single residential unit can be said to be as residential complex.
    Refer the extract from the education guide released by the CBEC

    7.9.7 What is the service tax liability on construction of two - floor house constructed through a contractor? My contractor is demanding service tax. Is he right in doing

    Service tax is payable on construction of a residential complex having more than one single residential unit. Single residential unit is defined in the notification and means a self-contained residential unit which is designed for use, wholly or principally, for residential purposes for one family. If each of the floors of your house is a single residential unit in terms of the definition, the contractor is rightly demanding service tax. If the title of each of floors is capable of being
    transferred to another person by mutation in land/ municipal records, both the floors may be considered as separate single residential units.
  7. Ratna Dasgupta

    Ratna Dasgupta New Member

    Thanks a lot for your guidance.
    1-Completion Certificate is now issued so am I suppose to pay the service Tax on balance amount.Last Installment which I paid was just before the CC and the cheques were encashed after the CC date.Is on this amount ST is leviable/payable?
    2-Owner is merely issuing letters seeking ST but no Invoice indicating the ST Registration no.Is this valid enough to pay them the ST or we insist on issuance of proper Invoice with ST no.
    3- If owner are four and all payments till now has been made equally to all four then should they be raising four Invoices with ST details separably or any one of them hoilding the POA can claim it.
  8. ZED

    ZED Well-Known Member

    Since the last installment was paid before issuance of CC, ST is leviable.

    In my previous post, I request you to check as to who were the parties to the contract.
    The one who is party to the contract can ask for ST, otherwise they will need POA (Power of Attorney) to act on behalf of person who is party to the contract.
    Do insist on getting ST registration. IT should be clearly mentioned that the amount of ST is X.

    If they are the party to contract (with you) then they can.
    If any one has POA, then its fine, you may make payment to that person only, but do ask for copy of it.
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