Service tax exemption for fully occupied flat

This query is : Resolved

SIJU VARGHESE (Querist)
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05 April 2017 Sir,

A Builder has two under Construction Projects, say Tower A and Tower B.

A party has booked a flat in Tower A on 01/04/2016 and paid Rs.10 Lakhs to Builder. Builder has paid Service Tax and VAT on the amount to Govt.
Later, the Builder has got Completion Certificate for Tower B on 01/10/2016. So the party has cancelled his flat in Tower A on 15/10/2016 and booked a new flat in Tower B for which Service Tax and VAT is not applicable. The party told to transfer the amount paid for Under Construction flat to the fully occupied flat.
My query is, in the above situation,
1. Whether the party will be exempted from paying tax on fully completed flat? Or whether it will be treated as an attempt of tax evasion?

Expecting your valuable reply.

Rajesh Kumar

Rajesh Kumar (Expert)
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08 April 2017 The first service was not provided. Service Tax paid on the first transaction should be claimed by the builder as refund for services not provided.
No service tax is payable on the second transaction.

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