Service tax in resale property

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 June 2012 Dear Sir/Madam,

In August 2011 I had purchase a new flat in resale Navi Mumbai of agreement value 14,50,000 dated 16/08/2012.

Now builder said service tax amount yet be balance, my question is who will be liable to pay service tax , me or my seller?

Dayal

Dayal (Expert)
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05 June 2012 The agreement with the builder is with you, therefore you are liable to make the payment, if you had purchased the flat under construction

Service tax is not payable on resale, or purchase of ready to move in flat.

Therefore your buyer is not liable to pay.

Querist : Anonymous

Querist : Anonymous (Querist)

05 June 2012 Dear Sir,

but my agreement did with the first seller not with directly builder ? so how can I pay the service tax ?

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Dayal

Dayal (Expert)
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05 June 2012 It has to be paid by the seller and not by you.

The prinicipal agreement is between the builder and first owner.

You may accordingly ask the seller to pay the service tax.

You have no relationship with the builder and therefore the liability is not on you.

Querist : Anonymous

Querist : Anonymous (Querist)

05 June 2012 dear sir,

can you please guide me as in when this service tax policy exists in india because my agent is asking me that it was introduce in april 2012...can i get a constuctive documents from honorable supreme court which i can show my agent.
thank you !

Dayal

Dayal (Expert)
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05 June 2012 Applicability

Service tax will apply in respect of services provided or to be provided on or after 1-7-2010.

Thus, a builder/developer is not liable to pay service tax in respect of services provided upto 1-7-2010. Such bifurcation is possible only if the builder/developer keeps proper accounts and records.
If construction is fully complete before 1-7-2010, no tax is payable as service tax is on provision of service which is the taxable event. Receipt of payment does not decide tax liability.

Valuation
Principally, service tax is payable on value of taxable services.
Thus, if a service provider has proper costing records, it is permissible to deduct value of material and land (or calculate value of service on cost plus profit basis) and pay service tax on value of service @ 10.30%.
If this is not feasible, then tax is payable @ 10.30% on 25%/33% of entire value of contract including material (used by builder plus supplied free of cost by customer), but then Cenvat credit is not available, as explained below.
(a) on 33% of gross amount charged if the gross amount does not include value of land
(b) on 25% of gross amount charged if the gross amount includes value of land (Till 1-7-2010, the 25% scheme was not available. Only 33% scheme was available).

Refer Circular No. 151/2/2012-ST clarifying Service tax on construction services