Respected Experts and friends,
M/s. ABC Company is Real Estate Company located in Maharashtra/Karnataka (Any place). It has owned Land for construction of Apartments. It has received Advance money from various customers towards purchase of Apartments.
The Company has executed Agreement to sell (AOS) with the Customers for sale of Apartments. But it has not entered into any Development agreement/Construction Agreement with the Customers. Because of this reason; the Company is not paying VAT and also not collecting VAT from customers as there is nothing to show that Work Contracts has been awarded by the Customers to the Company .
The Company says it will pay VAT, if any at the time of handing over the possession to the customers.
Is this approach correct to avoid VAT liability under the respective States VAT Act?
If yes, then again what is the logic/legal provision behind paying VAT at the time of handing over the possession?
The Company either construct the Apartment itself or give it to the sub-contractors.
Please kindly suggest.
CAclubindia
