I purchased a flat in noida in 2012 for total cost of 60 lacs. This included service tax cost of 2 lacs which was also paid in full. Before the flat reached possession, I transferred the flat, with the builders consent, to a bigger unit in same complex. The builder had not received completion certificate since it wasn't under construction. Additional cost to be paid for larger area of new flat is 10 lacs over purchase cost of old flat. Thus purchase cost now is 70 lacs. Now that my original unit has been replaced with the new unit and additional money is to be paid towards additional area purchased, the builder is not giving credit for service tax paid earlier since he states that service tax paid on old unit cannot be transferred to my credit thus he is asking me to pay 12 lacs instead of 10 lacs. He claims that while he won't give credit of ST paid earlier but he won't charge tax on additional money to be paid since he has received completion certificate. Is he correct in not giving me credit for 2 lacs already paid for service tax? Regards
The builder is correct in not charging ST on new unit as it is already completed. There is no liability of ST once the construction is completed.
Had you paid the full amount of 60 lakhs including ST of 2 lakhs before?
By the term credit, do you mean the input tax credit of ST that you want to claim?
Hello,
In your query you have stated both that the builder has received Completion Certificate and not received Completion Certificate.
On assuming that the builder has received Completion Certificate, then he in no case can ask you to pay the Service Tax amount.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, FCA, LLB, CERT. FAFP
Hi,
If the completion certificate is received then the builder cannot charge you Service Tax nor VAT nor GST.
Regards,
Keerthiga Padmanabhan
M.Com., CA, LL.B
Hi,
I am not able to understand your question properly.
Which credit are you asking from builder? Even I don't know why builder is asking for 12 lacs when you agreed for 10 lacs.
To clarify again, I understand there is no ST liability post receipt of Completion Certificate (CC). However, before I changed my flat for a bigger unit in the same complex while the property was still under construction, I had already paid ST of about 2 Lacs. The incremental value of the new property is 10 lacs in addition to the cost of the previous house which was 60 Lacs. Now the builder is asking me to pay 12 lacs since he claims that the 2 Lacs paid by me previously towards ST cannot be accounted for now owing to the property having received CC therefore a loss of 2 Lacs for me. Will he not receive input credit on ST paid by me previously? The builder states that the ST was paid by me towards house no. ABC whereas the house I now own is XYZ therefore the ST paid previously is a loss to me owing to completion of the project. I hope I have been able to amply clarify my question & situation. Seek your kind advice please.
As you mentioned that when you switched the flat, the project was still under completion, so there was ST liability. And how does it matter if the ST belongs to 1 flat or the other? In my opinion, the builder is wrong in doing so.
On a second note, there is no question of claiming 2 lakhs as input tax credit. It was ST liability that was paid by you. It was no loss for him, but you. The cost of 60 lakhs included ST of 2 lakhs. So, basically the cost to be paid to builder was 58 lakhs only and he cannot charge 2 lakhs more now.
Dear Ms. Bhandari Thank you very much for the clear explanation. In case the builder insists, can you recommend me the right course of action to be taken to counter the builder? Would I be able to convince by way of a CA's opinion or would it require legal intervention. Grateful if you guide. Thank you once again for the valuable guidance. Regards
Yes, we may work out the correct course of action if the builder continues to disagree with our contention.
Feel free to call/revert in case any assistance is required.
CA Lakshita Bhandari
The query is particularly asked to Ms. Bhandari.