Hello Friends,
On 3rd June, 2016 – Delhi High Court gave judgement on controversy –
whether the consideration paid by flat buyers to builder/promoter/developer for acquiring a flat in a complex, which under construction/development, could be subjected to levy of service tax.
Although judgement has been delivered for pre negative list based taxation era, but after close reading of judgement corollary may drawn that it may also be applicable post 01st July, 2012.
Now the confusion prevails in the minds of builder and buyers. What steps to take to ensure their mutual interest ?
Now it is clearly evident that revenue may go for appeal to the Supreme Court to decide the controversy. However, meanwhile the judgement like a coin may fall on either side i.e., favorable or unfavorable to the taxpayers.
On a safer note following options are available in this regard :
- The buyer and builder may open a ESCROW account and deposit sum relating to service tax payable and may utilize the same for payment if decision comes unfavorable. However, interest on delayed payment of service tax will be an issue here.
- The builder may continue to pay service tax collected from buyer as done hitherto under protest. So that refund can be called for in case of favorable decision.
The above options may be exercised after due consultation with your professional consultant dealing with Service Tax matters.
Our views are personal and meant for guidance only.
Thanks.
myGST 