Status of Service Tax liability

[Sandhya Vijaykumar]

Hello experts,

Thanks in advance. May I know the legal status in the given transaction.

Here is a transaction such that, an agreement was entered between promoter/builder and prospective buyer for sale of flat on completion of construction of residential complex. Now, at the stage when only foundation and compound walls have been constructed leaving the rest of the majority work incomplete, the promoter/builder has transferred the agreement to execute the contract to another promoter/buyer. In this scenario, what would be the status of service tax liability on the new promoter/buyer?

N S SANDHYA

Advocate, Bangalore

AI Summary

Service Tax Liability in Flat Sale Transfer: New Promoter Pays if Advance Received; Original Builder Must Settle Prior Dues First. A discussion was initiated regarding the service tax liability in a scenario where a promoter/builder transfers an agreement for the sale of a flat, under construction, to another promoter/buyer. An advocate sought clarification on whether the new promoter/buyer would incur service tax liability. One response indicated that if the new promoter receives an advance from the buyer, service tax liability arises; otherwise, it does not. Another response stated that the original builder must first settle any service tax liabilities for payments and advances received before the new promoter assumes responsibility.