ST on Individual Villas located in a gated community

[santhosh kumar]

Dear Experts,

Our builder is selling plots and constructing individual villas along with land in a gated community (which constitutes yet to be constructed swimming pool, park, club house) to interested individuals. Around 50 villas are sold and occupied out of 200 villas. Almost all 50 are registered sepertely for land and building contract.The payment was made as per stage wise completion of villas. Most them are now occupied, however, without handing over the completion certificate from builder, but on full payment of contracted amount (most of them are under 30 lakhs).

Now, the builder is demanding to pay individual villa owners to pay ST as he is claiming that Asst Commissioner of city issued notice to him for not paying the same. The builder is demanding the same from us by issuing a letter in his letter pad (with corporate address from another state) by quoting his Service tax number.

On consulting a local expert, we are told that on payment, we can get the refund of the ST paid as we are indivduals and the property is for personal use.

Now my queries are :

1. Are we really taxable as we are using only individual villas, though the amenties like water tank, park, swimming pool are common.

2. Is it not the ST to be borne by builder as the contracted price is already fixed.

3. If at all, we have to pay, can we raise RTI, under which rule we are taxed. (Bez, many such communities are not taxed, as far as we learned).

4. Is it the builders' duty to issue in proper invoice as well as with the local address, where his operational office is located. (bez, we think, in future, it may be a point of contention due to the different localities, service provider and reciever).

5. Regarding getting the refund of ST paid, is it really true ? if yes, kindly tell about the chances of getting it from government and ways to get it. (Many of the customers advances towards building construction was unilaterly adjusted against this ST by builder)

6. I have asked enough questions, already, thank you.

Regards,

Santhosh.

AI Summary

Builder Demands Service Tax on Villas Despite Fixed Prices; Participants Question Exemption Status and Potential Misuse A forum participant raised concerns about a builder demanding service tax (ST) payment for villas in a gated community, despite the contracted price being fixed. The villas, part of a larger complex with shared amenities, are individually registered. The builder claims an Assistant Commissioner issued a notice for unpaid ST. Participants debated whether the villas qualify for ST exemption under specific notifications, given their status as part of a residential complex. Some suggested consulting relevant case laws and obtaining the notice for clarity. Concerns were also raised about the builder potentially misappropriating collected ST.