Service Tax to Builder

[saket s]

Hi,

We are paying some amount to a Builder towards completion of a part activity. Flat is not yet handed over to us, which will take a long time for them for complete finishing and handing over to us. The builder is raising a Tax Invoice and claiming Service Tax. Do we need to pay service tax, since flat is under completion and not handed over.

If No, pls provide any notification / circular or corresponding rule.

Thanks

Saket

AI Summary

Service tax on under-construction property: applies to payments before completion certificate but not to purchase after completion.
Service tax is chargeable on payments for construction of immovable property where possession or a completion certificate has not been issued; advance payments prior to completion certificate attract service tax. Acquisition of a flat after issuance of the completion certificate is treated as a purchase of immovable property and ordinarily does not attract service tax; VAT does not apply to immovable property due to non-movability. Jurisdictional case law may modify applicability in specific territories.