Service tax on purchase of flat

[KRISHNAMOORTHY GOVINDAREDDY]

I have booked the Appartment in March 2008 and i have taken positions of the Appartment in October 2009. Total Cost of the Appartment is Rs.32 Lakhs. Total appartments is 214. Now I like to know from you that whether i am eligible for the relief of Service TAx under Circular N0.108  dt 29.01.2009. Now the Builder is insisting me to pay the service which he has already paid before 29.01.2009 to the Government. I have purchased the undivided portion of the land and i have entered into the construction agreement. The payment are made in installments only. Please Advise whether i am liable to pay any service tax on purchase of this Flat.

[Vartik Choksi]

As mentioned by you that you have purchased undevided shares in land and have entered in to construction agreeemnt,relief of that circular is not available to you provided a stand is taken and approved by an authority that the conjstruction was for personal use as defined in Resi.complex. dinesh bhavsar 98241 62516

[Surender Gupta]

Though you may not take the benefit the circular but since the overall nature of the property is of development by a builder, the same was not taxable prior to amendment made by the Finance Act, 2010. Therefore instead of ciruclar no. 108/2009 you may take the shelter of amendment made in 2010 finance act.

AI Summary

Service tax relief on flat purchase may depend on personal use certification or on legislative amendment affecting builder developments. Purchase of an apartment through acquisition of an undivided share of land plus a construction agreement payable in installments generally will not attract relief under Circular No.108 unless a competent authority certifies the construction was for personal use in a residential complex; alternatively, where the project is a builder's development, its pre-amendment non-taxable character and the Finance Act amendment may affect the tax position rather than the circular.