Applicability of service tax and vat on flats
Surendra
(Querist) 04 June 2014
This query is : Resolved
Dear Sir,
Greetings for the day !!!
We feel privileged to have your views here in this forum. I have a query regarding applicability of Service Tax and Vat on Flats.
Recently I booked a flat in Bangalore. The Company has provided flats on RIGHT TO OCCUPANCY basis and there will not be any sale deed for the said flats. We can implied from this, that whatever amount I have given to the Company (i.e. Consideration to occupy that flat) has been treated as deposit with the Company and at any point of time, when I may surrender my flat (RIGHT TO OCCUPANCY) to the Company and can get my money (consideration paid to occupy flat) back .
The Company did not charge Service Tax and VAT on such flats earlier due to their contention that it is merely transfer of RIGHT TO OCCUPANCY. But now the Company is asking for Service Tax and VAT on the said flat.
My queries are as follows :
1) What is the difference in the SALE OF FLATS and RIGHT TO OCCUPANCY only?
2) Whether Service Tax and VAT is applicable on RIGHT TO OCCUPANCY of any Flat? (since renting of dwelling units does not attract service tax, as well as the ownership in the flats has also not been transferred in my name, it remains with the Company and I enjoy only right to occupancy of the flat).
Thanks & Regards
T. Kalaiselvan, Advocate
(Expert) 06 June 2014
1) Outright purchase and mere lease.
2) If it is only 'Right to Occupancy' the demand for payment of service tax and VAT is illegal, ask them to give it in writing, you may issue a lawyer's notice rejecting their demand by asking them to quote the provisions of law.
