Service tax paid to the builder
Brindha
(Querist) 14 November 2008
This query is : Resolved
Sirs,
Are the purchasers of flats eligible to get the refund of the Service tax they paid to the builder (during 2007-08) ?
From the circular,issued by Central Board of Customs & Excise issued Service Tax Circular No.96 dated 23rd August 2007 which covers the issue, it looks like that the property buyers need not pay service tax to builder/developer. On the other hand if the developers had employed the services of a contractor, it is the contractor who will have to pay service tax and not the developer builder.
Please clarify?
1. Which section of service tax act demands that the service tax to be paid by the property buyer to the builder ?
2. Is there any relevent decision by the SC or any advance ruling on this matter?
Thanks,
Brindha
Rajesh Kumar
(Expert) 13 February 2009
If the burden of service tax has been borne by the buyer, they can claim directly the refund of service tax. If the service provider (builder in this case) claims refund of taxes paid, he shall not be granted refund in terms of unjust enrichment provisions.
Brindha
(Querist) 13 February 2009
Thank you Sir. Recently, it has come in the paper, that the Central Board of Excise and Customs has exempted the residential units from service tax, as per a communication to the apex body of developers CREDAI (Confederation of Real Estate Developers' Associations of India). It's not clear,whether this will apply retrospectively to properties already booked. In our case, the builder has collected the service tax from us and has paid to the Government on our behalf. He has shown us all the receipts also. Can we (buyers) now claim directly for the refund?
Regards,
S.Brindha
