Vat on sale of flat in mumbai
Rajesh
(Querist) 01 September 2012
This query is : Resolved
Dear Team,
I had purchased a flat in Mumbai and the sale agreement registered is dated 10.10.2010. This was resale ie., During this time the builder was in possession of the maintenance since society was not yet formed hence Bank for granting the loan needed an NOC from builder for mortgaging the flat. For providing the NOC the builder made me to sign an undertaking which mentions that I am aware that the VAT for the said flat is not paid and that if any demand is raised, I shall pay the same. Now the builder has sent me a letter for paying the VAT. I understand that VAT is payable by the initial buyer who purchased the flat from the builder in 2008 and since my sale agreement is dated 10.10.2010 and the same being a resale and completed flat will not attract VAT. My query is whether the builder can obligate me under the pretext of the undertaking signed by me to pay the VAT as an end user. Thank you in advance and your advice /response will be very useful for me to plan my next steps with the builder / original buyer
Kishor Mehta
(Expert) 02 September 2012
Sir,
[1] It is not yet clear whether the builder will be allowed to collect the entire load of VAT from the purchaser of the flat.
[2] In your case, as I understand, since this is a second sale the builder is not the seller, you have purchased the flat from a third party.
[3] If the builder has not sold the flat directly to you he can not collect the VAT from you.
Regards,
Kishor Mehta
Rajesh
(Querist) 02 September 2012
Thank you Mr. Mehta for the inputs.
Yes you are right in terms of resale wherein my flat was purchased from the initial buyer who brought it from the builder. I am concerned about the situation wherein the builder has taken a written declaration cum undertaking that I will need to pay the VAT in case the demand arises at a later period.
My question was whether as an end user, will I become obligated to pay the VAT upon demand by the builder on behalf of the initial buyer on account of the undertaking executed by me. The builder has forced us to sign the declaration as a condition to provide the NOC for the bank with whom I obtained the home loan to buy the said flat from the initial buyer.
Could you please provide me additional clarity on my obligation.
Kishor Mehta
(Expert) 02 September 2012
Sir,
As I understand it, your position is that of a guarantor, and the builder can not collect the VAT from you.
Further, as the circumstances were such that you had to accept his terms for a bank loan, hence it is termed that you have signed under duress, and whatever that is signed under duress and contrary to your interests is not legally binding on you.
Regards,
Kishor Mehta
