This has to do with todays decision by the High Court concerning Service tax on under construction flats. As I understand it, we now have to pay 2.5% in retrospect from July 2010.
My questions:
1) Does retrospect mean flats purchased after this date or is it also applicable to flats purchased before this date and service tax is going to be charged on pending amount since July 2010?
2) What about vat. presently it is 5% for flats bought before April 2010 and 1% after that. Though I dont see the logic of later being lesser than earlier but since I purchased mine on January 2010 for me the cost is huge, The agreement value was approx 1.43 cr.. so 5% is almost 7 lakhs!! I was told that this was under litigation also so has the decision yesterday been for the vat also?
My builder Rustomjee is demanding that this amount of 7 laks be put in an FD with him as beneficiary for 5 years or else possession of flat will not be given. How legally right is this. Can it be opposed. if the vat decision has also been taken then I would at least know for sure what i am liable to pay. Secondly even for the service tax decision the MCHI are not sure if they are appealing against the order in the SC..In the meantime builders are arm twisting buyers to deposit the service tax and vat. We were not told of this at the time of purchase. Now it is coming as a huge shock.
Please advise.
Sid
