Need Help: VAT + Service Tax payable for property

[S M Pinto]

Hi,

I am trying this service 1st time with wavering faith as to how and whether it can really help.

I have bought a property in Navi Mumbai (Ghansoli) with Arihant Builders. The possession was due in July 2008. I have received a letter from the builder, quote :
"This letter is issed to you about a new amendment to Maharashtra Value added Tax Act 2002 which came into effect from 20.06.2006 and Trade Circular No.12T of 2007. As per the aforesaid amendment any property which is transfered after 20.6.2006 will now attract VAT @ 5% of the Agreement Value. It is applicable irrespective of whether the Agreement in question was executed prior to 20.6.2006 or thereafter.

The issue as to whether sale of residential property / flats would attract Service tax or not is subject matter of Writ Petition pending for disposal in the Hon'ble Bombay High Court. In case the High Court decides that sale of residential property attracts Service Tax, the same shall be to the extent of 4.5% on the Agreement Value.

We did not want our esteemed customers like you to be taken by surprise and therefore by this letter we request you to make payment of VAT before taking posession. In addition to it at the time of possession please handover an instrument i.e. a cheque without date as a security towards Service Tax payment if made applicable. These instruments are not any demand of payments towards Service Tax and neither to be treated as deposit towards the same. No possession can be handed over to you without compliance of the above. We shall further keep you updated with the subject matter." Unquote

My queries:
1. VAT is it applicable on agreement value ?
2. Should I be getting a receipt for VAT paid
3. Is Service Tax also passed on to the customer.
4. Is service tax again also @ 4.5% of agreement value
5. Can the builder hold giving possesion of my flat for want of these payment
6. I haver several colleagues who have bought flats after me but none have paid any of these additonal costs being claimed by Arihant Builders.

Can anybody who is aware of this please help me.

[karira]

Pinto,

A similar query was raised by another member:

Service tax demand by builder

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