Vat and service tax

sarita singhal (Querist) 07 August 2011 This query is : Resolved
I had booked a flat at Rustamjee thane on 8th october 2006 and registered in Jan 2008.Stilt parking was booked with a price of 2.25 lakh and posession date was dec 2009. In July 2010 I received a letter for furniture posession.They revised parking price from 2.25 to 3.25, which was not acceptable to me. I tried to communicate many times but there was no positive response. Now posession is delayed considerably.I gave them a notice regarding this. They ignore and now asking for service tax and vat.Now for posession they want me to pay extra parking charges,service tax and vat.Please advice I am physically handicap and have gone through lot of mental pressure. Oblige.

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R.Ramachandran (Expert) 07 August 2011
If the complex in which there are more than 12 Dwelling units, then you have to pay service tax. You also have to pay VAT on the remaining portion (i.e. total cost of the flat less service portion = material portion). VAT applies on value of material portion.

sarita singhal (Querist) 08 August 2011
Other flat owners in the same building who has taken the possesion earlier havenot paid service tax and vat.They asked me 5% vat verbally.I am unable to understand the meaning of dwelling units.

R.Ramachandran (Expert) 08 August 2011
Each Flat is a dwelling unit. If there are more than 12 dwelling units in a complex / building, then Service Tax is payable.
Look, there are several methods in which the Builder is liable to pay VAT (which is a sales tax on the value of the materials used in construction of the building) to the State Government. He can opt for Actual basis or composition basis. In Actual basis, he will be paying the VAT on the actual value of the materials used - for which he would have to maintain detailed accounts. In the Composition method, he is eligible to pay a fixed rate of VAT on the gross amount charged (gross amount means this will include not only the material cost but also the labour cost plus his profit margin). In the later case, he will not be able to issue any VAT invoice, but his cost charged for the building will have this included.
Therefore, if you have doubt, then you have to show your documents to some one in your area and come to a conclusion.