Query about vat
vashdev
(Querist) 07 November 2014
This query is : Resolved
Sir, I would like to know who is liable to pay VAT seller or purchaser. On under construction property or on completed property. Whether seller pays it from the pocket of purchaser or from his own pocket. please guide me. Regards vashdev
Guest
(Expert) 07 November 2014
You could also post the same in CA Club Forum of LCI group it self
Anirudh
(Expert) 07 November 2014
The Seller is liable to pay VAT and Service Tax, but he can recover it from the buyer.
vashdev
(Querist) 08 November 2014
I am resident of Ulhasnagar. I would like to know who is laible to pay VAT on completed property.
If seller is liable to pay VAT, then why he can recover it from buyer. what is logic behind it. It means that VAT is to be paid by buyer. Why confusion. If seller is liable to pay, he is suppose to pay it from his own pocket. please clarify the confusion.
Further, seller is trying to prove completed property as under construction property in order to evade his laibility to pay VAT. please guide me.
vashdev
(Querist) 08 November 2014
I am resident of Ulhasnagar. I would like to know who is laible to pay VAT on completed property.
If seller is liable to pay VAT, then why he can recover it from buyer. what is logic behind it. It means that VAT is to be paid by buyer. Why confusion. If seller is liable to pay, he is suppose to pay it from his own pocket. please clarify the confusion.
Further, seller is trying to prove completed property as under construction property in order to evade his laibility to pay VAT. please guide me.
Anirudh
(Expert) 08 November 2014
Dear Vashdev,
Please understand that VAT/Service tax is payable only on UNDER CONSTRUCTION property.
No VAT/Service tax is payable on property for which COMPLETION CERTIFICATE has been obtained. Even if the property completed in all respects, but Completion Certificate has not been so far granted (it will be treated as under construction flat) VAT/Service Tax is payable.
Now coming to the question of liability to pay VAT/Service Tax. Your query that, when the seller is liable, why should he recover it from the buyer? is quite pertinent and valid. I need to explain to you in detail for your understanding.
1. Are you aware whenever you buy goods on which MRP (maximum retail price) is indicated like Soap etc., it says that the price is inclusive of all taxes. That means sales tax (VAT) is also included in it. Are you not paying it. If you are paying (i.e. VAT) why are you paying it?
2. Similarly wherever sales tax is applicable, the seller adds in the invoice Sales Tax (VAT) at a % on the value of the goods? Are you aware that it is you who is paying that Sales Tax? Can you say why?
Let me answer. The sales is effected by the seller and therefore he is liable to pay the sales tax. That does not mean that he is to bear the same. He has to collect it from the buyer (because it is not possible for the sales tax department to go after each and every buyer) and discharge his tax liability. Assume, that the seller has given the goods to you on credit, yet the sales tax has to be paid by him, as he has already sold the goods.
Same is the case with the service tax liability also.
I hope this clarifies your doubt.
vashdev
(Querist) 08 November 2014
Thank you for providing me valuable guidance.
Sir, but my case is typical. My builder showed me a shop. It was newly constructed. I liked the shop. So, I offered him consideration price.
Builder did not told me anything about VAT. Builder did not told me that completion certificate has not been applied.
Possession was granted by him. Now we want to do government registration. Builder is asking for vat before final registration. He is trying to prove completed shop as under construction shop, so that he may evade payment of vat and we pay him vat.
but sir, it is fraud. he want us to pay him vat on completed shop by showing it as under construction shop.
secondly sir, completion certificate is not yet applied by him. so it is not our mistake. it is his duty to obtain it.
sir, is there no way to teach such fraud builders a lesson.
what can i do sir. should i pay him vat or give him an undertaking in writing that we will pay him vat.
please guide me what to do.
Anirudh
(Expert) 09 November 2014
So long the completion certificate has not been granted (whether it was applied for, whether the builder is deliberately not applying for, or it is the fault of the builder etc., is of no use), VAT and Service Tax is payable.
vashdev
(Querist) 09 November 2014
Thankyou anirudh sir. I understood the point. In brief, i have to pay him the vat and service tax so that i can finalise my government agreement.
but i cannot comlaint against him for fraud commited by him. he is not applyin for completion certificate and taking undue advantage by proving the shop as underconstruction. where should i complain against him.
please guide me.
vashdev
(Querist) 10 November 2014
Sir, my above query is not yet answered which was submitted by me a day ago. please reply. if you say yes to above, it means that if someone try to prove married girl as unmarried girl just because she is not getting pregnat is correct. no one can complaint against that person.
similarly if completion certificate is not applied by builder, then building is considered as under construction though its possession was already taken over, payments given etc.
Please guide sir.
Anirudh
(Expert) 10 November 2014
Have entered into any agreement with the builder to buy the shop in question?
If yes, then VAT is payable. If not, you avoid him and take the shop for which has been granted the completion certificate.
Your comparison of a married girl etc., has no relevance and application against law. Currently, no law says, that so long as a girl gets pregnant she will be deemed to be unmarried. As and when such a law comes into effect, then the girl will be called unmarried. That will be as per law.
In the instant case, it has been provided under law, that so long as completion certificate has not been granted (whether applied or not, why not applied is irrelevant) it will be deemed to be under construction. PULL STOP. No further argument (in any case without understanding the legal provision).
vashdev
(Querist) 10 November 2014
Sir, we made rough sale deed not even done notary but it bears signatures.
Now we are about to do government sale deed, stamp duty alreayd deposited with nav jeevan bank.
but since the builder is asking for vat, the matter is held up.
now as you suggest me that shop will be considered as under construction, i will pay him vat.
vat is calculated on what price. the market price is 1850000/-, but i offered him consideration price 1700000/-. stamp duty is payable on 1850000/-, vat and service tax is payable on what amount and how much %.
please give your valuable suggestion as you resolved my earlier query. regards
Anirudh
(Expert) 10 November 2014
You said that he has already demanded VAT/Service Tax from you.
What is the details of the demand given by him.
vashdev
(Querist) 11 November 2014
I do not any details of the demand regarding vat/service tax.
As soon as i requested the builder that i want to do government sale deed, he asked for payment of vat/service tax approx. rs. 70,000/-.
I immediately objected to it. The matter is thus held up for the last 15 days.
Anirudh
(Expert) 11 November 2014
Ask him whether the demand of Rs. 70000/- is for both VAT and Service Tax.
If so, then ask for the break up.
If not ask him whether it is for VAT or Service Tax.
Also ask him whether he is paying WCT (Works Contract Tax) VAT on composition basis or on actual value basis.
vashdev
(Querist) 11 November 2014
In ulhasnagar, 70% of the buildings do not possess completion certificate though people live there for the last 20 years. yet they are under construction as per law.
vashdev
(Querist) 16 November 2014
my aboe quered is still pending.
