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kiran (privaate)     04 October 2014

Need legal guidance to deal with builder against service tax

Hello Expert Team,

   I have purchased 2BHK flat on Oct 2011 in Pune. At the time of purchasing, builder offer me a package of 25 lacs and said it is included everything. Beside this only agreement cost i.e. 1.6 lacs either i can pay them or can pay directly at the time of agreement upfront in muncipal office. So i chose to pay them. and we had agreemen in few days and also got the possession in next few year. I have paid all installment regularly on time. and there is no any written notice from builder to me.

Now after 2 years, builder bounce back and saying that I need to pay service tax. so i told him that you have offered me on package basis so it is not my liability to pay service tax. and again you haven't inform me at time of buying so I assumed that it is included in package.

Also this builder has promised us lots of things like 2 decorative entrance gates to building, solar water hitter, fans & lights in each room, exaust fans in every washroom & kitchen, security door. Builder has also promised me 1 year free gym at his gym. But nothing provided

Even after two years, builder hasn't completed even a single pending things including lift generator backup, doors on terrace, no decorative entrance gate, and lots of individual pending work

Now Builder has provided property tax bills to people who are paying service tax (forcefully just to avoid another dispute in future) that is calculated from 1 Apr 2013 and current bills is 18000 to 20000 for 800 build up sq ft..

I want to go with legal procedure to deal with such jerks who hasn't provided proper service still asking for services tax, who haven't kept his word and asking us to pay service tax even though he hasn't inform me earlier, Electricity bills are also getting generated on builder names, water bills are getting generated on commercial rates since builder hasn't form society and transfer it to society.


I request expert team to guide me on net steps to get rid of this jerk on all our issues or service tax, electricity, water, society, completion etc etc. What sort of action i need to take against him and what need to be done before filing case against builder??

Please guide  me.





 7 Replies

Rangee (Lawyer)     04 October 2014

Please check with your tax consultant or auditor regarding who is liable to pay service tax as per Service tax rules. if the statue provides that you have to pay service tax then by executing an agreement with builder your liability is not absolved. I think you have are liable to pay service tax and builder has to generate the bill and collect the service tax from you and deposit the same with government. The statuory Rules cannot be changed by executing agreements. 


1 Like

kiran (privaate)     05 October 2014

Thanks R.S.K. Singh...but while purchasing flat, builder has offered me a package of 25 lacs and clearly said it includes everything that i need to pay to builder. so i own nothing to builder & hence there is no question to pay service tax now. According to service tax rules, purchaser has to pay service tax to builder and in turn builder will pay service tax to Govt at the time of Home agreement. But in my case builder hasn't demand anything at the time of agreement too. & since service tax is applicable on construction since 2010, builder has to have collect it at the time of agreement.

Rangee (Lawyer)     05 October 2014

The liability to pay service tax is independent of every agreement and government cannot be looser because of you and your builder. You should know a bit law before executing the agreement and watch whether he is collecting service tax or otherwise. The crux of issue is that Bill should indicate the service tax has been levied whether you pay or the builder pays is secondary thing. Since the builder is liable to collect the tax from you  if a mention is made in the Bill and return is filed by the builder then you are not liable,since you have no registration with Service tax so you may not be liable. I need some more time to resolve your case by refereing to Service Tax Rules. 


1 Like

kiran (privaate)     05 October 2014

Thank you again. Yes builder has paid the service tax since Dec 2013 was last date for builders to pay service tax. Now builder is collecting it from purchaser. Some purchaser are ready to pay tax but some like me are not ready to pay. Hence builder is not cooperating with them and not giving property bill and other documents etc. I want to file a case against him because he hasn't complete lots of promised things. I know legal matter will be headache for me but in future too he will keep bugging us for water bills, sale deed n all rest processes. I am also having doubt that he has illegal construction since there is hardly a space between 2 buildings  and very less space left around building. so want to get rid of builder now.

Rangee (Lawyer)     07 October 2014

Once the builder has paid the service tax into the Government as per the agreement (  it is presumed that  as per the agreement it is inclusive of service tax) he cannot collect any more tax from you what he is demanding from you may be  some extra money towards other charges which are not legaly recoverable as per the agreement and hence he must be blackmailing that you pay service tax. Please obtain the details secretly the details of  service tax  deposited  by the builder from office under RTI and keep it with you. ask you builder to issue a notice to you requesting for service tax and then show him the details of taxes paid and the builder will be in soup. The rest of issues if any should be resolved with in the frame work of agreement by consulting a local lawyer. 


Hardeep (Business)     11 October 2014

Found this on another thread which could be of use :


"With respect to your builder's delay in charging Service Tax in his initial bill, I would like to point out that in the case of Max New York Life Insurance Co Ltd Vs Insurance Ombudsman and Others reported in [2013] 57 VST 514 (Ker), the Hon’ble HC has held that a service provider who does not disclose the prevailing statutory duties and levies at the time of transaction is not entitled to claim such taxes and levies from the consumer at a later stage during the course of continuing service.

Hence, you may deny to pay the Service Tax on the ground that he has not charged the service tax on the initial bill."

1 Like

kiran (privaate)     11 October 2014

Thanks Hardeep. Yes that is clear to me. So i have refused to pay service tax. But because of that builder is not providing NOC for home load transfer, not providing property tax... in short until & unless, i will not pay him service tax, he will not provide me any documents like NOC, property bill, completion certificate etc..


So how to deal with builder in such situation?? On what basis i can pull him in court??? what sort of legal action need to take???

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