Vinay (Engineer) 13 August 2011

Servicetax refund-residential apartment-bangalore

Hi,

First, Iam very glad to see this lawyersclub forum very informative and interactive and its indeed catering to the needs of lot of helpless people who want to know the regulations of law. Thanks Again.

My case goes like this - I am looking for an legal opinion/advice on getting refund of service tax which has been charged while purchasing a flat in Bangalore( in 2007).The builer has specifically stated the service tax head both in the sale agreement and sale deed.A letter mentioning the amount has also been issued.This claim of service tax refund is basing on the " Circular No. 108/02/2009 – ST " (as stated above) issued by Govt of India on 29th Jan to clarify all the questions related to service tax. Further to this, there are 12 buyers in total who has paid service tax in a similar way. Therefore request you to let me know whether we hold good to get a refund or not. If yes, please state the next steps as well

Thanks & Regards
Vinay

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4 Replies

Sanjeev (Lawyer) 13 August 2011

The Answer to your Query lies in the answers to the below:

Ques1- whats the date of completition of construction of the flats- as per the certificate issued by anyone as below:

(i) architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 1972); or

(ii) chartered engineer registered with the institution of Engineers (India); or

(iii) licensed surveyor of the respective local body of the city or town or village or development or planning authority;

who is authorized under any law for the time being in force, to issue a completion certificate in respect of residential or commercial or industrial complex, as a per condition for its occupation

Quest2- was the payment made in lumpsum after completition or was paid in instalments please clarify the dates of payment

Sanjeev (Lawyer) 13 August 2011

The refund of service tax paid to the Government can be claimed only by the person who has paid the service tax. The assessee or builder claiming refund can follow the below procedure:

Submission of application in prescribed Form-R in triplicate to the jurisdictional Assistant Commissioner ACCE or DCCE before the expiry of one year from the relevant date. (Date of Circular- 29th January 2009)
It should be signed and pre-receipted with revenue stamp.
The application in Form R shall have valid grounds for refund.
The applicant should seek a personal hearing.
Proof should be submitted that refund would not result in unjust enrichment. Invitation for authorities to verify the accounts maybe attached. A Charted Accountant (CA) certificate that the Service Tax has not been passed on may also be obtained and submitted where the CA clearly specifies the books, records, payments received verified.

Form R is enclosed. Th e refund should have been claimed within one year and in this case within one year of the circular date.

Attached File : 115844 202060 6 form r.pdf downloaded: 140 times

Vinay (Engineer) 17 August 2011

Thanks Sanjeev for your timely response.

(i) Ques1 Answer: I havent got any completion certificate from the builder so far.

(ii)Ques2 Answer: The service tax is paid in lumpsum totalling Rs 90,000(appx) after completion and before taking possession on June 2007 (appx). Hope this information suffice. Pls do let me know where do i stand on the refund.

Thanks & Regards

Vinay

srsubramanian (finance taxation manager ) 12 November 2012

S.R. SUBRAMANIAN

F-701, Rohan jhoroka,

Behind HAL old airport

Yamalur, Bangalore 560037

Contact: +91 9449037779

E-mail: srsconfirm@gmail.com, ushasrs@gmail.com, lakshmisrs@rediffmail.com

This is with reference to the above captioned subject

there are about 100 people those who have purchased the appartments have paid the service tax to the service tax Department through the developer in 2007-08 & 2008 – 09, based on the demand given by the developer. The developer also has deposited the service tax to the government. Later, there was a clarification through a Govt. circular that the service tax in connecting with the construction of residential complex is not applicable. Based on this service tax position prior to 1st july 2010 reg, there is a clarification which i could able to find out thru website issued by Commissioner of Central Excise, Pune-III, Trade Facility No. 1/2011, dated 15-2-2011 stating that

With effect from 1-7-2010 (the Finance Act, 2010), an explanation has been inserted below sub-clause (zzzh) of section 65(105) to clarify that unless the entire consideration for the property is paid after the completion of construction (i.e. after issuance of completion certificate by the competent authority), the activity of construction would be deemed to be a taxable service provided by the builder/promoter/developer to the prospective buyer and the service tax would be charged accordingly .
And he clarifies that:
(a) Where services of construction of Residential Complex were rendered prior to 1-7-2010 no Service Tax is leviable in terms of para 3 of Boards Circular number 108/02/2009-S.T., dated 29-1-2009. The Service of Construction of Residential Complex would attract service tax from 1-7-2010. Despite no service tax liability, if any amount has been collected by the builder as "Service Tax" for Services rendered prior to 1-7-2010, the same is required to be deposited by the builder to the Service tax department. Builder can not retain the amount collected as Service Tax.
(b) For services rendered after 1-7-2010 for which payment has been or is made after 1-7-2010, service tax is leviable and builder is liable to deposit the service tax to the service tax department. The only exception to this is provided within the parenthesis () in the "Explanation" in para 3.
(c) For services rendered after 1-7-2010 for which payment was made prior to 1-7-2010, service tax has been exempted by the Govt. based on documentary evidence vide notification no. 36/2010-S.T., dated 28-6-2010 as amended. Therefore, this benefit can be availed by builders on the basis of documentary evidence.

Commissioner of Central Excise, Pune-III, Trade Facility No. 1/2011, dated 15-2-2011

based on this I had submitted all the papers to the Service Tax commissioner's office at Lalbaugh road seeking refund of Service tax paid through the builder.

I was called for a personal hearing and could meet Shri C V Mohan Kumar, Assistant Commissioner, Service Tax, Bangalore, two weeks ago. On 31.10.2011 I have received an order rejecting the refund claim filed by me on the grounds that -

".....from the above documents it is clear the Right , Title and interest in land and construction will remain with the Vendors/builder/developer until the delivery of possession of the residential unit. The developer has to hand over the ready build flat to the purchaser after undertaking all the services that go in completionj of the habitable flat. The activity of building a residential unit oin an earmarked plot in the complex and making construction there on as per the plan, design and specifications, obtaining various permissions and providing amenities as contemplated by various clauses of the agreements entered into, apart from the provisionn of common infrastructural facilities before handing over the building to the customers would undoubtedly constitute 'SERVICE PROVIDED OR TO BE PROVIDED" by the developer."............."In the construction and allied services, what must be noted is referable to the agreement with the prospective buyer and cannot be viewed in isolation...I am of the opinion that Board's circlar No.108/02/2009 dated 29.01.2009 is not applicable in the instant case."...."the services rendered viz. construction services by the Developer are taxable under Sectiion 65 (105) (zzzh) of Finance Act 1994 .......I hereby reject the refund claim of Rs.....under Section 11B of Central Excise Act 1944 which is made applicable to Refund of Service Tax under Section 83 of Financing Act 1994".

I have also been intimated that an appeal must be filed within 3 months from the date of communication of the Order.