Service Tax on Builders wef dtd 1.7.2010

Recently, a Bengali gentleman of Nehru Nagar, Bhilai contacted me and wanted clarification on service tax payment liability of Builder vis a vis Customer. He was eager to get a confirmation of the view that he is not required to pay Service Tax on his Building purchased from a reputed Builder.

The facts of the case is that he has booked his house before dtd 1.7.2010 and prior to this date, Builder was not liable for payment of Service Tax on Construction of Complex Service popularly known as "Residential Construction" Service. The case is a little bit complicated that even though he has booked his house prior to the crucial date of 1.7.2010, a part payment was made after this date and the Builder is obviously demanding Service Tax from the gentleman. Our awakened customer has searched net and has downloaded some article from Taxguru site which emphatically stated that Buildings purchased prior to dtd 1.7.2010 is not liable for service Tax on this category of Service. He was impatient to prove his point and wanted that I should nod my head in his favour but I do not agree with  view of Taxguru site and as contended by our gentleman customer.

My point is that the value received by the Party (Builder) is inclusive of Service Tax. It is as per Section 67 of the Finance Act. When the Builder has received value of service on account purchase of house from the said customer, he is bound to make payment of Service Tax on such value of Service received after dtd 1.7.2010. The Value received prior to dtd 1.7.2010 is no doubt "not taxable" but it is not possible to stretch this date further on the plea of date of booking was prior to this date. Anyway, I could not convince that gentleman.