Service Tax – Big Blow to Builders - High Court Dismisses Writ Petition
NETIZENS may recall Finance Act, 2010 added this ‘Explanation' to sub-clauses (zzq) and (zzzh) of sub-section (105) of Section 65 of Finance Act, 1994
"Explanation. - For the purposes of this sub-clause, construction of a complex which is intended for sale, wholly or partly, by a builder or any person authorised by the builder before, during or after construction (except in cases for which no sum is received from or on behalf of the prospective buyer by the builder or a person authorised by the builder before the grant of completion certificate by the authority competent to issue such certificate under any law for the time being in force) shall be deemed to be service provided by the builder to the buyer;"
This had been challenged in the Bombay High Court by about 800 members of the Maharashtra Chamber of Housing Industry and the High Court had granted an interim relief – 2010-TIOL-526-HC-MUM-ST.
Mumbai Service Tax Commissioner Sushil Solanki, had advised the builders to collect and deposit the Service Tax with the Department or Court, in their own interest, because in case they lost the writ, they would be saddled with huge liability. It seems many builders heeded to his advice and deposited over Rs. 180 Crores with the Court. The Department is in need of huge revenue – they approached the High Court for withdrawing the amounts deposited in Court and last week, the High Court allowed the Department to withdraw the money.
Now, the High Court has dismissed the writ petitions filed by the builders and this comes as a tonic to the Revenue in the last quarter of the fiscal, when they want to collect as much revenue as possible by any means.
We will bring you the High Court order as soon as possible.