B G Parameshwara Vs Bengaluru Development Authority (Karnataka High Court)
Karnataka High Court held that if transaction of purchase of residential flat entered into before completion of construction and part of sale consideration paid prior to completion certificate, the same would amount to supply and accordingly, GST/ service tax is payable on the same.
Facts- By a notification dated 09.08.2017 the respondent- BDA had announced a scheme for residential apartments consisting of various sizes. Petitioner had applied for an allotment of two bedroom apartment in the said residential project of the respondent- BDA at Valagerahalli Phase 6. That petitioner was provisionally allotted an apartment bearing Flat No.B1-501 in terms of an Allotment Certificate dated 09.04.2018 and the petitioner had paid the entire sale consideration in a total sum of Rs.44,91,250/-.
Notably, respondent- BDA had issued an endorsement to the petitioner on 23.08.2019 calling upon the petitioner to pay a sum of Rs.5,28,000/-towards the service Tax (GST) under the provisions of the Central Goods and Services Tax Act, 2017 fee and to produce challan as a proof for having made the said payment. Petitioner in response had made a representation informing the respondent-BDA that, what was offered to him was a full completed apartment and there was no pre-construction agreement between the petitioner and respondent-BDA. As such, there was no question of payment of any service tax. Non-consideration of the same and the demand made by the respondent- BDA for payment of ₹5,28,000/- gave rise to the writ petition.
