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Case Law Details

Case Name : Maharashtra Chamber Of Housing Industry Vs Union of India (Bombay High Court)
Appeal Number : Writ Petition No. 1456 of 2010
Date of Judgement/Order : 23/07/2010
Related Assessment Year :

The Bombay High Court has granted an interim stay on collection of Service Tax levied on buildings under construction, following a writ petition filed by the Maharashtra Chamber of Housing Industry (MCHI). Mr. Sunil Mantri, President, MCHI, said the chamber had urged the High Court to restrain the respondents (Union Government and others) from taking steps against the members of the Chamber in respect of transactions for construction, development, and sale of immovable property under the various provisions of the Finance Act, 1994 and a new entry as amended by the Finance Act of 2010 in any manner, besides challenging the constitutional validity of the amendment.

According to Mr Mantri, the court had said, “No coercive steps shall be taken against the petitioner for the recovery of Service Tax in relation to the provisions in question, but it is clarified that assessment may proceed in accordance with law.”

This is an interim order and the hearing has been posted to August 3, 2010.

The text of the decision is reproduced below:


Writ Petition No. 1456 of 2010




V C Daga And S J Kathawalla JJ.,

Dated: July 23, 2010

Appellant rep by: Mr.Rafique Dada, Senior Advocate i/b. Parimal Shroff & Co

Respondent rep by: Mr.R.V.Desai, Senior Advocate with Mr.R.B.Pardeshi

Service Tax – Construction Service – Constitutional Validity of Finance Act 2010 Amendment challenged – No coercive steps till next hearing: Notice issued to Attorney General of India




Perused petition.

2. Arguable questions are raised in the petition with regard to the constitutional validity of Section 65(30a) read with Section 65(105)(zzp) and Section 65(105)(zzzh) read with Section 66 of the Finance Act,1994, as amended by the Finance Act, 2010 which needs consideration.

3. Rule.

4. Since the constitutional validity of the aforesaid provisions has been challenged, issue notice to the Attorney General of India along with respondent Nos.2 & 3, returnable on 3rd August,2010. In the meantime, until next date of hearing , no coercive steps shall be taken against the petitioners for the recovery of service tax in relation to the provisions in question, but it is clarified that assessments may proceed in accordance with law.

5. Mr.R.V. Desai, Learned Senior Counsel waives service on behalf of respondent Nos.4 to 6.

5. To be heard along with Writ Petition (L) No.1476 of 2010. Stand over to 3rd August, 2010.

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  1. Ashish says:

    The clarification is given at “”.
    (i) For the period prior to 01/07/2010: construction service provided by the builder/developer will not be taxable, in terms of Board’s Circular No.108/02/2009-ST dated 29.01.2009.
    (ii) For the period after 01/07/2010, construction service provided by the builder/developer is taxable in case any part of the payment/development rights of the land was received by the builder/ developer before the issuance of completion certificate and the service tax would be required to be paid by builder/developers even for the flats given to the land owner.

  2. Ashish says:

    In the decision on Monday, January 23, 2012, 9:26, it is mentioned that “imposed 2.5% service tax on construction of flats and shops with effect from July 1, 2010.” I want clarification whether this means that those who have registered their flat before July 1, 2010 do not have to pay this tax. Or they have to pay the tax on the amount which was given to builder after July 1, 2010.
    e.g. if only 10% (say Rs.1lac)amount of the flat cost (Rs.10lac ) is given after July 1, 2010 to the builder then we have to pay tax of 2.5% (Rs.2500 )on that 10% amount. We do not have to pay any tax on that 90% amount paid before July 1, 2010. Is this right?

  3. Satish says:

    Can anyone confirm whether property service tax is applicable to flat which were purchased in year 2009.
    I think this pending court decision is for those flats which were purchased in year 2010 onwards.
    Please clarify.

  4. Anil Kumar says:

    All likeminded people who hv purchased property should join together to fight the imposition of VAT @5% by the Govt. This is really creating a big hole in our pockets. Although the imposition has been stayed by the Hon High court on the basis of the case filed by MCHI, we the common people are not aware on the developments with respect to this imposition. The builders are demanding 5% of the sale value as FD which may be refunded if the case is in favour of the builder. There is a lot of uncertainity in the decision and ambiguity in the imposition as such. I would recommend all customers who are suffering to network with each other and file a writ petition with the govt with proper legal recourse.

  5. Prabhas says:

    Please update us on the latest status of the service tax case subjudice with the Hon.High court. No accurate information is flowing through, which is causing confusion among the buyers. please advice on the current status at the earliest.

    Thanks in advance

  6. Poonam says:

    Can u please update on the 8th jul 2011 hearing… Is the final decision out yet. And if we get a refund will it be from the builder or the government..?

  7. Harendra Kumar says:


    please send updates in the regard of Building construction related issue i.e. service tax and any oter taxes we are engaged in the business of construction of r buildings.

  8. Satish says:

    Hi, For Service Tax on my flat,I have submitted a blank cheque with an Affidavit cum indemnity bond to my builder. Please let me know once the decision of court is finalized. I think it is still subjudice.

  9. Anil B. Palaskar says:

    I come to know that the stay imposed in the Bombay High Court against the levy i.e. service tax imposed on property under construction after July’2010 has been cleared, and now the new buyer has to pay the service tax. Is it true, please confirm to me.

    Thanking you.

  10. Samir. Malhotra says:

    Thanks Adv. Rathod Sir for sharing valuable information & your opinion. But can you tell us what shall be the outcome in the matter. Please keep us posted.

  11. Adv. R. P. Rathod says:

    Service Tax made applicable on under Construction Buildings, has been stayed by the Hon’ble High Court, Mumbai. The Next date fixed for hearing in the matter is on 8th July 2011 – For Hearing and Final Disposal (OS Matters)

  12. Rakesh Thakur says:

    Dear All,

    Can any one confirm whether the service tax is applicable on the under construction flat as my builder is demanding the same.

  13. Chandrashekhar Deore says:

    No One is giving answer, since no one has updated it means, better to hire Adv/Consultant. because builders started demanding Service tax, otherwise they are not giving possesion.

    Chandrashekhar Deore

  14. sanjay s patel says:

    pls give me latest status of mumbai high court decision for service tax on residential complex property , now what builder can collect service tax from members or not?

  15. Ashok Sajwan says:

    Pl. update latest status of Mumbai High Court decision for service tax on residential property. Also can a builder raise demand for collection of service tax or not ?.

    Kindly confirm the same.

    thanks regards

  16. Arun Gaur says:

    The hearing has been done on 3rd August and the Next hearing date was 24th September. Both the hearing can be found at the Bombay High court website.

    In the DB realty vs. the UOI, Bombay high court has given the next date for hearing on 24/11/2010

  17. Ram T Singh says:

    Pl. update latest status of Bombay high decision for service tax on residential property. Also can a builder raise demand for collection of service tax or not.

  18. Vivek says:

    Is it applicable for all the builders any where in India or only on the petitioner as the court has said

    “No coercive steps shall be taken against the petitioner for the recovery of Service Tax”

  19. Advocate R. P. Rathod says:

    On 3rd August 2010 – the Writ Petition is duly admitted.

    The Next date for the matter is fixed for 24-09-2010 – Rules for Argument in the matter – till that date the service tax is stayed.

  20. Nitin Ramchandani says:

    Pls let me know about any development in nearing future in connection with the service tax on residential construction.I strongly oppose the imposition of service tax ,as it will break the dreams of lacs of peoples to own thir house.

  21. Sandeep says:

    I request u to please send me result of next hearing on August 3 on my e-mail ID I feel to prove that i join with tax guru for develop my knowldge in this feel

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