Vidarbha Taxpayers Association (VTA) has urged sales tax department to issue a clarification on levy of value added tax (VAT) on flats that were under construction during the period June 20, 2006 to March 31, 2010.
VTA members met joint commissioner Mohammad Naimuddin and submitted a bunch of documents that indicated ambiguities. The association has also sent copies of these documents to chief minister Prithviraj Chavan, finance minister Jayant Patil and sales tax commissioner Sanjay Bhatia.
VTA president, J P Sharma, told TOI that state government's decision to levy 5% VAT on flats that were under construction during the period June 20, 2006 to March 31, 2010 was challenged by many builders in Bombay high court (HC). However, the HC dismissed the petitions.
"The order specifically states that the sales tax assessing officer could decide whether a particular type of development contract was a work contract. VAT would not be applicable if it was not a work contract. As the work contract is not defined this would lead to numerous litigations," Sharma stressed.
VTA secretary T S Renu said that sales tax department was doing double taxation. "The department has adopted a practice wherein the building material suppliers' assessment was done after he submitted the details of the tax paid. All the suppliers had submitted to the department that they had not paid any tax. This has led to a situation wherein builders were doubly taxed for building material," he claimed.