Maharashtra Chamber of Housing Industry is contemplating filing a writ petition in the court to challenge the service tax levied on buildings under construction.

The state has the exclusive power to levy taxes on land and buildings in terms of Entry 49 of List ii to the seventh schedule of the constitution, by amending the provision to levy service tax on transaction of sale of immovable property is seem to be unconstitutional.

Sunil Mantri, President, MCHI said that the centre and the state have separate domains in respect of its taxing powers under the constitution.

Mantri added, “The sale of an unit in the complex as per the settled law of transfer of property is not a service accordingly sale by the builder should not be treated as a service since service tax is levied ultimately on the property this would be a tax on transfer of immovable property only.”

Mantri felt that such levy will increase the cost of the flat and ultimate buyer will have to bear such cost on the one side national housing and habitate policy 2007 envisages for affordable housing for all, the proposal to levy of service tax irrespective of any kind of house (even EWS or MIG) would run counter to the policy of the government.

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