29.07.2010 (UNI) In a major reprieve to home buyers and developers, the Bombay High court has granted interim stay on collection of service tax, levied on buildings under construction.

The writ petition, challenging the collection of service tax, was filed by the Maharashtra Chamber of Housing and Industry (MCHI), an umbrella organisation of more than 500 developers.

Speaking at a press conference, Sunil Mantri, President of MCHI, said for the first time ‘we have taken up a matter concerning interest of consumers’.

While admitting the petition on July 23, filed by MCHI against Union of India and others in the matter of Service Tax levied on buildings under construction, a division bench of the Bombay High Court had granted interim stay until further hearing.

The MCHI and others had challenged the constitutional validity of the Finance Act 2010.

The next hearing in the matter has been posted for August 3, Mantri said.

‘Any such levy will increase the cost of the flat and ultimately buyers will have to bear such a cost’, he added.

With the service tax in force from July 1, flat buyers now have to pay approximately 2.5 per cent more as service tax on the total value of their flat. UNI