Dear Sir

I took a housing loan for Rs 26 lakhs from LIC HFL in June 2012 out of which Rs 19.5 lakhs was disbursed in that month itself towards a flat purchase in Trichy Tamil nadu.

Now the flat promoter is asking me to pay Rs. 20085 as Service Tax towards the payments he received from the loan agency as cheques since july 2012.

His calculation is :

Total payment by LIC HFL from July 2012: Rs 26 – 19.5 lakhs = Rs. 6.5 lakhs

Portion to be considered for Service tax = 25% of Rs 6.5 lakhs = Rs. 1,62,500

Service Tax on the amount = 12.36% of the above = Rs 20,085

Should i pay this service tax to the flat promoter as he claims that all payments made after june 2012 towards flat purchase are necessarily to be paid Service Tax. Is he making a correct claim or is he trying to cheat ?

In case if he is cheating, what clauses / references should i quote to counter his argument?

Regards

Sarath