MUMBAI: In a major reprieve to home buyers and developers, the Bombay High Court has granted an interim stay on writ petition challenging collection of service tax levied on buildings under construction until further hearing.

The writ petition has been moved by Maharashtra Chamber of Housing Industry,  an umbrella organisation of more than 500 developers.

While admitting the petition on July 23, filed by MCHI against the Centre and others in the matter of ‘Service Tax levied on building under construction", a division bench of the Bombay High Court comprising Justice V C Daga and Justice S J Kathawala have granted interim stay until further hearing.

The MCHI and others through their writ petition challenged the constitutional validity of the Finance Act 2010 seeking to amend the Finance Act 1994 introducing and explanation to section 65 (105) (zzq) and 65 (105) (zzzh) to introduce the Service Tax concept of ‘Deemed Service” for any commercial or industrial construction of residential complex done prior to obtaining completion certificate. Next hearing in the matter along with other companion petitioners is posted for August 3.