‘Homebuyers entitled for refund of taxes for cancelled bookings’

CHENNAI: In a relief to the homebuyers, who have cancelled the booking and struggling to get refund of tax amounts paid to builders, the Tamil Nadu Real Estate Appellate Tribunal (TNREAT), while dismissing an appeal filed by promoters observed that the promoter should repay service taxes and others if home buyer mutually cancel the booking apart from giving full refund.

Home buyer Vinny Sawhney booked a flat in Cenotaph Road developed by Cenotaph Developers LLP and Olympia Tech Park Chennai Pvt Ltd, but cancelled the booking due to personal reasons. The price of the flat was Rs. 4.46 crore, the homebuyer paid Rs. 3.63 crore on various dates between April 2016 to June 2017. Following this, the developers repaid Rs. 3.50 crore on various dates and the last payment was made in August 2018.

Claiming the balance amount of Rs. 12.77 lakh, the home buyer approached the adjudicating officer of TNRERA. Hearing the sides, the adjudicating officer directed the developers to repay balance amount with interest.

The developers appealed in front of the TNREAT and argued that the balance amount was already remitted by them towards service tax, swach bharat cess and krishi kalyan cess. They also pointed out that difficulty arose because of the introduction of GST. After the GST regime, it became impossible to for the builders to get the refund from the service tax component from the central board of excise and customs, they argued.

On the other hand, the homebuyer pointed out that the developers ought to have taken steps to get refund from the Central board of excise and customs immediately after the cancellation of the booking.

Hearing both sides, TNREAT Corum of Leena Nair and R Padmanaban observed that having failed to apply for refund of the service tax component by furnishing the necessary details, the developers cannot escape from the liability to pay the balance amount of Rs 12.77 lakh. The person who collects and remits the service tax component to the government can alone claim refund from the government. "Irrespective of the fact that whether the appellant claimed refund of service tax component or not, they are liable to pay the amount to the respondent (homebuyer)," he observed.