Claim Service Tax from Department of service tax & refund to buyers- NCDRC tells Developer

Update [12/12/2016]: The Union government has challenged the Delhi Gigh Court order in the Supreme Court. The Delhi HC order is not set aside yet and SC will now decide the ultimate fate of this complaint.

The Delhi High Court in WPC No. 2235 of 2011, Suresh Kumar Bansal Vs. Union of India & Ors. and connected matters had decided that Service Tax couldn’t be charged in respect to the contracts entered into with the builders or developers for the purchase of apartments/flats. You can read more about the case at No Service Tax on buying under construction flats, rules Delhi High Court and a follow-up story on Exclusive – decoding the Delhi HC judgement on Service Tax refund on apartments

Ever since this news broke out, people from across the country have been sending us queries on how to claim Service Tax refund. As far as we know, the Government of India, Department of Service Tax is yet to come out with any notification on this matter.

Meanwhile, the Sunrise Green Residents Welfare Association filed a case against Jaipuria Infrastructure Developers Pvt. Ltd. in the NCDRC. The association sought the refund of Service Tax as directed by the Hon’ble High Court of Delhi. Association contended that they fear the developer has not deposited the Service Tax collected from the buyers to the concerned authorities.

The NCDRC has directed that the developer should apply to the Govt of India for the refund of Service Tax and it should be passed on to the individual buyer along with the interest if any. The court said the developer shall be liable for the consequences if the Service Tax was not deposited by them as claimed in the affidavit.

Court’s Order

After extensive arguments, lasting over two hearings, the complaint is disposed of in terms of the following consent order:

The developer, namely Jaipuria Infrastructure Developers Pvt. Ltd., shall, in view of the decision of the Hon’ble High Court of Delhi dated 03.6.2016 in WPC No. 2235 of 2011, Suresh Kumar Bansal Vs. Union of India & Ors. and connected matters, apply to the Government of India, Department of Service Tax, within six weeks from today, for refund of the amount of service tax which it has collected as reimbursement of the service tax from the flat buyers, in the project namely Jaipuria’s Sunrise Greens, Plot No.12A, Ahimsa Khand, Indirapuram Ghaziabad, giving break-up of the amount recovered from each flat buyer;

If and when Government of India, Department of Service Tax refunds the aforesaid amount of service tax to the developer or to the contractors / agencies through whom it was deposited by the opposite party with the Service Tax Department, the said amount shall be disbursed to the individual flat buyers, along with interest, if any, which may be received by the opposite party from Service Tax Department.  The payment, in that case, shall be made within four weeks of its being received from the Service Tax Department.  It is recorded that the case of the developer is that the service tax was paid by it through the contractors, whom it had employed for execution of different works in the aforesaid project;

If so required by the developer, the flat buyers and / or the complainant society shall join in seeking refund from the Service Tax Department of Government of India;

The individual flat buyers shall also execute such documents, if any, as may be required by the Service Tax Department of Govt. of India for the purpose of the refunding the amount of service tax to the opposite party or to the contractors through whom the said tax was deposited.

If it is found at a later date that any part of the service tax collected by the opposite party from the flat buyers was not deposited with the Service Tax Department through the contractors, as is claimed by it, the opposite party shall be liable for the consequences, resulting from making a false statement before this Commission.

CONSUMER CASE NO. 142 OF 2009


The way ahead

The Logical Buyer’s team suggests that the homebuyers formally write to their developer to claim the refund from the Service Tax Department and refund the same to the homebuyers.

8 thoughts on “Claim Service Tax from Department of service tax & refund to buyers- NCDRC tells Developer

  • September 21, 2016 at 12:26 pm
    Permalink

    Is this applicable across India or only related to Delhi State?

  • September 22, 2016 at 8:08 pm
    Permalink

    Indirect benefits are for all.

  • December 16, 2016 at 12:05 am
    Permalink

    Is the order valid only for apartments / flats or does it also cover the individual villas /houses that have been constructed and handed over to the owner by the PROMOTERS / Builders

  • December 16, 2016 at 6:35 pm
    Permalink

    If the cost of the land was included in the agreement itself, it does apply to individuals.

  • December 19, 2016 at 1:03 am
    Permalink

    Whats the procedure to claim Service tax ?

  • December 19, 2016 at 2:20 pm
    Permalink

    This order has already been passed and confirmed or Supreme Court will decide and pass the ultimate judgement ? Please suggest

  • December 20, 2016 at 10:00 pm
    Permalink

    Govt. has challenged this in SC and SC is yet to admit the case.

  • December 20, 2016 at 10:01 pm
    Permalink

    Govt. has challenged this in SC and SC is yet to admit the case.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.