Kolkata: The West Bengal Real Estate Appellate Tribunal has ruled that a real estate promoter is not required to refund Goods and Services Tax (GST) already paid to the government to a flat buyer when an agreement for sale is cancelled due to the buyer’s default.
The tribunal held that such GST is refundable to the buyer under the GST law through the prescribed statutory mechanism, and not by the promoter.
The ruling came while deciding two appeals filed by P.S. Group Realty Private Limited against orders of the West Bengal Real Estate Regulatory Authority (WBRERA) in a dispute over a flat in the developer’s ONE-10 residential project at New Town, Rajarhat. The total agreed consideration for the flat was Rs 88.26 lakh.
The dispute arose after the allottee paid Rs 9.17 lakh but failed to make further payments as per the agreed schedule. After repeated demands, the promoter terminated the agreement.
The regulator permitted cancellation and directed a refund after deducting the booking amount of Rs 1 lakh.
In execution proceedings, the regulator held that the promoter had wrongly deducted Rs 4.20 lakh paid as GST and imposed a Rs 2 lakh penalty for alleged non-compliance.
On appeal, the tribunal examined the agreement, payment records and tax documents. It noted that the promoter had raised tax invoices in accordance with the Central GST law and deposited Rs 4.20 lakh with the tax authorities, and that the allottee did not dispute the invoices.
The tribunal held that once tax invoices are issued, the promoter is under a statutory obligation to pay GST, regardless of later default. It found that the regulator failed to consider GST provisions and clauses of the model agreement, making the transaction subject to laws in force.
Holding that the GST paid by the promoter on behalf of the buyer is refundable to the buyer by operation of law under the Centre’s procedure, the tribunal ruled that the promoter cannot be compelled to refund the same amount again. It modified the regulator’s orders to allow deduction of both the booking amount and GST, set aside the penalty, and directed refund of any deposited penalty with interest.
The promoter was also directed to assist the flat buyer in seeking GST refund from the tax authorities.