Case law, Tamil Nadu land law
Appeal No. 130 of 2021
The Tamil Nadu Real Estate Appellate Tribunal, Chennai issued the order in Appeal No. 130 of 2021 on 17 June 2022, concerning whether developers must refund a Service Tax component after a flat booking was cancelled. The appeal challenges a Tamil Nadu Real Estate Regulatory Authority Adjudicating Officer's direction to refund Rs.12,77,539 with interest, compensation and legal expenses. The supplied text ends before the Tribunal's final decision on the appeal.
What the appeal concerns
Appeal No. 130 of 2021 was filed by M/s. Cenotaph Developers LLP and M/s. Olympia Tech Park Chennai Private Limited against Vinny Sawhney. It challenges the Adjudicating Officer's order in C.C.P. No. 264 of 2019, dated 19 August 2021.
The dispute arose from the respondent's booking of a flat in the project named "The Good Wood Residence" at No. 3, Cenotaph Road, Chennai. The respondent paid Rs.3,63,36,841 towards the booking and construction. After the booking was cancelled, the appellants repaid Rs.3,50,59,302 but retained Rs.12,77,539 described as the Service Tax component.
Earlier direction under challenge
The Adjudicating Officer attached to the Tamil Nadu Real Estate Regulatory Authority directed the appellants to pay, jointly or separately:
- Rs.12,77,539 as the balance refund.
- Interest at 10.25 per cent.
- Rs.50,000 as compensation for mental agony.
- Rs.25,000 towards legal expenses.
The developers appealed against that direction to the Tamil Nadu Real Estate Appellate Tribunal, Chennai.
Main arguments and evidence
The appellants argued that the disputed Rs.12,77,539 had already been remitted to the Central Board of Excise and Customs. Their stated breakdown was:
- Rs.11,92,369 towards Service Tax.
- Rs.42,585 towards Swach Bharat Cess.
- Rs.42,585 towards Krishi Kalyan Cess.
The appellants also argued that the introduction of the Goods and Services Tax regime made it impossible to recover the earlier Service Tax payment. They claimed that a payment received by the respondent on 13 August 2018 was accepted as full and final settlement.
The respondent argued that only the appellants, as the Service Tax assessee, could seek a tax refund after cancellation. According to the respondent, the appellants' failure to seek that refund should not reduce the amount returned to the buyer.
Tribunal proceedings
The Tamil Nadu Real Estate Appellate Tribunal, Chennai accepted additional documents filed by the appellants as Exhibits B1 to B8, subject to proof and relevance. The Tribunal framed the main question as whether the appellants were required to repay the Service Tax component after cancellation. The supplied text does not include the Tribunal's final answer or the final outcome of Appeal No. 130 of 2021.
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Common questions
Did the Tribunal finally order the developers to refund Rs.12,77,539?
The supplied text does not include the Tamil Nadu Real Estate Appellate Tribunal's final decision. It only records that the Adjudicating Officer had ordered the refund with interest, compensation and legal expenses.
Why did the developers say the balance could not be refunded?
The developers said Rs.12,77,539 had already been remitted as Service Tax, Swach Bharat Cess and Krishi Kalyan Cess. They also argued that the introduction of the Goods and Services Tax regime made recovery of that tax amount impossible.
Who did the buyer say was responsible for claiming the tax refund?
The buyer argued that the developers were the Service Tax assessee and therefore were the only parties able to claim a refund from the Central Board of Excise and Customs.
What additional material did the Tribunal accept?
The Tamil Nadu Real Estate Appellate Tribunal accepted the appellants' additional documents as Exhibits B1 to B8, subject to proof and relevance.
