Court’s big decision: Now additional GST cannot be collected

– Advertisement –

If you have bought a flat and have been asked to pay more tax later, then this news is a relief for you. In an important decision, the Madras High Court has said that the Tamil Nadu Housing Board (TNHB) can no longer charge an additional 5% GST from flat buyers who have already paid the full amount “including tax”.

– Advertisement –

Some home buyers had filed a petition in the court saying that they had bought a flat in TNHB’s RERA-registered housing scheme. It was clearly written in the advertisement and allotment letter that GST is included in the price, but later TNHB demanded an additional 5% GST.

What did the court say- Justice D. Bharatha Chakravarty said in his judgment that when the price of the flat was already stated including GST and the buyers have paid the full amount, then the board cannot demand any additional tax now. TNHB will have to register the sale deed without delay. Those who have paid additional GST “in protest” will have to return that money.

What was TNHB’s argument- The board said that this additional tax was necessary in “extraordinary circumstances” and it was done in “public interest”. But the court said that TNHB had already added 9% profit to the price of the flat, and if there is any GST error then it will be deducted from the profit—not recovered from the customers.

Despite being a government agency, TNHB cannot go back on its promise. The terms of the contract should be clear and “whatever is promised, must be fulfilled. If there is a mistake in GST calculation, then the builder should deal with the tax department himself, it is wrong to put the burden on the customer.

Impact on the real estate sector across the country-Tax expert Sandeep Sehgal says that this decision gives a clear message to real estate companies – if you have taken ‘price including GST’ from the customer, then it is unfair to ask for anything more later, whether you are a private company or a government institution.

Before buying a house, read the advertisement and allotment letter carefully – what is written “including GST”?

Government institutions are also bound by law, and they too cannot go beyond the contract and make any additional demand. This decision can become an example for home buyers across the country.

– Advertisement –