Refund of Service Tax while cancelling the Flat

615 votes

Many times, a customer ,at his own will, surrenders his booking to the concerned builder and the builder refunds either the entire amount paid by the customer along with Service Tax or he deducts stipulated amount in the name of ‘Cancellation Charges’ and refunds the remaining amount along with Service Tax. On the other hand, Cancellation of Flat takes place at the initiative of the builder consequent upon the default of the customer in making payment of the agreed installment(s). In case of cancellation, usually the builder deducts some amount as cancellation charges of the total amount paid by the customer and refunds the remaining amount to the defaulting customer. Thus, end result of both the surrender and cancellation is same.

In both the situations of surrender and cancellation, the concerned builder can make adjustment of excess payment of Service Tax in terms of Rule 6(3) of Service Tax Rules, 1994

Advocate Siddhant Sharma LawRato

520 votes

Hi yes the builder has to refund the service tax to the consumer with interest. In case of failure to do so you can approach the consumer court and file a case against the builder for not following the norms of the Hon'ble supreme court

LawRato LawRato