Skip to main content

Builders can't pass on VAT to flat buyers: Supreme Court

Apex court verdict upholding Bombay high court ruling is a jolt to developers in the state.


This is good news for those who have bought property between June 2006 and March 2010. The Supreme Court on Thursday said Value Added Tax (VAT) cannot be imposed on buyers.

This has come as a jolt to builders in the state who wanted 1% tax instead of 5% imposed by the state government in 2006. They were recovering the VAT amount from buyers.

Justice RM Lodha upheld the Bombay high court order that VAT cannot be imposed on buyers.

“The value of goods which can constitute the amount to be taxed has to be the value of the goods at the time of incorporation of goods in the works even though property in goods pass later. Taxing the sale of goods element in a works contract is permissible even after incorporation of goods provided tax is directed to the value of goods at the time of incorporation and does not purport to tax the transfer of immovable property,” the court observed.

The court also directed the Maharashtra government to bring clarity in Rule 58 (1-A) — relating to VAT rules.

“We respect the Supreme Court verdict but we will study the judgment only after we get a copy. The taxes imposed by the government have always been passed on to the buyer. We will not pay from our pocket,” said Sunil Mantri, vice president Naredco, CMD Mantri Realty.

“Imposing 5% VAT under section 42(3) of MVAT on flat purchased during June 20, 2006, to March 2010 would impact consumers. The SC verdict will lead to disputes between developers and buyers,” he added.

Builders’ association CREDAI had approached the apex court after the Bombay high court rejected their plea to impose only 1% VAT. In 2006, the state government imposed a VAT of 5% on constructions made between 2006 and 2010. The move resulted in an additional tax liability on flats, shops and bungalows sold by developers between June 20, 2006, and March 31, 2010.

“Whatever VAT amount the developer has recovered, will now have to be returned to buyers with interest,” said a consumer activist. “If they don’t, then we will move court.”

Advocate general’s stand

The apex court recorded the statement of advocate general of Maharashtra that clearly stated that implementation of Rule 58(1-A) shall not result in double taxation and in any case all claims of alleged double taxation will be determined in the process of assessment of each individual case

Article referred: http://www.dnaindia.com/mumbai/1894455/report-builders-can-t-pass-on-vat-to-flat-buyers-supreme-court

Comments

Post a Comment

Most viewed this month

Amendment of plaint under Order VI Rule 17 of the CPC explained

Cause Title :  Ganesh Prasad vs Rajeshwar Prasad, SLP (C) NO. 28377 OF 2018, Supreme Court Of India Date of Judgment/Order : 14/3/2023 Corum : J. B. Pardiwala, J. Citied:  Revajeetu Builders and Developers v. Narayanaswamy & Sons and Others reported in (2009) 10 SCC 84 North Eastern Railway Administration, Gorakhpur v. Bhagwan Das reported in (2008) 8 SCC 511 P.A. Jayalakshmi v. H. Saradha and Others reported in (2009) 14 SCC 525 B.K. Narayana Pillai v. Parameswaran Pillai and Another reported in (2000) 1 SCC 712 A.K. Gupta and Sons Ltd. v. Damodar Valley Corporation reported in AIR 1967 SC 96 Life Insurance Corporation of India v. Sanjeev Builders Private Limited and Another, Civil Appeal No. 5909 of 2022 dated 01.09.2022 Firm Sriniwas Ram Kumar v. Mahabir Prasad and Others reported in AIR 1951 SC 177 G. Nagamma and Another v. Siromanamma and Another reported in (1996) 2 SCC 25 Praful Manohar Rele v. Krishnabai Narayan Ghosalkar and Others reported in (2014...
Post a Comment
Read more

Owner of vehicle is not expected to verify the genuineness of the driving license before appointing a driver

Cause Title : Rishi Pal Singh Versus New India Assurance Co. Ltd & Ors., Civil Appeal No. 4919 Of 2022, The Supreme Court Of India Date of Judgment/Order : July 26, 2022 Corum : Hemant Gupta; J., Vikram Nath; J. Background the truck owned by the appellant met with an accident. The owner deposed before the court that before employing the driver, he had taken his driving test and that he was driving the vehicle satisfactorily and  that the driver was employed with him for 3 years before the date of the accident. He produced his driving license. This was reaffirmed by the driver who deposed that the driving license was obtained from the driver and it was issued from Nagaland, but no such license was produced on record. Both the Motor Accident Claims Tribunal and the High Court have held that the owner has alleged that the driver had a driving license from Nagaland but the same was not produced and therefore, the Insurance Company is entitled to recover the awarded amount...
Post a Comment
Read more

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more