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GST recovery by builders on delayed under construction building

This petition had 356 supporters

There are innumerable buyers who have invested their life saving for purchase of dream flat/home. In many cases even after 8 to 10 years, the construction is not yet complete. Hence such flat buyers are already victims due to builders playing truant and have been suffering financial loss as well as mental agony. The taxes on sale of flats - viz VAT, & Service tax has been passed on to under construction flat buyers, although had the flat been delivered by due date of possession, such additional costs would not have burdened such harrowing flat buyers. Now with introduction of GST,government has proposed to levy 12% GST applicable on the under construction buildings also. Builders who are required to pay such levies will certainly pass on their liability on the flat buyers. Thus there is undue/unjustified burden on flat buyers (who are awaiting for their dream homes even after the possession date as per agreements are over) for following reasons:

1. Such flat buyers are already victimised by the builders and are in mentally shattered because even after investing their life savings, the dream homes are still out of bound. Govt. ahas already accepted this fact & therefore has come out with RERA.

2. Such flat buyers have already paid VAT (where flats have been registered before 01.04.2010 @ 5% (some builders have not passed on benefit of the land & the standard deduction for labour cost), & @ 1% by those whose flats were booked after 31.03.2010. The authorities have not yet issued any notifications / directions to the builders to refund such excess recovery of VAT to such flat buyers. Now with introduction of the GST-which includes both VAT & Service tax element - builders will pass on the GST liability (proposed rate 12%) on such flat buyers. Hence it is principally wrong on part of Govt. to recover VAT element in GST twice and also to allow the builders to pass on their liability to the flat buyers. The builders have invited such liability because of delaying the construction & handing over possession to flat buyers. 

3. Since the liability is invited by the builders on them due to delay in completing project beyond the agreement date of possession, Govt. should come out with a specific circular barring the builders from passing on the GST liability on the flat buyers beyond the possession date as per agreement. In the absence of such circular, many such flat buyers have to pay for service tax although they should have got possession of flats before the service tax came into effect.

4. If the govt. sticks to the decision that the builders can pass on such liability of VAT to the under construction flat buyers, whose possession date as per agreement are over as on date of implementation of the GST, Govt. should ensure & take such measures to ensure that such flat buyers are provided with their dream flats without any delay & the additional financial burden cast on such flat buyers are compensated to them by the builders or the Govt. themselves.

Builders are already making the flat buyers dance to their tunes. Our request s that Govt. should also not join hands with them in further harassing & putting such flat buyers at loss by allowing the builders to pass on such liability of theirs on such flat buyers.

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