Builders, buyers gear up for legal battle over VAT dues
November, 01st 2012
With the Supreme Court deadline on payment of value-added tax (VAT) expiring on Wednesday, builders tightened the noose around buyers to recover the tax and threatened legal action against them. However, housing activists said buyers should first ascertain whether they are liable to pay.
The builders have paid VAT to the state government for sale of under-construction properties between June 20, 2006, and March 31, 2010, irrespective of whether they recover it from buyers or not. The Bombay high court had quashed a plea challenging the tax on Tuesday.
We will start recovery proceedings from those who have defaulted, said Sandeep Runwal, director, Runwal Group. He said over 80% of his customers had paid the tax.
Manohar Shroff, secretary, Maharashtra Chambers of Hou-sing Industry (Navi Mumbai), stressed the liability to pay VAT is on the buyers. We are not making money and the consumers have to pay. There would be litigations in the coming days, he said, adding that buyers had agreed to pay VAT if demanded by the government.
Housing activists say they are ready for a legal battle. VAT is a payment to be made by the builders, and buyers are being dragged into it, said advocate Vinod Sampat. Consumers pay for the flat which comprises all the components, including cost of land and raw materials. How can taxes regarding these components be charged from them? he asked.