• Clarity needed on cancellation of under construction flat

Location: Hyderabad, Telangana
Date of sale agreement: Sept 2018
Status of construction: Under construction
Under RERA: yes
Handover months as per sale agreement: 36 months
Handover date currently promised by builder: Dec 2020-Feb21

Issue:
1. We purchased a land owner share 2bhk flat in a gated community in Aug 2018. The builder had the usual pangs of delays and opaqueness in communication. We stopped payment midway (paid around 40%) of total value.

2. The builder quoted delay in payment as default conditions as per the sale agreement and gave a notice by email to cancel the booking. No registered post was received for the same.
Q1. Is the notice by email only considered legally valid?

3. My father and I (co-buyers) after deliberation, decided to go ahead with cancellation. The clause in the sale agreement pertaining to cancellation amount says "Provided further that upon termination of this agreement as aforesaid, the developer shall refund to the Customer(s) (subject to deduction of booking amount equal to 10% of the total said unit value and any agreed liquidated damages and any other amount which may be payable to Developer), the installments of sale consideration of the apartment which may till then have been paid by the customers to the developer. Any refund payable by the developer to the customer shall be paid within 90 days from the cancellation agreement signed by both party." 

4. The developer has charged 18% GST on the cancellation invoice. Additionally, in an application letter (simple word doc) issued by developer which will officially start the process of cancellation, they have added a clause of "90 days or resale of flat, whichever is later"

Q2. Can the developer add this clause of resale of flat in their timelines? If no, how can I contest this?
Q3. Regarding the GST, am I within my rights to demand the builder to share the receipts towards the GST payment made to the Govt.?
Q4. In the payment demand letters released by the builder, they never mentioned about the %of GST calculated on the payments, however, in one of their recent mails they shared the breakdown of the final dues pending on us (before the cancellation talks started) and the calculation showed taxes to be pegged at ~9%. So, assuming they charged 12% GST from us as per the old regime, can they charge 18% GST towards cancellation? If not, what are my legal options?
Q5. What is the legal process of cancellation of an under construction property? To be noted, the sale agreement was not registered in the sub-registrar office as per my knowledge.

If you can please be kind and quote apt GST law articles, that will be particularly helpful.
Asked 5 years ago in Property Law
Religion: Hindu

2 answers received in 30 minutes.

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15 Answers

Notice by email is valid 

 

2) they are bound to make payment on cancellation of booking and not till flat is resold 

 

3) As per RERA the builder  is bound to return the money collected from the buyers within 45 days of such cancellation after deducting the booking amount

4) you can seek proof of payment made for GST 

 

5)The allottee shall have the right to cancel/withdraw his allotment in the project as provided in the Act, provided that where the allottee proposes to cancel/withdraw from the project without any fault of the promoter, the promoter herein is entitled to forfeit the booking amount paid for the allotment. The balance amount of money paid by the allottee shall be returned by the promoter to the allottee within 45 days of such cancellation,” says the Real Estate (Regulation & Development) Act, 2016.

Ajay Sethi
Advocate, Mumbai
99929 Answers
8155 Consultations

Please approach RERA authority to address your grievances against injustice being caused to you by their illegal actions for the compliance of the property project under RERA.

No need to go anywhere. Your all relevant resources and relief are available before RERA authority. 

Ramesh Pandey
Advocate, Mumbai
2541 Answers
8 Consultations

Yes,communication through e mail is also valid.

90 days or resale of flat, whichever is later" - As per law, binding on builder to refund within 45 days. 18% GST wrongly imposed and you have absolute right to receive GST receipt paid on your behalf. And i think, builder have no paid any GST 
Complain to RERA and send legal notice for refund of full amount because cancellation is due to builder fault " usual pangs of delays and opaqueness in communication".

And builder have to refund GST on cancellation of flat booked in the last fiscal.

Yogendra Singh Rajawat
Advocate, Jaipur
23085 Answers
31 Consultations

1. Notice sent in email is very much valid. 

3. Once Inordinate delay is a good ground of cancellation and hence full refund is payable. 

2. Once you cancel your agreement the developer is free to deal with that particular flat.  Your only remedy is then to get full refund and damages. Your refund has no connection with timeline of sale of the same flat. 

4. Its 5%. The claim of builder has no legal basis. 

5. It can be cancelled by sending letter or by email. 

If your grievances are not redressed then file case before the consumer forum. 

Devajyoti Barman
Advocate, Kolkata
23659 Answers
538 Consultations

You can contest all the illegalities before rera or consumer court. If the illegalities are considered then all your amount will be refunded. Otherwise if it's cancelled because of your fault or compulsion then your booking amount will be Forfeited

Prashant Nayak
Advocate, Mumbai
34628 Answers
249 Consultations

RERA provisions over  ride sale agreement 

Ajay Sethi
Advocate, Mumbai
99929 Answers
8155 Consultations

No proceedings would supersede valid agreement between the parties before the Competent authorities. 

You follow the due process of law as per RERA authority. 

Ramesh Pandey
Advocate, Mumbai
2541 Answers
8 Consultations

There is no guidelines laid down by the government to forfeit the booking amount for the cancellation, and the deduction is done at the builder’s discretion.

- Hence, legally, the builder cannot deduct any money out of the advance payment you have made for the booking till the time; a builder-buyer agreement is made and registered with the sub-registrar.

- Further, A builder-buyer agreement is not created until the buyer pays at least 10 per cent of the property value.

- Further, as per Real Estate Regulation Act (RERA), home-buyers can cancel allotment of the apartment booked with a builder at any stage even if there is no default on the part of the developer. The builder is bound by law to return the money collected from buyers within 45 days, after deducting the booking amount.

- Hence, if you have already paid 10 percent of the flat value, and the said agreement signed by you , is not registered in the office of the Registrar , then you are liable to get full amount refund paid by you ,even there is a clause present in the agreement for not refunding  , and if the said agreement is registered , then builder has right to deduct booking amount from the paid amount. 

- Further, if you can cancel the agreement for purchasing the said flat due to delay in possession or his fault , then the builder is bound to refund the entire amount with 10% interest..  

- If, builder not refunding the same ,then you should lodge your complaint before the Consumer court , and thereby prayed for the refund of paid amount with interest.

1. Yes, notice through email is valid 

2. No, the developer cannot put conditions of timelines 

3. Yes, 

4. As above in details 

Mohammed Shahzad
Advocate, Delhi
15834 Answers
243 Consultations

No, RERA  provisions will not supersede the agreement clauses

Rahul Jatain
Advocate, Rohtak
5365 Answers
4 Consultations

Yes 45 days refund is a valid provision of rera and you can invoke the same

Prashant Nayak
Advocate, Mumbai
34628 Answers
249 Consultations

A notice sent via email is valid. 

ask him that so far we have cancelled the booking, collect the same amount from next proposed customer and give it to you.

in case builder failed to do so, then approach the jurisdictional assistant commissioner of Service Tax  and inform him the situation with a proof of your cancellation, he will tell you the way to get the legitimate way of getting the refund. 

 

Mohammed Mujeeb
Advocate, Hyderabad
19358 Answers
32 Consultations

Refund clause is void. Refund within 45 days as per RER Act.

Yogendra Singh Rajawat
Advocate, Jaipur
23085 Answers
31 Consultations

If terms for cancellation are missing then 100 per cent refund can be claimed from the developer. In case a developer refuses to repay the booking amount even with a clause present in the agreement, the buyer may file a case with the consumer forum asking for a refund with interest.

If you want to cancel your booked property, all cancellations would need to follow the pre signed clause as per the agreement. Make sure to read the cancellation clause in the sale agreement to understand the amount the builder is liable to refund in case of a cancellation

 if any flat booked in service tax regime and service tax paid on certain part of the consideration, is cancelled in GST regime and the entire amount along with taxes is refunded to the customer then the builder can go for refund of the service tax paid within 1 year from the date of cancellation by the customer. However, if the taxes paid is not refunded to the customer, then builder cannot go for refund of the same as the customer has bear the ultimate tax burden.

A flat is booked by the customer in the period starting from July’17 to March’18 and is cancelled by the customer in FY 18-19 (before Sep’18) and the amount received from the customer is refunded along with GST.

Flat is booked in FY 17-18 (from Jul’17 to Mar’18), GST is paid on the consideration received. The same is cancelled in FY 18-19 (after Sep’18) and the entire amount along with GST is refunded to the customer, then the GST paid cannot be adjusted against the subsequent liability by issuing a credit note. The only option left with the builder is to go for refund of the taxes paid under GST within 2 years from the date of cancellation of flat by the customer as per Sec. 54 of the CGST Act, 2017, on the ground that the incidence of tax has been borne by the builder itself and the same is not passed on to the customer.

Thus as per GST rules, the builder has to refund the GST already charged and he cannot levy GST on the cancellation amount, instead he has to add the GST already received by him

You can drag him to GST tribunal for his unfair trade practice of charging GST on refund of cancellation amount and also for not returning the already charged GST amount. 

 

T Kalaiselvan
Advocate, Vellore
90129 Answers
2503 Consultations

The RERA empowers the home buyer to cancel an allotment of the apartment booked with a builder at any stage even if there is no default on the part of the developer. It binds the builder to return the money collected from the buyers within 45 days of such cancellation after deducting the booking amount.

The builder has to obey the orders of RERA if you approach RERA and get an order in your favor in this regard.

 

T Kalaiselvan
Advocate, Vellore
90129 Answers
2503 Consultations

1. Yes it is legally valid if you opted E-Mails as way of communication at time of booking. 

2. No developer cannot add clause of resale of flat and you can file suit against developer before RERA for refund of money within 90 days if he fails to refund the money. 

3. Yes you can demand the reciepts from builder. 

Mohit Kapoor
Advocate, Rohtak
10686 Answers
7 Consultations

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