I) should I write a letter and post them or email is ok about the cancellation? To be safe side I have also sent a letter through mediator marketing company.
It is better that you send the communication canceling the booking by a registered post with acknowledgment card.
II) is service tax refundable?
The developer would not have paid the service tax yet, hence ask him to return the same or to provide the tax payment details which you can claim refund from the government owing to cancellation of the booking.
III) what should I do to avoid 1lac forfeit amount deduction?
Since this is an unregistered agreement, the condition laid down in it is one sided, hence you do not agree for its deduction, you may drag him to consumer court seeking return of the same
iV) what are the chances of getting my money back? I paid entire amount including service tax by Cheque payment only.
Drag the developer to the consumer forum which will be the quickest method for recovering the amount.
V) It's been a month and builder asked to submit all original receipts and allotment letter to begin the refund process, how valid is this submission? which I denied, so far.
Without submitting the details, the builder may not process the refund so decide accordingly.
Vi) according to new law what benefits I will get on cancellation of booking? Since builder has used my money
The new law is yet to be enforced/implemented. Hence wait.