In a significant decision providing clarity to real estate buyers in Maharashtra, the Maharashtra Real Estate Appellate Tribunal (MahaReat) has declared that homebuyers are not allowed to demand the return of statutory taxes and duties such as GST, stamp duty, registration charges, TDS, MVAT, or similar government levies from developers even in cases of delayed possession of property.
While instructing a developer to pay back more than ₹2 crore to a buyer for the late handover of a flat in Mumbai, the tribunal made this pronouncement. However, the request of the buyer to add taxes and statutory levies to the amount to be refunded was denied. As per the MahaReat, the developers do not keep the money collected as charges but, rather, they pay it directly to government authorities. In view of this, homebuyers who want refunds of such taxes should definitely go to the respective government departments rather than to the developer.
The Case in Question
This is a case of a homebuyer who in January 2017, made a reservation for an approximately 1,000 sq ft apartment in the western suburbs of Mumbai at a price of over ₹2 crore. The contract stipulated that the handover was to be made by December 2019 with a grace period that could be extended up to December 2020. As a result, the project was delayed and it was only in July 2022 that it obtained a partial occupation certificate (OC).
Feeling that the project had been subject to changes without his knowledge, the homebuyer decided to exit and claim a refund of all amounts paid for the unit. Thus, the amount of the main consideration was included along with service tax, GST, TDS, stamp duty, and other applicable charges, with the interest as per law.
The issue was initially taken to the Maharashtra Real Estate Regulatory Authority (MahaRERA), which ordered the developer to refund the principal amount with interest. Then, the homebuyer came to MahaReat asking that the refund also include statutory taxes.
MahaReat’s Ruling on Statutory Taxes
In its judgment, the tribunal stated, “We are therefore of the view that taxes paid to the Government could not be termed as the amount received by the developer in respect of the subject flat.”
The tribunal noted that homebuyers had argued that GST, MVAT, TDS, stamp duty, and registration charges should be refunded with interest since the developer had failed to hand over possession within the agreed timeline. The developer, on the other hand, contended that these statutory dues are paid by the homebuyer and transmitted directly to the government. The developer has not retained or benefited from these payments and therefore cannot be held liable to refund them.
MahaReat explained that Section 18(1) of the RERA Act obligates promoters to refund only the amount actually received toward the apartment, plot, or building when an allottee withdraws. “Taxes paid to the Government are not part of the consideration for the flat and cannot be claimed from the developer,” the tribunal clarified.
Developer Functions as Collection Agent
The tribunal emphasized that taxes such as GST and MVAT are borne by the consumer or allottee but are collected by the promoter as a service provider. The developer merely acts as a collection agent and remits these amounts to the government. Similarly, for TDS, although the developer receives credit for the advance tax, it does not retain the amount since it is deposited directly with the Income Tax Department.
Regarding stamp duty and registration charges, MahaReat noted, “These are paid by the homebuyer in their own name. Only the homebuyer is entitled to seek a refund of these charges from the relevant authority after executing the deed of cancellation.”
The MahaReat ruling makes it clear that while homebuyers are entitled to refunds of amounts paid toward the property itself in case of delays or withdrawal, statutory taxes and government levies are not refundable through developers. Buyers seeking refunds for GST, TDS, stamp duty, or registration fees must approach the relevant government authorities for redressal.
.png)