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The West Bengal Real Estate Appellate Tribunal has ruled that homebuyers cannot demand GST refunds from developers when a flat purchase is cancelled and must instead approach the GST department. The decision came while modifying a WBRERA order in a dispute involving a cancelled booking at a Kolkata housing project. The tribunal allowed the promoter to deduct GST already paid to the government and set aside a penalty imposed earlier. The ruling clearly separates regulatory refunds from tax refunds and reinforces that GST recovery is governed by central tax law.
The West Bengal Real Estate Appellate Tribunal has clarified that GST paid on a flat purchase cannot be refunded by the developer if the transaction is later cancelled. Instead, the homebuyer must claim the refund directly from the GST authority in accordance with tax law. The ruling was delivered while hearing an appeal related to a cancelled apartment booking at the ONE-10 residential project in Kolkata. Advertisement
In this case, the buyer had paid INR 9,17,919 towards the purchase of a 665 sq ft flat but did not pay the remaining amount within the stipulated time. As a result, the promoter, PS Group Realty Pvt Ltd, terminated the agreement. Following the cancellation, the West Bengal Real Estate Regulatory Authority directed the promoter to refund INR 8,17,919 after deducting INR 1,00,000 as booking charges and also imposed a penalty for not refunding the GST component.
The promoter challenged this order before the appellate tribunal. The tribunal observed that once GST invoices are raised, the developer is legally required to deposit the tax with the government, irrespective of whether the transaction is later cancelled. Since the tax amount has already been paid to the exchequer, the developer cannot refund it to the buyer.
Based on this reasoning, the tribunal allowed the promoter to deduct INR 4,20,500 paid as GST on behalf of the buyer and set aside the INR 2,00,000 penalty imposed by the regulator. It referred to relevant provisions of the Central Goods and Services Tax Act and a GST circular issued in 2022, which clearly states that GST refunds in cancelled transactions must be claimed from the tax department and not from the supplier.
The regulatory order was accordingly modified to align with the statutory tax framework, while maintaining the refund of the non-tax portion as applicable.
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