In a major reprieve for developers in Maharashtra, a division bench of the Supreme Court passed an interim order on Tuesday allowing them to pay value added tax (VAT) till October 31, adding the amount would be refunded if the developers win the case.
The Supreme Court passed the interim order while hearing a special leave petition filed by the Maharashtra Chamber of Housing Industry and Confederation of Real Estate Developers’ Associations of India (MCHI-Credai) and Credai-Pune against the levying of 5% VAT by the Maharashtra sales tax department.
The appeal filed by the associations on behalf of the buyers was earlier rejected by the Bombay High Court.
?With this, developers will be allowed to pay VAT by October 31 instead of August 31 and register themselves with the sales tax department by October 15,” said a statement from MCHI-CREDAI.
The Supreme Court also ruled that in the event of the petitioners succeeding, the amount deposited with the sales tax department would be refunded to them with interest that the Court may determine. The state government wanted to levy a VAT of 5% on constructions made between 2006 and 2010, which would cost an additional tax liability on flats, shops and bungalows sold by developers between June 20, 2006, and March 31, 2010.
The VAT applicable in Maharashtra is in addition to the 3.09% service tax imposed by the Central government recently. As a result those who bought flats during the period are supposed to pay VAT on their purchase.
Over 10 lakh properties are said to have been registered across the state during this period. The MCHI-Credai had moved an application seeking a stay on the notification asking builders to register by August 16 and pay VAT on development and sale of apartments in Mumbai by August 31.
The court also restrained the state from taking any coercive steps for the recovery of tax, interest or penalty.