02 February 2014
I need help with my Service Tax refund. I had booked a 2 BHK flat in Greater Noida (West) in Feb. 2012. I had paid 90% of the total cost of the flat till Nov. 2012 (construction based payment). But due to unavoidable financial reasons i had to surrender my flat to the builder. They deducted 5% of booking amount plus broker charges and Service Tax Rs. 139446. They told me that as they have already paid the Service Tax to government so they are not liable to refund the amount and I myself have to claim for Refund from the government. Please help me and let me know how can i go ahead with my refund claim. What all forms are required, where to get them and whom to submit. Request you to send all relevant details and help me. Thank you in advance!
25 July 2025
You've brought up a valid and increasingly common concern — **Service Tax refund** in case of **cancellation of a booked property**. Since you've paid Service Tax to the builder, and the deal was later **cancelled**, legally you're entitled to a **refund of the Service Tax** under certain conditions.
Here’s a clear, step-by-step guide tailored to your case:
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### ✅ **Can You Claim Refund of Service Tax on Cancelled Flat Booking?**
**Yes**, a refund is possible **under Section 11B of the Central Excise Act, 1944**, made applicable to Service Tax under Section 83 of the Finance Act, 1994 — *provided the tax was actually paid and no service was ultimately rendered.*
> However, **you (the buyer) cannot directly claim** this refund from the government unless **you paid Service Tax directly** to the government. In most cases, it is the **builder who has paid it**, so **only the builder** is legally eligible to claim it from the department.
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### 🔴 **Important Point: Refund Must Be Claimed by Builder**
* Since the **builder collected Service Tax** from you and deposited it with the government, **they are the ones who need to file for the refund** due to **cancellation of service** (flat sale). * You, as a buyer, **cannot directly file a refund claim** unless you are a registered Service Tax assessee (which you are not).
### 🛑 What the Builder Said — *"You have to claim the refund yourself"* — is **not correct** as per law.
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### ✔️ **What You Should Do Now**
#### 1. **Send a Written Request to Builder**
Ask the builder to **file a refund claim** with the Service Tax department citing **cancellation of booking**.
Include:
* Flat booking details * Receipts and cancellation agreement * Bank statements showing payments * Proof that the service (flat allotment) was never completed * That the refund is due under **"No service rendered"** basis
They must file:
* **Form-R** (refund application under Rule 5 of Service Tax Rules) * Along with **copies of invoices**, proof of cancellation, payment to you, and Service Tax paid
#### 2. **If Builder Refuses to Cooperate**
You can:
* File a complaint with **CBIC/CBEC**, via the **CPGRAMS portal** ([https://pgportal.gov.in/](https://pgportal.gov.in/)) * File a complaint in **Consumer Court** against the builder for unfair trade practice * Seek refund including **Service Tax + interest**, if they are holding it unjustly
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### 📝 Sample Draft Letter to Builder
```text To, [Builder's Name] [Builder's Address] Date: XX/XX/20XX
Subject: Request for Refund of Service Tax Paid – Cancelled Flat Booking
Dear Sir/Madam,
I had booked a 2BHK flat in your project located at Greater Noida (West) in February 2012 and had paid approximately 90% of the flat's value by November 2012.
Due to financial constraints, I had to cancel the booking. You have refunded the amount after deducting 5% booking amount and broker charges. However, Service Tax amounting to Rs. 1,39,446 has not been refunded, citing that it has already been deposited with the government.
I would like to bring to your attention that as per applicable provisions of Finance Act, 1994, you may claim a refund of Service Tax in the event of **cancellation of service**, provided the tax was paid and no service was rendered.
Hence, I request you to kindly file for refund of the Service Tax paid to the government and refund the same to me at the earliest.
* Flat booking documents * Builder’s demand letters & receipts * Proof of Service Tax charged (in receipts/invoices) * Cancellation letter/agreement * Refund acknowledgement from builder * Bank statements showing payments and refund * Any email communication regarding the issue
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### 🕓 Limitation Period
* Refund of Service Tax must be claimed **within 1 year** from the **date of cancellation** (or from the date the tax was paid, whichever is later). * This timeline applies to the **builder**, so get them to act fast.
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### Need Further Help?
If the builder still refuses, I can help you draft a **legal notice**, a **consumer complaint**, or even a **representation to the GST/Service Tax department** (even though GST applies now, Service Tax cases are still handled by legacy departments).
Let me know if you'd like assistance drafting a formal letter to the department or builder.
CAclubindia
