No Service Tax liability can be imposed on the Builder on cancellation of booking by flat buyer

Last updated: 07 January 2023
Quick Summary
The CESTAT Mumbai has ruled that builders are not liable for Service Tax when a flat booking is cancelled by the buyer. If the service contract is terminated and the advance payment, including any collected Service Tax, is returned to the buyer, then no taxable service has been provided. In such cases, the builder is entitled to a refund of the Service Tax paid.

Court :
CESTAT, Mumbai

Brief :
The CESTAT, Mumbai in Credence Property Developers Pvt. Ltd v. Commissioner of CGST & Central Excise [Service Tax Appeal No. 85780 of 2020 dated January 5, 2023] has held that once the buyer of a flat cancelled the booking and the consideration for service was returned, the service contract got terminated and once it is established the no service is provided, then refund of tax for such service becomes admissible. 

Citation :
Service Tax Appeal No. 85780 of 2020 dated January 5, 2023

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