The Supreme Court, on Tuesday, extended the deadline for registration of VAT till October 15. The Maharashtra sales tax department, in a recent circular, had directed builders to pay 5 per cent VAT by August 31 this year along with penalty on purchase of properties between June 20, 2006 and March 31, 2010.

Maharashtra Chamber of Housing Industry -Confederation of Real Estate Developers' Associations of India (MHCI-CREDAI) and CREDAI-Pune metro had filed a special leave petition in the Supreme Court when the SC ordered to extend the deadline till October 15. The court also extended the deadline for filing returns and payment of VAT liability, without interest and penalty to the state's sales department to October 31.

While deciding the special leave petition, if the Supreme Court orders in favour of the developers, the sales department will have to return the amount collected from the former along with the interest.

Rohit Gera, vice-chairman of CREDAI - Pune and managing director of Gera Developers Private Limited said the extension of deadline is a relief for consumers as well as builders. "It was next to impossible to calculate the exact VAT liability on each unit by August 31. Since builders did not want to default, they would have inevitably charged more from consumers. With two more months in hand, builders have time to calculate the exact liability and take flat owners in confidence," he said. With August 31 as the earlier deadline, builders were in a rush to recover money from flat owners and deposit it with the government.

The Bombay HC had earlier dismissed the builder association's appeal against Maharashtra government to levy VAT on under-construction properties bought between 2006 and 2010.

Even as the deadline is extended, Pune Forum for Flat Owners has appealed builders not to recover VAT from flat owners at the rate of 5 per cent. "With the extension of the deadline, builders would now seek the amount from customers, but they should do it only at 1 per cent," said Aruna Nafday, convenor of the Forum.

The builders should also refrain from demanding interest on the amount from the customers as the court has taken care of the interest issue, she said.

The builders have created a picture that they are fighting on behalf of the customers, but they had not taken anyone into confidence while approaching the court, Nafday said. "Flat owners are arm twisted and harassed by builders for no mistake of their customers. It was the responsibility of the builder to maintain its account and charge VAT and deposit it to the state government." The flat owners should carefully read their agreements with the builder and pay the taxes if the liabilty is put on them, she added. (Indian Express)