TNHB Cannot Demand Additional 5% GST After Full Payment Including Tax

The Madras High Court has ruled that the Tamil Nadu Housing Board (TNHB) is not authorised to collect any additional GST from flat purchasers after they have already paid the full cost of the flat, which includes the GST amount specified in the agreements and advertisements.

Justice D Bharatha Chakravarthy gave the ruling while permitting the batch of petitions contesting the notices issued before the purchasers via the TNHB in 2024, pushing them to file an additional 5% GST of the total sale price of the flats.

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The Justice ordered the board to implement the sale in the applicants’ favour who have furnished the full cost computed as per the advertisement rate and refund the additional 5% to those who have paid that 8 eight weeks.

The buyers who went to court are those who purchased 102 High Income Group (HIG) flats in the Nandanam division of TNHB and 72 such flats in the Anna Nagar division. They cited that in 2021, the rate was fixed at Rs 9,892 per square foot inclusive of GST in Nandanam and Rs 10,500 per square foot in Anna Nagar, according to the advertisements and display boards on the site, though they were subsequently pushed to file an additional GST before conducting the sale.

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The counsel of TNHB, the per square foot cost comprises 12% GST when the construction contracts were given, and is specified in the advertisement. 

But from TNHB’s various projects, including the two covered in this case, GST authorities then asked for 5% more GST. A total of Rs 101 crore needs to be paid by TNHB, as demanded in the notice. He cited in the High Court a writ petition against the same demand notice is due. 

The ruling of the Judge said that the TNHB could not push the buyers to pay the additional GST, and it must instead pay from its own accounts.

“Firstly, it can be seen that the tax liability now sought to be collected is 5% of the sale consideration. Already, 9% of the sale consideration is added as profit (of the board); therefore, even if there is any GST that is left out, that will only reduce the profit of TNHB to 4%. Thus, the argument relating to overriding public interest to wriggle out of the contractual obligation cannot be countenanced,” Justice Bharatha Chakravarthy specified in the order.

A Profit Reduction 

In the ruling of the judge, “Already, 9% of the sale consideration is added as profit (of the board); therefore, even if there is any GST that is left out, that will only reduce the profit of TNHB to 4%.”