“Customs duties refunded if deal is cancelled in 5 years,” says expert

Q. Is there a time limit within which a buyer must cancel their sales contract to be entitled to a stamp duty refund? Is there necessarily a default on the part of the builder to be entitled to a refund?

Rajendra Rane, Borivali (West)

A. The answers to your questions can be found in the Maharashtra Stamp Act. Where a contract for the sale of immovable property on which stamp duty has been paid is registered and is subsequently cancelled by a cancellation deed registered within five years from the date of execution, the person concerned is entitled to claim a refund (Section 48(1) of the Stamp Act). However, there is an additional time limit. The claim for refund must be made within six months from the date of registration of the cancellation deed (Section 47 of the Stamp Act).

To be entitled to such a refund, it is not necessary that there is any default on the part of the builder. It is quite possible that after signing the sale agreement, the buyer is transferred, for example, from Mumbai to Gurgaon. He can cancel the sale agreement and legitimately claim a refund. In short, cancellation of the sale agreement can take place for any reason.

Q. I have booked a flat in Pune and signed a sale agreement in March 2023 for a total amount of Rs. 1.1 crore. Now the builder is demanding a 5% price increase on the grounds that the cost of labour, raw materials, etc. has increased. However, he has not given me an official letter to this effect despite my specific request. But he is also indirectly threatening me to cancel the booking if I do not accept. Can the builder demand such an increase? And if I refuse, can he cancel my booking?

Prashant Kashalkar, Kothrud, Pune

A. Before RERA came into force, it was common for many builders to increase flat rates in the name of increasing cost of raw materials etc. However, after RERA, builders are required to quote prices without any increase.

The standard agreement prescribed by RERA states: “The total price is without indexation, save and except for indexations/increases due to increase on account of development charges payable to the competent authority and/or any other increase in charges as may be levied or imposed by the competent authority, local bodies/government from time to time.”

The very fact that the builder has not given you an official letter informing you about the escalation shows that he knows very well that he cannot make such a demand. However, in the worst case scenario, if the builder dares to cancel the contract, you should immediately contact MahaRERA. It is also pertinent to note that as per Section 11 (5) of RERA, the builder can cancel the subdivision only in terms of the sale agreement. And since the sale agreement does not give the builder any right to demand such an escalation, he cannot cancel the subdivision.

Advocate Shirish V Deshpande is the president of the Mumbai Grahak Panchayat. Queries can be directed to [email protected]