Sales Tax Dept conducts raids against 15 Mumbai builders

The department hopes to recover over Rs 800 crore from the concerned builders

Last Updated: Aug 01, 2012, 14:16 PM IST

Mumbai: In a major crackdown, Maharashtra Government's Sales Tax Department is carrying out raids against 15 top builders in the financial capital, to recover the VAT amount they collected from flat buyers, but failed to deposit with the government.

The department hopes to recover over Rs 800 crore from the concerned builders, including those against whom raids are in progress, Department sources told PTI.

"While some builders have kept the amount with them, others have kept it in an escrow account. There are some builders, who have used the amount as capital for projects," the sources said.

The raids are in progress in south Mumbai as well as in some parts of the suburbs, they said.

Recovery notices have been sent to all the concerned builders, who owe the Department over Rs 800 crore towards unpaid VAT, the sources said.

The Bombay High Court had earlier upheld the constitutional validity of an amendment in the Maharashtra Value Added Tax (MVAT) Act of 2002, which imposes VAT on newly constructed properties.

It had dismissed a petition filed by the Maharashtra Chamber of Housing Industry and a bunch of petitions filed by various builders, challenging the constitutional validity of the 2006 amendment by which the term 'sale of goods' had been broadened to bring construction activities under the purview of the legislation.

Developers had to pay one per cent of the total sale price of the flat or five per cent of the value of goods transferred (value of the property minus the land price and some other deductible components).