Demanding Extra Amount For Flat As If For Tax Amounts To Deficiency In Service: Delhi State Commission Holds E-Homes Infra Liable
The Delhi State Consumer Disputes Redressal Commission, comprising Sangita Dhingra Sehgal (President) and Pinki (Judicial Member), has held E-Homes Infrastructure Pvt. Ltd. liable for deficiency in service for arbitrarily demanding an additional amount from the complainants under the guise of GST and Service Tax and for subsequently cancelling the flat allotment without justification.
Brief Facts
The complainants, Rajeev Menon and another, had booked a flat in the housing project titled “Jewel of Noida” developed by E-Homes Infrastructure Pvt. Ltd. for a total consideration of ₹72,61,000, located in Sector-75, Noida. An Allotment Agreement dated 26.04.2017 was executed between the parties. The complainants paid ₹1,00,000 as booking amount and ₹9,89,150 subsequently. A housing loan of ₹58,08,800 was obtained from PNB Housing Finance Ltd., and a tripartite agreement was executed among the parties.
The complainants stated that they had paid ₹68,97,950, i.e., about 95% of the total sale consideration, with the balance payable at the time of possession. Despite repeated enquiries, the builder failed to communicate any possession details. Later, the complainants received a letter from the builder demanding ₹15,25,120, which included GST and Service Tax, amounts that had never been previously mentioned. Upon objection by the complainants, the builder cancelled the flat allotment through a letter dated 11.05.2018. Aggrieved by the arbitrary cancellation and unlawful tax demand, the complainants approached the State Commission seeking refund and compensation.
Builder’s Submissions
The builder contended that the complainants did not qualify as “consumers” under the Consumer Protection Act, 1986, since the flat had been purchased for investment purposes, and the complainants were residing in Australia. It was also submitted that due intimation regarding possession was given and that as per the terms of the agreement, the builder was entitled to forfeit 10% of the total sale consideration in the event of cancellation.
Commission’s Observations
Issue 1 – Whether the complainants qualify as ‘consumers’?
The Bench relied on the National Consumer Disputes Redressal Commission’s (NCDRC) judgment in Aashish Oberoi v. MGF Land Ltd. (2017), which held that a person may purchase more than one house for the use of family members and still fall within the definition of “consumer.” The Commission noted that there was no material on record to suggest that the flat was purchased for commercial purposes. Accordingly, the complainants were held to be “consumers” and the complaint was maintainable.
Issue 2 – Whether there was deficiency in service by the builder?
The Commission examined the tax demand letter and observed that the builder had never previously raised any demand for Service Tax or GST during the construction phase. The receipts issued to the complainants indicated ‘Zero’ in the tax column, showing that no such charges were contemplated earlier. Further, the builder failed to produce any documentary evidence to justify the belated tax demand.
Holding the conduct of the builder to be arbitrary and unjustified, the Commission observed: “The attempt to charge an extra amount under the guise of GST and Service Tax, when no such demand was ever raised earlier, constitutes clear deficiency in service.” The Commission also found that the cancellation of the flat allotment following the complainants’ objection to the tax demand was without any valid basis and amounted to unfair trade practice.
Order and Reliefs
Finding E-Homes Infrastructure Pvt. Ltd. guilty of deficiency in service, the Commission directed:
The builder to hand over physical, vacant, and peaceful possession of the flat to the complainants within two months;
To pay ₹3,00,000 as compensation for mental agony; and
To pay ₹50,000 as litigation costs.
Accordingly, the complaint was allowed, with the Commission holding that demanding an additional amount under the pretext of tax, not mentioned in the original agreement, and cancelling the allotment without justification amounted to clear deficiency in service.
Appearance
Present: Complainant in person, & Mr.Manoj Kumar Jha, Counsel for the Complainant (Email:advmanojjha1970gmail.com) Mr. Srinivasan Ramasway, Counsel for the Opposite Parties.
Cause Title: Rajeev Menon vs E-Homes Infrastructure Pvt. Ltd.
Case No: Complaint No. 1450/2018
Coram: Sangita Dhingra Sehgal (President), Pinki (Judicial Member)
