Tamil Nadu

North Chennai

CC/60/2018

Prashanth Kumar S/o.sankara subramaniyan - Complainant(s)

Versus

M/s.Pushkar properiter P Ltd rep by P.Kirthivasan - Opp.Party(s)

S.Kothadaraman

14 Jul 2022

ORDER

Complaint presented on :06.04.2018           Date of disposal            :14.07.2022

                                                                                  

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION,

CHENNAI (NORTH)

@ 2^ND Floor, T.N.P.S.C. Road, V.O.C. Nagar, Park Town, Chennai – 600 003.

 

                PRESENT : THIRU. G. VINOBHA, M.A., B.L.,                          :PRESIDENT

                                      TMT. KAVITHA KANNAN, M.E.,                         : MEMBER-I

                              THIRU.V.RAMAMURTHY,B.A.,B.L.,PGDLA.,    :MEMBER-II

 

C.C. No.60/2018

 

DATED THURSDAY THE 14^th  DAY JULY OF 2022

Prashanth Kumar

S/o.Sankara Subramaniyan,

Old No.309 5, New No.3A, Belly Area

Anna nagar West,

Chennai-600 040

By his Power Agent

R.Suriyanarayanan,

No.20, Bharathi street,

Perambur, Chennai-11.

                                                                                      .…..Complainant

 

 ..Vs..

Ms.Pushkar Properties (P) Ltd.,

Rep by P.Kirthivasan,

Pushkar K.V.Residency,

1A, F Block, 51/3, 2^nd Main Road,

Anna Nagar East, Chennai-102

                                                                                      …..Opposite Party

 

 

Counsel for Complainant                           : M/s. S.Kothadaraman & L.Prabahar

 

Counsel for  opposite party                         : M/s. G.Vijayakumar and 3 others

 

 

 

ORDER

 

THIRU. G. VINOBHA, M.A., B.L., PRESIDENT :

This complaint has been filed by the complainant against the opposite party under section 12 of the Consumer Protection Act, 1986 prays to direct the opposite party to deliver the key of the Flat, to pay the service tax of Rs.5,70,000/- to the authorities, to pay a sum of Rs.2,50,000/- in respect of loss of monthly rent to the complainant with interest at the of 24% P.A. from the date of claim to the date of payment, to pay a sum of Rs.2,00,000/- for the mental agony suffered by the complainant with interest at the rate of 24% P.A. from the date of claim to the date of payment and to pay cost for this complaint.

1.THE COMPLAINT IN BRIEF:

          The complainant stated that the he owned a flat at Door No.309/5, New No.23, Ponni colony main road, Belly Area, Anna Nagar West, Chennai-102  along with 5 others in a residential complex, entered into a joint venture development agreement with the opposite party herein on 07.01.2015, inter alia agreeing to develop the said residential complex on terms and conditions contained therein.  There was no consideration for the construction, and the cost  of construction of a new constructed flat is to be adjusted against the cost of the UDS of the land that was agreed to be given, by the owners, which opposite party is entitled to sell.  The complainant stated that the opposite party  with ulterior motive to mislead the complainant gave a calculation memo which indicated that the service tax component in respect of the flat for a sum of Rs.1,10,870/- on the basis of which it was agreed under the terms of the Joint Development agreement, to be paid by the complainant to the concerned authorities through the opposite party though the opposite party alone is liable to pay the same under the Service Tax Act. The complainant stated that the opposite party constructed the flats and intimated to the complainant on 12.01.2017 that the flat is ready for delivery, and called upon the complainant to pay service tax of Rs.5,71,137/- either to him or to the Tax department.  The complainant submitted that contrary to the earlier calculation memo, the opposite party demanded exorbitant amount and when confronted, the opposite party informed that the calculation memo given earlier was not accepted by the tax authorities and hence the demand for higher amount, has been made as per their method of calculation, which was on the total cost of construction.  It is pertinent to note that the opposite party till now had not shown any order of the Tax authorities demanding payment of the Tax. The complainant stated he sent a reply to opposite party rejecting his demand for a higher tax and demanding key.  He has wrote to the tax authorities seeking clarification as to the nature of leave and its method of calculation and protested against the levy of  service tax on components which do not attract service tax, like the cost of materials the land cost etc. The tax authorities sent a letter very vaguely indicating that service tax has to be paid by the builder in term of sec 67(I)(iii) read with rule 2(a)(ii) of the rules read with their own officer circular No.151/2/2012 dated:10.02.2012 and not indicating what is the extent of tax payable on the service component of the composite contract like complainant. The complainant requested the opposite party to take up the above narrated points which the tax authorities and the work out a remedy. The opposite party failed to do so.  The complainant further stated that he was willing to pay the agreed tax liability of Rs.1,10,870/- and demanding deliver of Possession  of the Flat with the Key in terms of the Joint Development agreement.  But the opposite party demanded full payment of Rs.5,71,317/- before delivery of the Key and possession of the Flat.  This is contrary to the terms of the agreement.  Moreover he has constructed one extra car parking over common area against the agreed terms and has allotted the same to a person to whom he has sold a flat as such there is 9 car parking for 8 unit.  The said act is clearly amounts to deficiency of service. The complainant stated that he has filed before High court in W.P.No.23156/2017. Tax department raised preliminary objection contenting that the opposite party alone had locus standi to challenge the tax as he is not the person to pay the tax. The opposite party has refused to join with the complainant as co-petitioner to challenge the act of the tax authorities. The opposite party duty bound to pay the tax, mislead the complainant, with ulterior motive stating that the tax amount would amount to Rs.1,10,870 and made the complainant by his misrepresentation to sign the agreement incorporating a condition that the complainant has to pay tax. Opposite party is not handing over the key of the completed flat citing the reason of non-payment of Rs.5,71,317/- as service tax. The opposite party is liable to pay a sum of Rs.5,70,000/- in respect of service tax to the authorities. Hence the complaint.

2.WRITTENVERSION FILED BY THEOPPOSITE PARTY IN BRIEF:

          The opposite party denies all the allegations stated by the complainant except those, which are specifically admitted thereon.  The opposite party submitted that it is agreed between the complainant and the opposite party at the time of entering into joint development agreement dated 07.01.2015 that the complainant shall pay the applicable service tax with respect to the flats allotted to him .  The applicable service tax means the prevailing service tax at the time of sale of the flat.  The opposite party have never agreed and not specified any amount as claimed by the complainant in the complaint.  The opposite party has asked the complainant to pay directly  to the service tax department.  The opposite party submitted that all the other owners of the flats have paid the service tax to the department for the flats allotted to them. The opposite party submitted that as per the agreed terms of the joint development agreement, after completion of the construction, the opposite party demanded the service tax payable but the complainant, for the best reason known to him, had not deposited any amount either with them or to the service tax department.  The opposite party submitted that the opposite party  has not demanded/collected any exorbitant tax, the service tax is fixed by the government authorities and not  by the builder.  Further the opposite party submitted that a per the terms of the joint development agreement it is agreed between the parties that the service tax shall be payable for the flat allotted to the owners of the said flats and the parties are not classified as to whether they are owners of land or the purchasers of the flat.  The opposite party denies the averment that they have been approached by the complainant to settle the issue with the service tax department since the terms for payment of the service tax have been agreed between the parties by way of joint development agreement dated:07.01.2015 and the opposite party cannot go back on their own agreement.  The opposite party submitted that they do not have the knowledge with whom they have agreed the tax liability for a sum of Rs.1,10,870/- and it is the duty of the complainant to pay a sum of Rs.5,71,317/- as undertaken by him by entering into the joint development agreement. The opposite party submitted that the complainant filed writ petition No.23156 of 2017 before Hon’ble high court, has been rightly dismissed. The opposite party submitted that the opposite party has not misrepresented at any point of time and has directed to pay only the service tax demanded by the service tax department.  The opposite party submitted that the possession of the flats has not been handed over in view of the nonpayment of the service tax as agreed in the agreement.  It is further submitted that it is intention of the complainant to get possession and enjoy without payment of the necessary tax amount to the government authorities the opposite party is always willing to hand over the possession of the flat on payment of the service tax as agreed between the complainant and opposite party.  It is further submitted that the possession of flat has been handed over to other flat owners who have paid the service tax. The opposite party has not committed any deficiency of service on the part of the opposite party.

3. POINTS FOR CONSIDERATION:

1. Whether there is any deficiency in service on the part of opposite party as alleged in the complaint?

2. Whether the complainant is entitled for the reliefs prayed in the complaint.     If, so to what extent?

Both side arguments heard. The complainant filed proof affidavit and Ex.A1 to A7 were marked on his side and written arguments.  The opposite party filed proof affidavit and Ex.B1 were marked on the opposite party side and written arguments.

4. POINT NO :1 :-

                   The complainant is represented by his power agent.  The complainant herein along with 5 others who are owners entered into joint venture development agreement with opposite party on 07.01.2015 and it was agreed that the opposite party has to construct eight flats on the land owned by complainant and five others and each owners has to be given a constructed flat by the opposite party and two flats were agreed to be retained by the opposite party builders.  Both the parties admitted the joint venture agreement and according to the complainant at the time of entering into joint venture agreement the opposite party mislead the complainant and gave a false calculation memo which indicated the service tax in respect of the flat is only Rs.1,10,870/- and believing the same the complainant agreed to the terms of the agreement and agreed to pay the service tax to the authorities through the opposite party though the opposite party is alone to liable to pay the same under the Service Tax Act.  It is further alleged by the complainant that on 12.01.2017 the opposite party intimated that the flat is ready for delivery and called upon the complainant to pay service tax of Rs.571137/- either to him or to the authorities which is contrary to the earlier calculation memo and exorbitant and hence when the same was questioned by the complainant, the opposite party replied that the tax authorities calculated the same based on the total cost of flat.  The complainant wrote to the tax authorities seeking clarification regarding service tax and they replied that the service tax has to be paid by the builder in terms of Sec 67(I)(iii) read with rule 2(a)(ii) of the rules read with their own office circular No.151/2/2012 dated:10.02.2012.  The complainant also filed writ petition before High Court  W.P.23156/2017 against the tax department and the opposite party since the opposite party has refused to join as a co-petitioner to challenge the service tax by the tax authorities and hence the same was dismissed and hence the complainant contended that he was willing to pay agreed tax of Rs.110870/- and demanded delivery of possession flat with Key from the opposite party  which was denied and it claimed Rs.571317/- which is contrary to the agreement and further alleged that the opposite party violated the terms and constructed 9 car parking for eight units and sold one car parking which also amounted to deficiency in service and claimed various reliefs including delivery of Key of the flat and to pay service tax of Rs.5,70,000/- to the authorities.

          5. The opposite party mainly relied upon the terms and conditions of the joint development agreement and contended that the complainant agreed to pay the prevailing service tax at the time of handing over of the flat and no amount was specified in the agreement and the opposite party even asked the complainant to pay the service tax directly to the department which was also refused by the complainant and it is stated that the opposite party had no knowledge with whom they have agreed to tax liability of Rs.110870/- and alleged that the complainant cannot go back against the terms of the agreement and it is his intention to get possession without paying necessary tax to the authorities and opposite party is always ready to handover key of the flat if entire service tax is paid by the complainant to the authorities.   It is further alleged by the opposite party that the writ petition filed by the complainant was dismissed by observing that the petitioner has to workout his remedy in accordance to terms of the contract entered between them upon failure to invoke the common law remedy and hence contended that the complainant has to workout his remedy based on joint development agreement before proper forum and therefore contended that there is no deficiency in service on their part.

          6. The circular issued by the Ministry of Finance dated 10.02.2012 is marked as Ex.A1 the complainant by relying upon Page.2 para no.(i) contended that the service tax is liable to be paid by the builder even for the flats given to the land owners at the time of handing over of possession.  In the very same circular the details as to how to value the flats for payment of service tax is also found.  The joint development agreement dated 07.01.2015 is marked as Ex.A2.  In Ex.A2 page no.11 Clause 3 the opposite party builder agreed to pay Rs.1,00,000/- to each owner apart from allotment of 6 flats to them out of 8 flats, and page no. 15 Clause 15 the owners agreed to pay APPLICABLE service tax with respect to their allotted 6 flats, it is stated in Clause 16 that the builder has agreed to pay the electricity, water, sales tax, EB charges  and other charges under Clause 17 it was agreed that the builder has to complete construction within 18 months from the date of commencement of construction. Therefore by virtue of Clause 15 of the agreement the complainant has agreed to pay service tax for construction of flats and hence he is now estopped from contending that the said clause is void and against the statute and rules.  In Ex.A2 at page no.26 the service tax payable is stated as Rs.110870/- which was worked out at 5% of the value of the flat but there is no signature or seal in that page to show that the same was calculation given by the opposite party but, at any event as per Clause 15 the complainant has agreed to pay the APPLICABLE service tax at the time of handing over which mean that it may be even a higher amount prevailing at the time of handing over.  

          7. It is not the case of the complainant that the opposite party delayed the construction and in fact it is found from Ex.A3 dated 12.01.2017 the opposite party informed the complainant that the flat is nearing completion and to pay service tax of Rs.571137/- directly to the department and they are ready to hand over the keys, it is further found that in Ex.A3 a calculation memo was given, how Rs.5,71,080/- was arrived based on service tax calculated as on that date at 15%.  It is found that except the  present complaint other 5 land owners had already paid the above said service tax and taken possession also.  But the complainant alone has sent a letter to the service tax department under Ex.A4 wherein he questioned the method of calculation of service tax by the department as wrong and he himself given a calculation and expressed his willingness to pay Rs.1,13,400/- alone towards service tax.  The service tax department has given a reply quoting the service tax rules and the circular dated 10.02.2012 as per which the builder is required to pay the service tax. It is found from the Ex.A7 Email communications between complainant and opposite party that a sum of Rs.1,10,000/- was given by the opposite party to the complainant at the time of joint agreement for payment of service tax by the complainant which was admitted by him in the said E-mail. In Ex.A7 the opposite party stated in the reply that the calculation of the service tax is done by the department and not by the builder, further it is stated that the land owner has to pay and equal amount what a new flat buyer pays as far as service tax concerned. Though the payment of service tax was not imposed as a pre condition for delivery of possession in Ex.A2. According to opposite party it is usual practice to pay the service tax before handing over possession of flat and further even as per Ex.A2 clause 22  the agreement shall be in force till all the transaction are fully completed and hence the complainant is not entitled to seek for delivery of key of the flat and hand over  possession without complying with clause 15 of Ex.A2 by paying the necessary service tax. It is found from Ex.B1 the complainant has filed Writ petition Before High Court to quash the letter of the from the service tax department dated:19.06.2017 which was dismissed with observation to work out his remedy in accordance with the terms of the  contract before the proper forum. The complainant has not initiated any proceeding before proper forum seeking declaration that clause No.15 of Ex.A2 is not valid and against the law and without doing the same the complainant has approached this forum by alleging deficiency in service on the part of the opposite party which was not established by the complainant by proper evidence. 

          8. Though the complainant alleged and claim of Rs.2,50,000/- towards loss of monthly rent to the complainant there is no documentary proof filed by him in respect of the same. Though the complainant alleged that instead of eight car parking for eight flats, the opposite party has constructed and allotted nine car parking which is against the terms and conditions and even for this there is no proof filed by the complainant and hence it will not constitute the deficiency in service on the part of the opposite party. The complainant failed to prove that the opposite party has mis-represented and mislead the complainant by giving the false calculation memo for payment of service tax and thereby induced the complainant to enter into joint development agreement.  But on the other hand it is found that the complainant has voluntarily signed in Ex.A2 along with 5 others and having agreed to pay service tax under Ex.A2 it is not open to the complainant now to allege that clause 15 of Ex.A2 is against the law and rules. There is no proof to show that complainant suffered any financial loss as claimed in the complaint. When the opposite party is ready to hand over the key of the flat on payment of agreed service tax by the complainant and non handing over of the possession and Key is due to the fault of the complainant in not paying the service tax as agreed the same will not amount to deficiency in service on the part of the opposite party. Point no 1 answered accordingly.

9. Point. No.2:-

          Based on findings given to point. No.1.  the complainant is not entitled to  seek for delivery of Key of the flat without paying the service tax due to the authorities concerned and hence the complainant is not entitled to any of the reliefs claimed in the complaint and the complaint devoid of merits and hence the same is dismissed. Point.no.2 is answered accordingly.

          In the result the complaint is dismissed. No costs.

Dictated  by the President to the Steno-Typist taken down, transcribed and computerized by him, corrected by the President and pronounced by us in the open Commission on this the 14^th   day of  July 2022.

 

MEMBER – I                MEMBER – II                                 PRESIDENT

LIST OF DOCUMENTS FILED BY THE COMPLAINANT:

Ex.A1	10.02.2012	Circular
Ex.A2	07.01.2015	Agreement of Joint development.
Ex.A3	12.01.2017	Letter from 2nd respondent.
Ex.A4	10.05.2017	Letter from 1st respondent.
Ex.A5	19.06.2017	Letter from service tax department.
Ex.A6	09.06.2017	Power of attorney.
Ex.A7		E-Mail communication

 

LIST OF DOCUMENTS FILED BY THE OPPOSITE PARTY:

Ex.B1

20.12.2017

Final order in W.P.No.23156 of 2017

 

 

 

MEMBER – I                MEMBER – II                                 PRESIDENT