Date of Filing : 12.12.2018
Date of Disposal: 03.08.2022
DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION
THIRUVALLUR
BEFORE TMT. Dr.S.M. LATHA MAHESWARI, M.A.,M.L, Ph.D (Law) .…. PRESIDENT
THIRU.J.JAYASHANKAR, B.A,B.L., .....MEMBER-I
THIRU.P.MURUGAN,B.Com. ....MEMBER-II
CC. No.08/2019
THIS WEDNESDAY, THE 03RD DAY OF AUGUST 2022
1.Consumer Protection Council, Tamilnadu,
Represented by Prof.S.Pushpavanam,
No.9, 12th Cross, Kumaran Nagar, Tiruchi -17.
On behalf of
2.Mr.S.Madhavan,
1-2, 204 Happinest, VGN Enclave,
Paruthipattu, Chennai – 600 071.
3.Mrs.N.Rajalakshmi,
w/o Shri.S.Madhavan,
1-2, 204 Happinest, VGN Enclave,
Paruthipattu, Chennai – 600 071. .........Complainants.
//Vs//
1.Mahindra Life spaces,
Rep. by Mr.Sangeetha Prasad,
The Managing Director and CEO,
5th Floor, Mahindra Towers,
Dr.G.M.Bhosle Marg, Mumbai- 18.
2.Manager, Customer Relations,
Rep.by Ms.Ramya Chandran, VGN Enclave,
5th Cross, mahindra Happinest,
Paruthipattu, Avadi, Chennai -71. ...Opposite parties.
Counsel for the complainant : Party in person.
Counsel for the opposite parties : Mr.T.Balasubramaniam, Advocate.
This complaint is coming before us on various dates and finally on 21.07.2022 in the presence of 1st complainant who appeared in person and Mr.T.Balasubramaniam counsel for the opposite parties and upon perusing the documents and evidences of both sides, this Commission delivered the following:
ORDER
PRONOUNCED BY TMT. Dr.S.M. LATHA MAHESWARI, PRESIDENT.
This complaint has been filed by the complainant u/s 12 of the Consumer Protection Act, 1986 alleging deficiency in service along with a prayer to direct the opposite parties to refund a sum of Rs.1,45,728/- with 18% interest from the date of possession till the date of payment, to pay the difference amount, to pay a sum of Rs.50,000/- for the mental agony and hardship caused to the complainant and to pay a sum of Rs.5000/- towards cost of the proceedings to the complainant;
Summary of facts culminating into complaint:-
The complainant and his wife jointly purchased a flat in the project developed by the opposite party. The present complaint was filed with the help of the voluntary consumer organisation, Consumer Protection Council who was the 1st complainant alleging deficiency in service in the purchase of the flat by the 2nd and 3rd complainant. It was submitted that the following discrepancies were found after purchase of the flat;
Though 476sq.feet of carpet area was promised but the actual carpet area provided was only 447sq.feet causing loss of Rs.87,000/-
Service tax was levied by the Builders on the cost of land and also on the cost of materials;
Service tax was levied by the Builders on construction of infrastructure like pathway, sump, septic tank, motor room, Sewage treatment plant etc., unfair trade practice committed by the opposite party by charging 14.5% for the 40% of the amount paid by the complainant instead of 25% as per the circular issued by the Central Board of Indirect Taxes;
No receipt issued for all the monies claimed to have been paid to several agencies and the difference amount after payment of the amount was not refunded to the complainant;
Thus aggrieved by the discrepancies mentioned above the present complaint was filed for the following reliefs as mentioned below;
To direct the opposite party to refund a sum of Rs.1,45,728/- with 18% interest from the date of possession till the date of payment;
To pay the difference amount;
To pay a sum of Rs.50,000/- for the mental agony caused to the complainant
To pay a sum of Rs.5000/- towards cost of the proceedings to the complainant;
It was
Crux of the defence put forth by the opposite parties:-
The opposite parties 1&2 jointly filed written version disputing the complaint allegations. It was submitted by them that ever since the booking of the flat the complainant 2 raised several issues including issues with regard to the carpet area and service tax even prior to the registration of the flat and on being satisfied with the clarifications provided by the opposite party 1 they registered the flat in September 2016. The complainant No.2 had already approached the TN RERA with certain complains against the opposite party No.1 and the same got dismissed on 17.09.2018. The complainant has not alleged any issue with regard to the carpet area and service before TN RERA and had now filed the Consumer Complaint only to harass the opposite parties. The carpet area including the balcony area is 475sq.feet as mentioned in the Term Sheet and also the physical measurement of the flat and in the light of new definition for carpet area in the RERA bill, the opposite party No.1 had chosen to exclude the carpet area of the balcony from the carpet area of the flat in order to avoid any non-compliance. Hence they alleged there was no question of shortage of carpet area by 29sq.feet as alleged by the complainant. With regard to the allegations of service tax it was submitted by the opposite parties that they have discharged their service tax liability based on works contract service. Further the complainant No.2 &3 had executed the term sheet, Agreement for Sale (AFS) for undivided share of land, Agreement for Development and Construction (ADC) and Sale Deed for proportionate undivided share with the 1st opposite party and the service tax at full rate on 40% of the aggregate consideration of AFS and ADC has been levied. The service tax consists of deposits for electricity, water, STP charges, legal documentation charges, infra charges and Government fees. It was submitted by the opposite parties that they have correctly discharged the service tax liability by collecting and depositing the service tax at full rate on 40% of the collected consideration under the AFS and ADC in compliance with the relevant provisions of the Service Tax Act and rules there under. The amount collected under the following heads
Electricity Deposit – Rs.10,000/-
Water and Sewerage Deposit –Rs.10,000/-
Sewage Treatment Plant (STP) Installation Charges –Rs.15,000/-
Legal and Documentation Charges –Rs.10,000/-
Infra Charges –Rs.125sq.feet of saleable area.
These amounts are not considered as part of construction service. However there are provisions of services rendered by the opposite party 1. Hence service tax was payable by the opposite party 1 and there was no exemption or notification providing concessional rate of tax for such amounts issued by the Government. Further it was submitted that at the instance of complainant No.2 & 3, the opposite party 1 has been subjected to the audit by Service Tax Commissionerate, Chennai and on request, all agreements invoices, calculation of service tax and Reconciliation of Service tax collected from flat buyers Vs Service Tax deposited had been disclosed in returns and the Authorities expressed satisfaction that the opposite party has not retained any service tax collected from the customer and the allegations by the complainants was closed for lack of merits. With regard to the allegations about the Service Tax collected on full rate on additional amenities, it was submitted that on Sewage treatment Plant, Service Tax mega exemption was not applicable to opposite party No.1 and it applies only to the STP of Municipal Corporation and hence it was pure service and opposite party paid the service tax at full rate. The demand letter for payment was sent to all customers by email and courier with regard to service tax and hence the allegations that it was not issued was denied. Further the opposite party submitted that it was not possible to provide receipt for payment made to several agencies to each and every customer as the service provided by the agencies were bulk in nature and it was not an industry practice to provide separate receipt to all the customers for the payment made to several agencies by the 1st opposite party. The 1st opposite party had given receipts for all the payments collected from the complainant and hence there was no difference between the receipted amount and collected amount and there was no question of refund to the same. It was submitted that the present complaint was bad for non-jointer of necessary and proper party and thus sought for the dismissal of the complaint.
The complainant has filed proof affidavit and documents Ex.A1 to Ex.A20 were marked. On the side of opposite parties proof affidavit and documents Ex.B1 to Ex.B22 were filed.
Point for consideration:-
Whether the complaint filed by the complainants before this Commission is maintainable?
Whether the deficiency in service as alleged by the complainants against the opposite parties has been successfully proved by the complainants by sufficient evidence and pleadings?
If so to what reliefs the complainant is entitled?
Point:1&2
On the side of the complainant the following documents were filed in support of the complaint allegations;
Payment receipt for land purchase dated 14.09.2016 was marked as Ex.A1;
Receipt for payment of Rs.2,08,475/- issued by Mahindra Life spaces in the 3rd complainant’s name dated 27.10.2015 marked as Ex.A2;
Receipt for payment of Rs.70,132/- issued by Mahindra Life spaces in the 3rd complainant’s name dated 08.08.2016 was marked as Ex.A3;
Claimed carpet area was marked as Ex.A4;
Floor plan with marking of unit was marked as Ex.A5;
Mega Exemption Notification was marked as Ex.A6;
Tax-Invoice issued by the opposite party in the name of 3rd complainant dated 04.02.2016 was marked as Ex.A7;
Central Bard of Indirect Taxes & Customs circular were marked as Ex.A8 & Ex.A9;
Legal notice issued by the complainant to the opposite party dated 19.05.2017 was marked as Ex.A10;
Reply notice issued by the opposite party to the complainant dated 31.05.2017 was marked as Ex.A11;
Letter from 1st complainant to the opposite parties dated 07.08.2017 was marked as Ex.A12;
Reply notice issued by the opposite parties to the 1st complainant dated 10.08.2017 was marked as Ex.A13;
Table for excess tax collected by the builder was marked as Ex.A14;
Service Tax Rules was marked as Ex.A15;
TN Government Gazette June 16th,2010 on exclusion from FSI area was marked as Ex.A16;
TN Government Gazette relevant page for Thiruvallur was marked as Ex.A17;
Email reply from GST office to complainant No.2 was marked as Ex.A18;
Letter from Tamil Nadu Real Estate Regulatory Authority, Chennai dated 04.06.2022 was marked as Ex.A19;
Letter from Office of the Principle Chief Commissioner of GST & Central excise to the complainant No.2 dated 08.06.2022 was marked as Ex.A20;
On the side of opposite parties following documents were filed in support of their contentions;
Booing form issued by the opposite party No.1 to the complainant No.2 &3 was marked as Ex.B1;
Letter from opposite party 1 to complainant No.3 dated 04.02.2016 was marked as Ex.B2;
Sale Agreement dated 24.02.2016 was marked as Ex.B3;
Email exchanges between opposite party No.1 and complainant No.2 dated 02.04.2016 was marked as Ex.B4;
Agreement for Development and Construction dated 01.08.2016 was marked as Ex.B5;
Deed of sale for Undivided Share of land dated 14.09.2016 was marked as Ex.B6;
Final audit report given by the Service Tax Department to opposite party No.1 dated 17.11.2016 was marked as Ex.B7;
Letter from Service Tax Department dated 02.05.2017 was marked as Ex.B8;
Reply by opposite party No.1 to CREDAl, Chennai on a complaint from complainant No.2 dated 15.06.2017 was marked as Ex.B9;
Letter from national Stock Exchange of India Limited to opposite party No.1 in regard to complaint from SMW in (C-2) about unfair trade practice dated 14.07.2017 was marked as Ex.A10;
Reply by opposite party No.1 to NSE dated 20.07.2017 was marked as Ex.A11;
Reply by opposite party No.1 to complainant No.2 dated 05.08.2017 was marked as Ex.A12;
Letter from complainant No.2 to Sub-Registrar, Avadi dated 09.10.2017 was marked as Ex.A13;
Letter from complainant No.2 to opposite party No.1 dated 22.10.2017 was marked as Ex.A14;
Notice from TNRERA to opposite party No.1 a complaint from complainant No.2 dated 14.05.2018 was marked as Ex.A15;
Reply to TNRERA by opposite party no.1 dated 10.07.2018 was marked as Ex.A16;
Reply to complainant no2 by opposite party no.1 dated 29.08.2017 was marked as Ex.A17;
Order of dismissal passed by TN RERA on complaint filed by complainant no2 dated 17.09.2018 was marked as Ex.A18;
Letter from GST Department to opposite party no1 dated 14.11.2018 was marked as Ex.A19;
Letter from opposite party no1 to GST Department dated 26.11.2018 was marked as Ex.A20;
Letter from GST Department to opposite party no1 dated 20.02.2019 was marked as Ex.A21;
Reply by opposite party no1 to GST Department dated 27.02.2019 was marked as Ex.A22;
Heard the oral arguments and perused the written arguments filed by both parties. The 1st complainant filed written arguments stating that the opposite party has committed unfair trade practice with regard to the shortage of carpet area and with regard to collection of service charges. It is also argued by him that the carpet area as per brochure given was 476sq.feet wherein it was only 447sq.feet after the possession was taken by the complainants 2 & 3. Further with regard to the collection of service charges it is argued by him that service tax is not to be levied in construction of flat as it is levied only for a service provided and as the land is an immoveable property and as the builder had levied service tax for the cost of land and cost of materials, no service tax would be levied for the flat. Hence he sought for the excess service tax charge to be returned to the complainants No.2 & 3 based on the revised circular dated 01.03.2016. Thus he prayed for refund of excess service tax along with compensation.
On the other hand, the opposite parties argued that the present complaint is not maintainable before this commission as the complaint does not fall within the definition of “deficiency of service” as defined under the Consumer Protection Act. Further it is submitted by them that the complainants had already approached TN RERA for the same issue with regard to the carpet area, service tax and sale of land. It is submitted by the counsel for the opposite party that the carpet area including the balcony was 476sq.feet as mentioned in the Term Sheet and also as per physical measurement of the flat. Thus as per the new definition for carpet area in the RERA bill the 1st opposite party had chosen to exclude the carpet area of the balcony from the carpet area of the flat in order to avoid any non-compliance and the said facts has been clarified by the officials of the 1st opposite party by way of email dated 02.06.2016 and the same has been acknowledged by the complainant No.2 and thus they denied the allegations of shortage of carpet area.
With regard to the levy of service tax it is argued that the 1st opposite party has levied service tax at full rate on 40% of the aggregate consideration of AFS and ADC and has levied service tax rate at full rate on the charges for amenities collected from the customers consisting of deposits for electricity, water, STP charges, legal documentation charges, infra charges and Government fees. It is argued by them that the demand letters were issued to the complainant No.2 & 3 by the 1st opposite party which has all the elements required for the tax invoice in terms of Rule 4A of the Service Tax Rules and hence no separate tax invoice is required to be issued. Further it is argued that the option for levy of service tax where the value of land and services are separable or inseparable and the option to exercise are left with 1st opposite party and the same has been made known to the complainant Nos.2 & 3. He also cited the Hon’ble Supreme Court judgement rendered in the case of Larsen & Toubro Limited Vs State of Karnataka reported in 2014 (303) ELT 3 (SC) wherein it has been held that the services provided by the Builders to the flat purchaser is works contract service. Further it is argued by him that there is no provision in the Finance Act or Service Tax Rules or circular or High Court or Supreme Court Judgement which provides the basis for determination for arriving at value of land and construction service. Hence it is argued that the opposite party has correctly discharged the service tax liability by collecting the proper service and sought for the dismissal of the complaint.
We perused the pleadings and evidences produced by both the parties. The main allegation of the complainant against the opposite party is that the shortage with the carpet area as provided in Ex.A4 the TERM SHEET FOR L/1 BLOCK and has been excess collection of service tax by the opposite party. The first contention raised by the opposite parties that the present complaint is not maintainable before this Commission. Hence this commission decides to adjudicate the issue as to maintainability of the complaint before the Consumer Commission. It is an admitted fact that complainants 2 & 3 had purchased a flat from the opposite parties and thus had availed service from them. Hence, they very well come under the definition of consumer. Further, the Consumer Protection Act provides for filing of complaints by consumer organisations and hence the complaint filed by the 1st complainant is maintainable. Thus we answer the point no.1 in favour of complainants holding that the complaint is maintainable.
Point No.2:
It is stated by the 1st complainant in their proof affidavit that the opposite party has charged for the balcony area as it has not come under saleable carpet area. Further the issue regarding shortage of the carpet area was also argued by the complainant that there is shortage of 29sq.feet in the carpet area. This commission is of the view that whether there is any shortage in the carpet area allotted to the complainant could be decided only after inspection of the premises and a report was filed. However, the complainant did not take the steps to file a petition for any inspection of the premises.
The issue regarding the collection of service tax in excess by the builders has been appropriately answered by the opposite parties that they have collected the service tax at full rate on 40% of the aggregate consideration under AFS and ADC. It is clearly admitted by the opposite parties that they have collected the following amounts towards
Electricity Deposit – Rs.10,000/-
Water and Sewerage Deposit –Rs.10,000/-
Sewage Treatment Plant (STP) Installation Charges –Rs.15,000/-
Legal and Documentation Charges –Rs.10,000/-
Infra Charges –Rs.125sq.feet of saleable area;
Government fees –Rs.71sq.ft of saleable area.
Thus we could not come to a conclusion that the opposite parties had collected any extra service charges from the complainants. Further the contention of the complainant that the builder has collected 40% instead of 14.5% also could not be accepted for the reason that the builder though collected the service tax has paid the same only to the Government. Further the amount collected for electricity, water, STP charges, Legal documentation charges, infra charges and Government fees comes under the provision of Service Tax and hence the Service Tax collected by the builder could not be termed as against law. It is seen that the complainant had earlier approached TNRERA and the same has been agitated before the said Commission and the same got dismissed on same technical grounds. The complainant cannot be permitted to agitate the same issue again and again before different Forums. It is also seen that a letter (Ex.A20) has been issued by the OFFICE OF THE PRINCIPAL CHIEF COMMISSIONER OF GST 7 CENTRAL EXCISE dated 08.06.2022 which has clearly stated as follows;
“Further with regard to your complaint dated 28.10.2019 regarding whether the excess service Tax collected has been duly transferred to the Consumer Fund, it was informed by the Jurisdictional Commissionerate vide their reply dated 30.10.2019 that the amount has been deposited into the consolidated fund of India. The same was also informed to your vide email dated 25.10.2019 to your email id smwin20@gmail.com and further Chennai Outer Commissionerate vide their letter dated 30.10.2019 (Copies are attached for reference) have communicated the same.
Besides, it is understood that you have addressed 32 complaints on this issue, which was re-examined by the Jurisdictional Commissionerates in March 2022 and observed that M/s. Mahindra Life space developer Limited, has reconciled the Service tax payments on collection from the client and no discrepancy was observed by the preventive wing of the Commissionerate.”
Thus the letter has clearly stated that the issue regarding collection of Service Tax by the opposite parties had been reconciled and there is no discrepancy. The letter also clearly stated that the repeated complaints even after the reply furnished would hamper the official functioning of the officers and thus advised the complainants/petitioners to refrain from making repeated allegations against the taxpayer without any substantive material evidence. Thus this commission holds that the complainant does not provide substantial evidence to hold that the service tax collected by the opposite parties is in excess of admissible charges. Thus we hold that there is no deficiency in service committed by the opposite parties in the matter of carpet area and collection of Service Tax from the complainant. Thus we answer the point accordingly in favour of opposite parties and as against the complainants.
Point No.3:
As we have held above that the complainant has not proved any deficiency in service on the part of the opposite parties the complainants are not entitled to any relief in the facts and circumstances of this case. We answer the point accordingly.
In the result, the complaint is dismissed. No order as to cost.
Dictated by the President to the steno-typist, transcribed and computerized by him, corrected by the President and pronounced by us in the open Commission on this the 03rd day of August 2022.
Sd/- Sd/- Sd/-
MEMBER-II MEMBER-I PRESIDENT
List of document filed by the complainant:-
Ex.A1 14.09.2016 Payment receipt for land purchase. Xerox
Ex.A2 27.10.2015 Receipt for payment of Rs.2,08,475/- issued by Mahindra Life spaces in the 3rd complainant’s name. Xerox
Ex.A3 08.08.2016 Receipt for payment of Rs.70,132/- issued by Mahindra Life spaces in the 3rd complainant’s name. Xerox
Ex.A4 .............. Claimed carpet area Xerox
Ex.A5 ............ Floor plan with marking of unit Xerox
Ex.A6 ........... Mega Exemption Notification Xerox
Ex.A7 04.02.2016 Tax-Invoice issued by the opposite party in the name of 3rd complainant. Xerox
Ex.A8 ............... 25% abatement circular (75% concession) Xerox
Ex.A9 ............ 30% abatement ciruclar (70% concession) Xerox
Ex.A10 19.05.2017 Legal notice issued by the complainant to the opposite party. Xerox
Ex.A11 31.05.2017 Reply notice issued by the opposite party to the complainant. Xerox
Ex.A12 07.08.2017 Letter from 1st complainant to the opposite parties. Xerox
Ex.A13 10.08.2017 Reply notice issued by the opposite parties to the 1st complainant. Xerox
Ex.A14 ................ Table for excess tax collected by the builder Xerox
Ex.A15 ............ Service Tax Rules Xerox
Ex.A16 .............. TN Government Gazette June 16th,2010 on exclusion from FSI area Xerox
Ex.A17 ............. TN Government Gazette relevant page for Thiruvallur Xerox
Ex.A18 ............. Email reply from GST office to complainant No.2 Xerox
Ex.A19 04.06.2022 Letter from Tamil Nadu Real Estate Regulatory Authority, Chennai. Xerox
Ex.A20 08.06.200 Letter from Office of the Principle Chief Commissioner of GST & Central excise to the complainant No.2. Xerox
List of documents filed by the opposite parties:-
Ex.B1 21.11.2015 Booking form issued by the opposite party no1 to complainant no.2 & 3. Xerox
Ex.B2 04.02.2016 Letter from opposite party no1 to complainant no.3. Xerox
Ex.B3 24.02.2016 Agreement for sale. Xerox
Ex.B4 02.04.2016 Email exchanges between op no.1 to complainant no.2. Xerox
Ex.B5 01.08.2016 Agreement for Development and Construction.
Ex.B6 14.09.2016 Sale Deed for UDS. Xerox
Ex.B7 17.11.2016 Final Audit Report given by Service Tax Department to opposite party no.1. Xerox
Ex.B8 02.05.2017 Letter from Service Tax Department. Xerox
Ex.B9 15.06.2017 Reply by opposite party no1 to CREDAi, Chennai on a complaint from complainant no.2. Xerox
Ex.B10 14.07.2017 Letter from National Stock Exchage of India Limited to opposite party no1 in regard to complaint from SMW in (C-20) about unfair trade practice. Xerox
Ex.B11 20.07.2017 Reply by opposite party no1 to NSE. Xerox
Ex.B12 05.08.2017 Reply by opposite party no1 to complainant no.2. Xerox
Ex.B13 09.10.2017 Letter from complainant no.2 to Sub-Registrar, Avadi. Xerox
Ex.B14 22.10.2017 Lettter from complainant no.2 to opposite party no.1. Xerox
Ex.B15 14.05.2018 Notice from TNRERA to opposite party no1 on a complaint from complainant no.2. Xerox
Ex.B16 10.07.2018 Reply to TN RERA by opposite party no.1. Xerox
Ex.B17 29.08.2017 Reply to complainant by opposite party no.1. Xerox
Ex.B18 17.09.2018 Order o fdismissal passed by TN RERA on complaint filed by complainant no.2. Xerox
Ex.B19 14.11.2018 Letter from GST Department to opposite party no.1. Xerox
Ex.B20 26.11.2018 Letter from opposite party no.1 to GST Department. Xerox
Ex.B21 20.02.2019 Letter from GST Department to opposit party no.1. Xerox
Ex.B22 27.02.2019 Reply by opposite party no.1 to GST Department. Xerox
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MEMBER-II MEMBER-I PRESIDENT
