• Builder issue related to possession

We had booked a 3 BHK flat in Indirapuram Ghaziabad in June 2016, which was under construction and was promised to be delivered for possession by DEC 2016. The structure and for all 11 floors each of the 4 Towers were almost in ready state, with floor tiling in-progress state.

 As per the agreement, built-up area was 1665 Sq feet. Also they promised us to provide other amenities like Park, pool, club house and 2 level parking and other security equipment. As per the agreement these all facilities were to be delivered by Dec2016.

In March 2017, we got a notice from builder mentioning that, after compounding it has been identified that area of the flat is increased by 95 Sqr Feet and thereby we shall be paying Xyz amount to the builder for this additional space and conveys that there was a clause in agreement where in it was mentioned that " Any increase/decreased in the saleable area of the said unit will be payable or refundable ". And we wonder that this clause should not be applicable on us as flat was booked when all the major construction work was completed and no changes in construction was done after the booking.

Now in Mid-April we have received the possession letter, as per that we have to pay the remaining amount to the builder within 30 days. Explaining you the current state of the building:
1. Construction of Club house, park and swimming pool has not started yet.
2. The common area between building to entry/parking, has no flooring done.
3. Builder asking for extra amount for so called extra 95 Sqr feet, which was not mentioned in earlier agreement.
4. No information about the handover date of the flat after paying the balance amount is mentioned in possession letter.
 
We would like to know, what law/ govt rule exits regarding the above mentioned 4 points. Please suggest.

Apart from above, we would like to know about the service tax rule. Is service tax applicable on a under construction property? Because as per judgement given by Delhi high court case "Suresh Bansal V/S Union of India" on 3rd June 2016" Buyer should not pay service tax on under construction property. Please suggest.

Thanks in advance.
Asked 7 years ago in Property Law
Religion: Hindu

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4 Answers

At times, the buyer may be duped by the builder / seller concerned who may have promised a gamut of amenities, features or likewise at the start of construction. But at the time of handing over the unit to the respective buyer, there are several unfulfilled promises seen by the home buyer. These can vary from being an illegal property to poor construction quality to not providing the promised amenities within the said project. As a result, the buyer feels cheated. Hence, to avoid a situation like this it is better that buyer’s do a detailed check of the property they are going to take for possession.

Before taking the keys from the builder or an owner, make sure that you have received the original documents and photocopies of all the essential documents from the builder/owner.

Check if the lifts, if any, are in the working condition especially if your unit is higher up. Besides this, you also need to see if the common areas are well-lit and have the promised flooring and tiling within it.

Builders promise a plethora of amenities such as swimming pool, club house and gym, to name a few, at the time of booking. However, it may happen that some of these may be delayed, or not in a non-desirable condition at the time of possession. If not then, ensure that these amenities are made available as per the agreement later on.

While a buyer may have gone through the necessary documents and may have done a site visit before buying a property, it is important to be doubly sure that everything is in place as expected. This simple checklist will help you have peace of mind before occupying that dream home.

As far as the judgement referred by you it pertains to a period before July 2012. From July 2012, a radical change was introduced in service tax wherein all services except certain services specified in the Negative List, were subjected to service tax. However, even from July 2012 and till date, the Act and Rules pertaining to service tax do not contain any provision for exclusion of value of land.

Anticipating an appeal by the Central Government to Supreme Court, builders are likely to continue charging service tax from buyers because in case the Supreme Court rules in favour of the revenue then the builders would be required to pay service tax along with interest. In a scenario where such tax has not been collected by them, the same would be a cost to them along with interest.

T Kalaiselvan
Advocate, Vellore
85409 Answers
2237 Consultations

5.0 on 5.0

1) builder can issue possession letter only after issue of OC

2) if OC is not issued builder cannot offer possession to flat purchasers

3) you are not liable to pay any amount to builder for extra 95 square feet

4) The Delhi High Court recently held that no Service Tax could be charged in respect to the contracts entered into with the builders or developers for the purchase of apartments/flats. In the case of Suresh Kumar Bansal vs the Union Of India, the bench of Justices S. Muralidhar and Vibhu Bakhru observed that the Section 65(105)(zzzh) is applicable for the purchase of units in a complex within the scope of taxable service. However, the service tax will still be applicable on preferential location charges (PLC) levied by a builder. The Court ordered if the developer has already collected the Service Tax on such services, same should be refunded with interest at the rate of 6%.

Ajay Sethi
Advocate, Mumbai
95208 Answers
7610 Consultations

5.0 on 5.0

1) ) builder has to carry on construction as per sanctioned plans . if plans show flat area as 1300 square feet builder cannot arbitrarily increase area by 95 square feet and demand flat owners pay for additional area

2) as per UP apartment act 2010" having a builder buyer agreement &

is mandatory, you are supposed to get the

agreement docuement, registered with authority within 4 months of

execution of BBA.& do ensure that builder buyer agreement mentions

"ALL" the details of l of Terms and conditions plus floor plan,

building plan, material to be used, specifications , amenities and

quality to be provided, common area and its use, built up area, carpet area, date of completion

3) builder can obtain OC for each tower separately

Ajay Sethi
Advocate, Mumbai
95208 Answers
7610 Consultations

5.0 on 5.0

Partial OC is granted to large projects that are being developed in different phases or blocks. ‘’Once a specific phase is completed, the concerned authorities after inspecting the building grants it a Partial OC. Simultaneously, as the next Phase finishes, partial OC is given to that as well and so on. Once the entire project is complete, Partial OC is replaced with one common OC for the entire project.

we are not liable to pay any amount to builder for extra 95 square feet. So my query is

"Do we have any clause (ACT/LAW) in our constitution which prevent builder to perform this wrong doing"

The builder canot demand any extra charges on this count.

there is no rule or law for this. He may asked to quote the rule or law for this extra charges or else you can ask him to settle the matter in court of law.

T Kalaiselvan
Advocate, Vellore
85409 Answers
2237 Consultations

5.0 on 5.0

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