I bought 2 villas for 30 lakh from a builder in April 2012 on a construction link plan. As per Sale Agreement, he would give the position of the villas within 8 months. He didn't mention any service tax, late fees, maintenance fee clauses in the contract. I have made all the payments by cheque to his account. He didn't issue any receipt for it so far. There was not delay from my end in making payment. He gave me the position of one Villa in October 2015. I have already made full payment of Rs.30 lakh to him in Nov 2015 as per contract. He has not completed my second Villa yet. Bathroom toilet seats, Kitchen sink and electrical wiring still left. He is now demanding total amount Rs.1,71,000 as service tax, late fees and maintenance charges. As per him, he will give the position only after I pay Rs.1,71,000 extra than the agreed amount. My questions: 1. Can the Builder charge me service tax, late fees and maintenance charges when there are no such clauses in the Sale Contract? 2. Do I have to pay him Rs.1,71,000 extra when I have already paid him the full amount as per the sale contract? 3. If I don't have to pay him extra then how to get position for my second Villa now?
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1. If there is subsequent change in law making payment of service tax mandatory then youa re liable to make such amount even if the agreement is silent on this.
2. As far as other expenses are concerned if those are covered by the agreement then you are not bound to make such payment.
3. I would suggest you ti file case in consumer forum where you can seek relief of damages and completion of sale.But service tax will have to be paid by you.
How to ensure that even if I pay service tax, the builder is paying it to the government and not keeping to itself?
If he does not pay he will be prosecuted by the govt. That is not your headache. You can ask for ST Registration No. to cross check it.
1) if there is no provision in your contract for late fees , maintenance charges builder cannot charge you the same
2) pay the amount of Rs 1.71 lakhs under protest .
3) take possession of villa then move consumer forum and seek refund with interest
4)Service tax is applicable on almost all services that a consumer avails, including buying an under-construction property. This is so because, in case of an under-construction property, the developer is deemed to be the provider of construction services to the homebuyer, and hence service tax is charged on the cost of construction. It is not charged on the entire value of the property but only to the extent of cost of construction.
1) Builder will issue 2 separate payment receipts i.e. one each for VAT (with Tax Invoice no and TIN) and ST (with Tax Invoice No and ST registration no).
2) VAT & Service tax should be specifically mentioned in the sale agreement and which party will bear this cost
3) responsibility of builder is to deposit the VAT and Service Tax with govt. It doesn’t mean he has to deposit from own pocket
As Service tax (also late fee and maintenance charges) was not mentioned in the Sale agreement, I have asked the builder to issue a proper demand letter for the same. Am I right in asking the demand letter for the extra amount? Should I pay him the extra amount by cheque even if he doesn't issue me a demand letter for the same?
1) ask builder to give detailed break up of amount payable towards service tax , late fees etc
2) you should insist on demand letter
3) also receipt for payments made by you
4) dont pay without any demand letter
1. The answer is a big NO. Unless there is a provision of service tax, late fees and maintenance charges in the agreement the builder cannot demand any of these.
2. Refuse to pay him the amount and you may then file a lawsuit against him seeking directions to deliver the possession with compensation for delay. Alternatively, you may make the payment under protest and then file a lawsuit to recover the paid amount with compensation.
You have the right to seek a demand letter. Do not pay on the basis of an oral demand. If you decide to pay under protest then remit the amount through a cheque drawn in his favour.
1. Builder can charge service tax to you but not any other tax. He has to pay the service tax to the commertial tax department. If it is written in the agreement that the consideration includes all taxes then you won't have to pay service tax also,
2. When there is no default on your part then you won't have to pay any amount other than Service Tax,
3.File a complaint case before your local District Consumer Dispute Redressal Forum alleging deficiency in service and unfair business practice claiming immediate possession of the Villa, rent for similar type of Villa in the same locality, interest, damage and cost,
4. Engage a local lawyer having expertise in this field.
1. Take the Money Receipt separately from the builder specifically stating that the payment received is on account of the service tax towards the sale of the Villas to you,
2. Send a copy of the same to the Commercial Tax Authority.
3. He will be nailed if he fails to deposit the amount to the Commercial Tax Authority.
1. Send him a letter asking him to send you a letter of demand for giving possession of the Villa,
2. Do not pay him any amount unless he sends you the demand letter as otherwise he will claim that he had a verbal price escalation agreement with you for which you have made the payment without any demur.