Flat owners in country’s tallest towers take on builder over VAT  2 Residents Send Legal Notice, Developer May File Counter Complaint

Rajshri Mehta TNN 

Mumbai: Trouble is brewing at The Imperial, India’s tallest twin 60-storey residential towers at MP Mill compound in Tardeo. For the past few months, residents have been embroiled in a legal dispute with the developer, S D Corporation (SDC), over the latter’s demand for value-added tax (VAT). 
    Some of the residents claim the developer has not given them parking slots because of the dispute. Recently, two of the residents sent a legal notice to SDC, stating they are not liable to pay the VAT —an average Rs 40 lakh per flat —as it was not part of their sale agreement and they were not informed about it when the flats were sold in 2007. 
    SDC, a joint venture between construction firm Shapoorji Pallonji and builder Dilip Thakker, refuted the allegations. “No flat buyer has been denied possession of parking slot or flat,” SDC director Amit Thacker said. 
    The Imperial is home to influential individuals like Axis Bank CEO Shikha Sharma, HDFC chairman Deepak Parekh’s son, senior lawyer Satish Maneshinde and senior management executives of US private equity fund Blackstone. There are 116 flats in the two luxury towers; each flat costs an average of Rs 25 crore. 
    In a notice sent on behalf of a resident, lawyer Javed Gaya stated that SDC should have informed his client of the liability considering they were party to a writ petition filed in September 2007 against VAT. “This liability could have been factored into the purchase price. There was no provision for VAT in the letter of option (LoO) which deals with all liabilities, including service tax, to be paid by us. As it has been agreed that the conditions in LoA will supersede those in the contract agreement in case of a conflict, SDC’s action of surreptitiously inserting this liability in the sale agreement is unacceptable to us,” the notice stated. 
    The issue dates back to early 2012 when SDC started giving possession of flats. As the possession was delayed by two years, some residents demanded that SDC pay them interest at the rate of 11% interest per annum for the period as per the agreement. Even as the quantum of penalty was being debated, the SDC issued a demand notice for VAT. 
    Residents claim that when they voiced their objections, the SDC, through the security guards employed by it, restricted their entry and that of labourers employed by them to renovate their flats. The developer allegedly refused to give possession of flats and car parking slots till VAT was paid. 
    “Eleven of my son’s friends —all senior financial executives —purchased flats here because of him. Though VAT has been paid for my two flats, the developer is not giving me parking slots because my son has refused to pay VAT for his flat. Such behavior is very unbecoming of SDC,” said a resident, whose son is a senior executive with Blackstone and has a VAT liability of Rs 40 lakh. 
    Two of the residents, including one whose VAT liability is Rs 70 lakh—filed a complaint with the Tardeo police after their imported cars—a Mercedes and a BMW —were damaged. The cars were allegedly damaged in the parking garage which has CCTV cameras. 
    The SDC’s director said a section of residents was using armtwisting tactics to get their VAT liabilities waived. “Even after the Bombay high court upheld the levy, some purchasers have refused to reimburse the VAT amount we had paid on their behalf,” said Thacker. “They have breached the terms of the agreement. We are contemplating legal action for recovery of the VAT amount from these flat buyers.” 


HOUSE THAT | The Imperial comprises two 60-storey residential towers in Tardeo 
The towers were constructed by S D Corporation, a joint venture between construction magnate Shapoorji Pallonji and businessman Dilip Thacker . The towers have 228 luxury flats ranging from 2,500 sq ft to 10,000 sq ft. The flats, depending on the size, come with a price tag of 25-85 crore There are eight 10,000 sq ft penthouses.

TARDEO TUSSLE THE DISPUTE | Some residents claim the developer has not given them parking slots because of their refusal to pay VAT. Recently, two of the residents sent a legal notice to SDC, stating they are not liable to pay VAT—an average 40 lakh per flat—as it was not part of their sale agreement and they were not informed about it when the flats were sold in 2007.

THE OTHER SIDE | SDC director Amit Thacker denied the allegation saying, “No flat buyer has been denied possession of parking slot or flat. Of the 116 flat buyers on whom VAT is applicable, 111 have already paid.” While a majority of the purchasers had deposited VAT in escrow. Some had said they would pay when demand notices were issued by the authorities concerned. “They have breached the terms of the agreement. We are contemplating legal action for recovery of VAT from these flat buyers,” said Thacker


Source::::::::  The Times of India, 20-05-2013, p.03, http://epaper.timesofindia.com/Default/Client.asp?Daily=TOIM&showST=true&login=default&pub=TOI&Enter=true&Skin=TOINEW

High court seals builders’ conviction for double-selling same flat

Mustafa Plumber

The Bombay high court has upheld the conviction handed down to Vinay Mehta and Nitin Mehta of Anamika Real Estate Pvt Ltd for cheating a home buyer by double-selling a flat.  The sessions court had sentenced the duo to six months’ simple imprisonment and fined them Rs5,000 each. It also directed the firm to pay Rs 5,000 to the complainant, CM Lakhani.  In 1998, Lakhani met the Mehtas and decided to buy a flat in the under-construction Benzer Tower in Borivli (E) for Rs7.5 lakh. He paid Rs50,000 as the booking amount and the balance was to be paid as mentioned in the agreement signed on January 12, 1998.  When the project was not completed, in 2003, Lakhani checked with the sub-registrar of assurances office and found out that the duo had entered into an agreement with Annay and Nitin Kancholiya on June 20, 2000, for the same flat.  Advocate Mohan Tekawade, appearing for Lakhani, argued that the Mehtas deprived his client to be of his property and used the Rs50,000 for personal expenditure. The Mehtas argued that Lakhani neither paid the balance nor credited his demand notice so, they issued a final letter of cancellation of the agreement. They argued the case would amount to breach of contract and not cheating.  But justice KU Chandiwal dismissed the Mehtas’ revision petition and directed them to surrender before the authorities concerned.

Source:::: DNA, 01-11-2012, p.02. http://epaper.dnaindia.com/story.aspx?id=30856&boxid=15738&ed_date=2012-11-01&ed_code=820009&ed_page=4

No escaping VAT, high court tells builders

Dismisses clutch of petitions seeking the quashing of govt circulars on the tax

DNA Correspondent l Mumbai

Builders will have to assess their tax liabilities the way the government wants it to and pay VAT (value added tax) by October 31.  Also, they can avail of the option of composite payment for agreements entered after April 2010, the Bombay high court ruled on Tuesday.  While upholding the two sales tax department circulars related to VAT, the court dismissed a clutch of petitions from various builders’ bodies that had sought the quashing of the circulars.  The Maharashtra Chamber of Housing Industry and the Builders Association were among the petitioners. A division bench of justices DY Chandrachud and RG Ketkar directed the developers/builders to register themselves with the sales tax department and pay VAT as per the new Maharashtra Value Added Tax (MVAT) Act, 2002. Under the act, the new definition of “sale” makes it mandatory for developers to pay tax every time they sell a flat/house.  As per the circular, developers were supposed to register by September 15 and pay the taxes by October 31. The earlier deadline was August. The SC had extended it while admitting a petition that challenged the HC order, which had upheld the constitutional validity of an amendment in the MVAT Act (changing the definition of “sale”). Going by the circulars, developers will have to pay 5% of the agreement value as tax for flats built between June 2006 and March 31, 2010. In case of tax liability after April 1, 2010, developers will have to pay 1% of the agreement value as tax without any land deduction and input tax credit.  For the period 2006-2010, input tax credit, with conditions, will be available. Also, deduction for labour and service will be available on actual basis. Deduction of land cost too will be there followed by a 30% standard deduction from the remaining amount.  The petitioners wanted the composite scheme — offered to developers for agreements entered after April 1, 2010 — to be extended to them.  But the bench rejected it saying, “The state is empowered to provide scheme of composition to registered dealers. While providing the scheme the first principle is to encourage voluntary compliance of the law.”  The court went on to add, “The scheme is not a way of amnesty but provisions made by the state acting as a delegate of the legislature.” Source:::: DNA, 31-10-2012, p.01. http://epaper.dnaindia.com/story.aspx?id=30776&boxid=23190&ed_date=2012-10-31&ed_code=820009&ed_page=1

Flat handover delay, missing amenities to cost builder 2L

Nitin Yeshwantrao TNN 

Thane:Abuilder hasbeen fined Rs 2 lakh for the delay in handing over possession of threeflats to the two buyers and non-compliance of a written promise to provide basic amenities to the residentsof HillPalacebuilding near Upvan Lake here. The Thane District Consumer Disputes Redressal Forum also directed the builder, M/s Patsons Engineers, to pay Rs 10,000 towards cost of legal expenses borne by the two buyers and an additional Rs 1,000 for failing to provide the piped gas line to their flats as the builder had promisedinitially in 2006. 
    President of the consumer forum, R B Somani, and member Jyoti Iyer ruled in favour of the two residents—Priyank Kumar and Kiran Madhav Prasad-—who had dragged the builder for lapses. 
    It is learnt that the builder had assured to hand over the flatsin May2006 and alsooffered a string of amenities, including asafety door, power back-up andborewell facility within the premises of the high-rise overlooking the Yeoor forest in Thane(West). 
    The two had approached the builder in Feb2006 andwereconvinced into buying three flats of different sizes. An upfront payment of Rs 10.80 lakh, Rs.17.55 lakh and Rs.10.80 lakh respectively was made to the builder, who assuredthem of flat possession by May 2006. Besides a collective Rs 39.15 lakh paid by the duo to the builder, they also shelled out Rs 2.13 lakh towards miscellaneousexpenses. 
    Thirty-three months after the promiseddateof possession, the builder handed over keys to the flats in April 2009. Not just that,theflatswere a far cry from what was promised—safety door, power back-up, borewell, etc were missing from the new flats and neither was any possession certificate or an Occupation Certificateissued. 
    The Forum ruled it as “unfair trade practice and sheer deficiency in services’’ on part of thebuilder.


Source:::: The Times of India, 03-10-2012, p.04. http://epaper.timesofindia.com/Default/Client.asp?Daily=TOIM&showST=true&login=default&pub=TOI&Enter=true&Skin=TOINEW

Builders Cut out of Resale Deals

If developers do not give conveyance certificates, Govt. will

Sudhir Suryawanshi l Mumbai

Developers will no longer have a say in redevelopment or resale plans, the state government recently announced. So if you are still to get the conveyance certificate of your flat, do not despair. The state housing department has a backup plan. If a builder has failed to give a conveyance certificate within four months of completion and handing over flats, the local deputy registrar’s office will issue a deemed certificate.  This effectively means no objection certificates from developers will not be needed anymore. It is well-known that builders/developers deliberately hold on to conveyance certificates even after handing over flats to buyers. Till now certificates were a must for redeveloping or reselling flats. Even banks made NOCs from developers compulsory while disbursing home loans. Ramesh Prabhu, chairman of Maharashtra Societies Welfare Association (MSWA), said developers often exploited buyers in the name of certificates. “They charge Rs500 per square feet on average while giving NOCs in connection with resale of flats or seeking bank loans to buy a flat or registering housing societies or simply going for redevelopment,” he said. “I hope, this new circular will curb the malpractice in the housing sector.” The state housing department has already informed the property registration and stamp duty department and the City and Industrial Development Corporation (CIDCO). “The deputy registration officials at the district level will call a housing society and the building’s developer if certificates are not issued,” Prabhu said. “And they will issue deemed certificates in case the builder hasn’t issue any within four months of handing over flats.”  Advocate Mahendra Sandhanshiv said the state housing department’s decision will stop developers from exploiting flat buyers. “As it is housing rates are very high. And then there is developer’s commission in exchange of NOC. “Even after selling a flat, a developer continues to reap monetary benefits by holding on to certificates,” he said. “Now that will stop.” Despite repeated attempts, Paras Gundecha, president of the Maharashtra Chamber of Housing Industry, could not be contacted. Source::::: DNA, 01-10-2012, p.01.  http://epaper.dnaindia.com/