Demanding Extra Amount For Flat As If For Tax- Deficiency In Service: Delhi State Commission Holds E-Homes Infra Liable

Brief facts:

The complainants booked a flat in the housing project titled- 'Jewel of Noida' of E-Homes Infrastructure Pvt. Ltd. ('builder') for a consideration of Rs. 72,61,000/- situated in Sector-75 Noida. An allotment agreement dated 26.04.2017 was executed between the complainants and the builder. Accordingly, a sum of Rs. 1,00,000/- and Rs. 9,89,150/- was paid on 28.04.2017 and 31.05.2018 respectively. Thereafter, a loan of Rs. 58,08,800/- was obtained from PNB Housing Finance and a tripartite agreement was executed between the parties. The complainants have made a payment of Rs. 68,97,950/- i.e 95% of the total consideration of the flat and the remaining was to be paid at the time of possession.

As per the complainant, the builder failed to communicate regarding the possession despite enquiries being made and thereafter, a letter was received from the builder demanding a sum of Rs.15,25,120/- which included GST and Service tax. The complainants objected to the demand contending that this tax was never mentioned earlier and cannot be demanded at a belated stage. The builder then cancelled the allotment agreement by way of a letter dated 11.05.2018.Thus, a refund was sought by the complainants but to no avail. Hence, a complaint was filed by the complainants before the Delhi State Commission praying for appropriate compensation.

Submissions of the builder:

As per the builder the complainants do not qualify as ' Consumer' under the Consumer Protection Act, 1986 since the flat was purchased for investment purposes and teh complainants reside in Australia. It was submitted that due intimations were given to the complainants regarding possession of flat. It was further submitted that the flat was completed well within time and possession was offered. As per terms and conditions of the allotment agreement, the builder is entitled to forfeit 10% of the total sale consideration in the event of cancellation of flat allotment.

Observations of the commission:

Issue 1: Whether the complainants fall within the definition of 'Consumer' under the Consumer Protection Act, 1986?

The bench relied on the decision of the NCDRC in Aashish Oberoi vs MGF Land Ltd (2017) wherein it was held that a person may purchase separate houses for individual use of family members. Thus, it was observed that though complainants are residing in Australia, the house could have been purchased for other members.

Additionally, it was observed that the builder has placed nothing on record to show that the flat was purchased for commercial purpose. Hence, the complainants were held to be consumers for the purpose of the 1986 Act and the complaint was maintainable.

Issue 2: Whether there is deficiency in service in providing services to the complainants?

The bench perused the tax demand letter and observed that the builder never raised any demand for Service Tax and GST earlier during the course of construction. It was further observed that the receipts issued to the complainants also reflected 'Zero' in tax columns and no documentary evidence has been produced by the complainant to show that such tax was to be recovered at a later stage.

Thus, the attempt to charge an extra amount under the guise of GST and Service Tax was held to be arbitrary and unjust. The letter demanding the amount was also held to be without justification. Hence, the builder- E-Homes Infrastructure Pvt. Ltd. was held liable for deficiency in service for providing its services in charging an extra amount for the flat and cancelling the allotment in an arbitrary manner.

The complaint was thus allowed with the following reliefs and directions:

1. The builder was directed to hand over physical, vacant and peaceful possession of the flat within 2 months.
2. Rs. 3,00,000/- as costs for mental agony.
3. Rs. 50,000/- as litigation costs.

Case Title: Rajeev Menon vs E-Homes Infrastructure Pvt. Ltd.

Case Number: Complaint No. 1450/2018

Date of Decision: 26.08.2025

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