Haryana RERA Directs Builder To Pay Interest And Pass Benefit Of Tax Reduction To Homebuyer

The builder continued charging 8% GST from the homebuyer, despite the Ministry of Finance's Notification No. 03/2019 CT (Rate) dated March 29, 2019, which reduced the GST rate on Affordable Housing Projects to 1%.

Background Fact

The homebuyer (Complainant) booked a flat in the builder's (Respondent) project named ROF Ananda, an Affordable Group Housing Colony situated at Sector-95, Gurgaon on June 2, 2019, and paid Rs. 1,12,334. Further Builder-Buyer Agreement (BBA), was executed on July 19, 2019.

According to the BBA, the total sale consideration for the flat was Rs. 22,46,680, and the flat, numbered C205 in Tower-C on the 2nd floor with a carpet area of 549.17 sq. ft. and a balcony area of 100 sq. ft., was allotted to the homebuyer.

As per the BBA, the builder was supposed to handover the possession of the flat within four years from the date of approval of building plans or environmental clearance, whichever was later.

Homebuyer contended that Despite having deep resources and a legal team, the builder company failed to recognize the implications of the Ministry of Finance's Notification No. 03/2019 CT (Rate) published on March 29, 2019, regarding the reduction of GST on Affordable Housing to 1%.

Instead, the builder company continued to charge 8% GST from the homebuyer, even though the homebuyer booked the flat after the notification. When the homebuyer raised this issue, the builder company ignored them.

Homebuyer further contended that The builder never offered possession to the homebuyer despite their follow-ups they did not update them on the flat's status. When the homebuyer visited the site, the guards refused their request to see the construction and showed them another flat that did not meet their needs, stating that site visits were prohibited by the company's authority.

Feeling Aggrieved, Homebuyer filed complaint before authority seeking physical possession without any illegal conditions and interest for Delayed possession.

Observation and Direction by Authority

The authority held that the offer of possession made by the builder on February 22, 2022, was improper because the courier sent to the homebuyer never reached its destination due to an incomplete address and the absence of a contact number on the envelope.

The authority further observed that a valid offer of possession must include three components: it must be made after obtaining an occupation certificate, the unit must be in a habitable condition, and the possession should not be accompanied by unreasonable additional demands. Therefore, the authority concluded that the offer of possession made by the builder was not valid as it contained unreasonable additional demands.

The authority directed the builder to pay interest to the homebuyer for every month of delay from the due date of possession (09.04.2022) until the actual possession of the flat is handed over, at a rate of 10.95% per annum.

Regarding the issue of GST, the authority directed the builder's company to refund the GST amount charged at 8% to the homebuyer, following the Ministry of Finance's notification dated 29.03.2019.

The authority held that under section 171 of the Central Goods and Services Tax Act, 2017, and the Haryana Goods and Services Tax Act, 2017, any tax reduction or input tax credit benefits must be passed on to the customers through a corresponding price reduction.

Case – Satakshi Gupta & anr Versus M/S Chirag Buildtec Pvt. Ltd.

Citation - Complaint No. 2521 of 2023

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