A friend of mine Mr A bought a flat in resale from Mr B in Faridabad, Haryana. Mr B was offered possession by Builder C but did not take possession as he was an investor and wanted to sale the flat . A paid entire sum of consideration to B. Builder C charged certain transfer Fee from Mr A and has transferred the Flat in his name. Builder endorsed earlier receipts of Mr B in favor of A but made a fresh builder buyer agreement with A.
Builder has offered possession to A and he has taken the possession. The problem starts now.
2. Earlier, A was informed by brokers involved and builder also that apart from transfer fee and service tax, he does not have to pay anything extra. However, when A approached builder for registration of Flat, he was asked to pay VAT@4.2 % of entire consideration amount else he will not execute and register sale/conveyance deed. It was never mentioned earlier and does not find any mention in possession letter or invitation to execute sale deed letter. In the invitation to sale deed letter, they are asking for only registration fees, stamp fees and legal fees. The VAT is demanded orally only.
3. On the basis of information collected by me, it appears that Haryana govt imposed VAT on sale of under construction properties in 2013 but a case is pending in Punjab and Haryana High Court. Based on res judicata of Larson and Tubro Judgment and Raheja Judgment , it appears that when A bought the property , it was ready to occupy and complete in all respects. The date of new builder buyer agreement between A and C is clearly posterior to completion of the flat.
4. In the light of above, is the builder justified in demanding VAT from a resale customer that too, after completion of building wherein more than half of the flats are occupied for more than a year?
What legal or other recourses A has at his disposal to resolve the issue, especially when he has paid the consideration amount at a premium to a third person B who is no more involved in the issue?
