Emerald
Hills Owners Welfare Association
KULDEEP KUMAR
KOHLI
1.
H.E. Mohamed Ali Rashed Alabbar,
Chairman,
Emaar
Properties
PO
Box 9440, Dubai, UAE
2.
Mr. Hussain Ahmad Dhaen AL Quemzi,
Vice
Chairman,
Emaar
Properties
Dubai
Respected His Excellences,
At the very outset I wish to put on record the
hard work being put in by Ms. Namita Mehta and the other heads from the legal
and finance team in trying to meet the expectation of different buyers on
different issues and many of the buyers from our Group, who were agreeable to
the fresh offer of Emaar, in the process, have signed fresh agreements,
though the relief granted by Emaar was far below our expectation and the gains
made by Emaar by holding the delivery of the flats/plots much beyond the date
promised in the BBA.
We are aware of His Excellency Mohamed Alabbar being an Emirati billionaire and the founder and Chairman of Emaar Properties, one of the largest real
estate development companies in
the world with annual revenue of $4.2 billion and a market cap of over $20
billion, known for developing the world's tallest building Burj Khalifa and the world's largest mall Dubai Mall, which are part of Emaar's 500-acre flagship mega-development Downtown Dubai, as well as The Tower at Dubai Creek Harbour, set to be over 3,000 feet tall upon completion in 2020, the
2,000-seat Dubai Opera, Dubai Marina, the world's biggest man-made marina, Emirates Hills, regarded as "the Beverly Hills of Dubai",
and King
Abdullah Economic City, established
with King
Abdullah of Saudi Arabia as one of the largest private developments in the
region spanning 64 square miles.
The creation of such a huge empire has only been possible
because of the moral principles and the social values that are being followed
by the Respected Promoters of the Group and the employees or in short is
because of following the “Business Ethics” such as providing quality goods
and services at reasonable prices to its customers, avoiding adulteration,
misleading advertisements and other unfair malpractices and also following
proper business policies and practices such as corporate governance, corporate
social responsibilities.
I
as the President of Emerald Hills Owners Welfare Association on behalf of
owners of different Emaar Projects in India wish to convey to you His
Excellency that THE BUYERS OF FLATS/PLOTS/COMMERCIAL SPACE IN YOUR PROJECTS are
too disturbed with few of the practices being followed in respect of your
projects in India which do not appear to be, in line with the business
ethics of the Group, which most likely is not within your knowledge
and hence deserves an immediate indulgence at your end in resolving the same. I
bring to your notice that these defaults have already dented the image of Emaar
via media/television , but then we are also confident that H.E. would initiate
the needful resolutions which would help recover the brand image of Emaar.
We
are very confident of your being aware of the recent change in the environment
in India in favour of the buyers through various judgements being announced by
the Honourable Supreme Court and the Honourable National Consumer Dispute
Redressal Commission and the evolution of the RERA (Real Estate Regulatory
Authority).
The
major issues which need your immediate indulgence and kind intervention are the
following:
1.
HVAT
2.
GST
3.
COMPENSATION TO THE BUYERS WHO BOUGHT IN RESALE WITHIN ONE YEAR OF THE ORIGINAL
PURCHASE
4.
COMPENSATION TO THE BUYERS WHO BOUGHT IN RESALE AFTER ONE YEAR OF THE ORIGINAL
PURCHASE.
5.
COMPENSATION TO THE BUYERS WHO SIGNED AN AGREEMENT WITH YOU WHERE THE DATE OF
START OF CONSTUCTION IS NOT SPECIFIED.
6.
COMPENSATION TO THE BUYERS WHO HAVE ALREADY TAKEN POSSESSION OF THE FLAT BUT
HAVE NOT BEEN GIVEN ANY COMPENSATION UNDER THE PRETEXT OF SOME DELAY IN PAYMENT
OF INSTALMENT.
7.
COMPENSATION TO THE BUYERS WHO MADE ALL PAYMENTS ON TIME AND HAVE TAKEN THE
POSSESSION BUT HAVE NOT BEEN GIVEN ANY COMPENSATION OR HAVE BEEN GIVEN TOO LOW
A COMPENSATION
1. H VAT
Emaar has already recovered
the VAT amount due by the allottees in the sale price of the allotted units.
Any and all future liability arising from Emaar’s incorrect assessment of the
tax amount is not the liability of the allottees. The Allottees are not liable
for Emaar’s further tax liabilities in the matter beyond what has been paid
under the sale price. Furthermore it is provided that even if you had opted for
the Rule 49A scheme, you are barred by the rule, specifically at Rule 49A
(2)(v)&(vi) to collect the tax amount paid or issue tax invoice from the
buyers.
The
fact that the company had challenged the assessment/demand notices, raised by
the authorities on account of levy of Haryana Value Added Tax HVAT on the
construction of the units was never intimated to the buyers at the time of
booking the flats in May 2009 and was not even mentioned in the Builder Buyer
Agreement, which clearly implies that the cost of 3.87% of the total
consideration due towards HVAT was already included in the cost at which
the flat was offered to the buyer.
You
have subsequently opted for the amnesty scheme and paid 1% HVAT and hence the
amount of 3.87% minus 1.05% now paid needs to be refunded to our members who have
bought your property as the said amount of 3.87% is already included in the
sale price. Additionally from some buyers an additional 1.05% was collected
against the HVAT-amnesty-scheme and this also needs to be refunded.
2. GST
His Excellency, the overall
tax liability on home has been reduced after the implementation of Goods &
Services Tax, 2017 whereas the benefit so accruing is not being passed to the
buyers by your branches in India. The law on the issue is very clear and
despite this clarity on law position, if any
builder resorts to such practice, the same can be deemed to be profiteering
under section 171 of GST law which is illegal.
The position of
Government of India on GST is as under :
- The
CBEC and States have taken cognisance of many buyer complaints that in
view of the works contract Service Tax rate under GST at 12% in respect of
under construction flats, complex etc., those who have booked flats and
made part payment before 1st July, 2017, are being asked to
bear higher tax incidence for payments made after 1st July,
2017. The government has reiterated that this is against the GST law, as
explained below.
- Construction
of flats, complex, buildings have a lower incidence of GST as compared to
a plethora of Central and State Indirect Taxes suffered by them under the
earlier regime.
- Central
Excise Duty was earlier payable on most construction material @ 12.5%. It
was higher in case of cement. In addition, VAT was also payable on
construction material @ 12.5% to 14.5% in most of the States. In addition,
construction material also earlier suffered Entry Tax levied by the
States. Input Tax Credit of the above taxes was not allowed for payment of
Service Tax. Credit of these taxes was also not available for payment of
VAT on construction of flats etc. under composition scheme. Thus, there
was cascading of input taxes on constructed flats etc.
- As
a result, incidence of Central Excise Duty, VAT, Entry Tax, etc. on
construction material was earlier being borne by the builders, which they
passed on to the customers as part of the price of flats charged from
them. This was not visible to the customer as it formed a part of the cost
of the flat.
- The earlier headline rate of Service Tax on construction of flats,
residences, offices etc. was 4.5%. Over and above this, VAT @ 1% under composition
scheme was also charged. The buyer only looked at the headline rate of 5.5%. In other
Cities/States, where VAT was being levied under the composition scheme @ 2% or above, the headline
rate visible to the customer was above 6.5%. What the customer did not see is the embedded
taxes on account of cascading and sticking of input taxes in the cost of the flat etc.
- The
situation has changed under GST. Under GST, full input credit is available
for offsetting the headline rate of 12%. As a result, the input taxes embedded in the
flat will not (& should not) form a part of the cost of the flat. The input
credits should take care of the headline rate of 12% and it is for this reason that refund of overflow
of Input Tax Credits to the builder has been disallowed.
- The
builders are expected to pass on the benefits of lower tax burden under
the GST regime to the buyers of property by way of reduced prices/
instalments. It is, therefore, expected from Emaar that in the flats under
construction, they should not ask customers to pay higher amount of
instalments inclusive of all taxes to be received after imposition of GST.
3.
COMPENSATION TO THE BUYERS WHO BOUGHT IN RESALE WITHIN ONE YEAR OF THE ORIGINAL
PURCHASE
4.
COMPENSATION TO THE BUYERS WHO BOUGHT IN RESALE AFTER ONE YEAR OF THE ORIGINAL
PURCHASE.
Excellency,
the above two issues No. 3 and 4, are well taken care in the judgment below and
this is based on the views expressed by the Honourable Supreme Court in
Haryana Urban Development Authority Vs. Raje Ram, AIR 2009 SC 2030.
CONSUMER
CASE NO. 427,430-440 of 2014
Versus
M/s
Unitech LTD (Opposite party –OP)
Para
9. For the reasons stated hereinabove, I am of the considered view that the
opposite party should handover possession of the apartments booked by the
complainants on or before the last date stipulated in the letter of the
opposite party dated 27-05-2015. In the cases of those complainants who are the
initial allottees of the apartments or who acquired the same within one year of
the initial allotment, the opposite party should also pay compensation to them
in the form of simple interest at the rate of 12% per annum with effect from
the date of possession stipulated in the agreement till the date on which the
possession is actually handed over to them. The persons who purchased the
flats within one year of the initial allotment, ought to be treated at par with
the initial allottees, because at least two more years being still available to
the opposite party at the time of purchase by them, they could not have
anticipated that the builder will not be able to honour its commitment, as
regards the stipulated date of delivery of possession. No separate
compensation for the mental agony, harassment and suffering needs to be paid by
the opposite party to the complainants.
However,
in the case of those complainants who acquire the flats by way of resale more than
one year after the initial allotment, the opposite party should pay
compensation in the form of simple interest at the rate of 12% per annum with
effect from three years from the date of the repurchase till the date on which
the possession is delivered to them
5.
COMPENSATION TO THE BUYERS WHO SIGNED AN AGREEMENT WITH YOU WHERE THE DATE OF
START OF CONSTUCTION IS NOT MENTIONED
During
our discussions with your team in Gurgaon, it was agreed to by them that the
date of signing the BBA would be taken as the date of construction for grant of
compensation but there appears to be some change of mind amongst your senior
management in Gurgaon, India and no compensation is being given to them by your
office in India.
His
Excellency may kindly like to appreciate that this kind of an injustice cannot
be meted out to the innocent buyers who have all, having faith in the
brand Emaar, signed the contract under the impression that the project
construction would be started within a reasonable period of a month or two from
the date of signing the contract. Hence in all such cases the date of start of
construction may kindly be taken as the date of signing the BBA.
6.
COMPENSATION TO THE BUYERS WHO HAVE ALREADY TAKEN POSSESSION OF THE FLAT BUT
HAVE NOT BEEN GIVEN ANY COMPENSATION UNDER THE PRETEXT OF SOME DELAY IN PAYMENT
OF INSTALMENT.
7.
COMPENSATION TO THE BUYERS WHO MADE ALL PAYMENTS ON TIME AND HAVE TAKEN THE
POSSESSION BUT HAVE NOT BEEN GIVEN ANY COMPENSATION OR HAVE BEEN GIVEN TOO LOW
A COMPENSATION
His
Excellency, the above category of buyers at point No. 6 & 7, are the
biggest sufferers, as they took the possession when offered to them, did
not prefer to go in for litigation and have been denied the basic compensation
for the delay/offered too less a compensation, though others have been
offered more and hence require your kind and personal indulgence on priority to
be placed at par with others.
In
view of above, we shall be grateful for a quick justice to the buyers on
priority on all the issues mentioned above.
His
Excellency, it may be difficult for me to hold so many buyers
moving
the Honourable Courts and hence an early action at the end of Emaar, under your
instructions, shall be highly appreciated.
Thanking
you,
Yours
faithfully
KULDEEP
KUMAR KOHLI
PRESIDENT
Copy
to:
Mr. Sanjay Malhotra,
Chief Executive Officer,
Emaar India,
Emaar Business Park,
MG Road, Sikanderpur Chowk,
Sector 28,
Gurugram – 122002
Ms.
Namita Mehta
Chief
Service Officer,
Emaar
MGF Ltd,
Sikandarpur,
Gurgaon
Mr. Ashish Kabra,
Chief Financial Officer,
Emaar India,
Gurugram – 122002
