2013 (2) TMI 298 - SC - Service Tax

Court affirms broad interpretation of 'service' under Consumer Protection Act, 1986

Narne Construction (P.) Ltd. Versus Union of India

The Court affirmed the High Court's decision that the appellant-company's activities constituted 'service' under the Consumer Protection Act, 1986. The ... Housing construction and building activities carried on by a private or statutory body - Consumer Protection Act, 1986 - whether such activity tantamounts to service within the meaning of clause (o) of Section 2(1) of the Act - Held that:- As decided in Lucknow Development Authority v. M.K. Gupta [1994 (11) TMI 364 - SUPREME COURT OF INDIA] as relied upon by High Court the activities of the appellant-company in the present case involving offer of plots for sale to its customers/members with an assurance of development of infrastructure/amenities, lay-out approvals etc. was a 'service' as when a person applies for allotment of building site or for a flat constructed by development authority and enters into an agreement with the developer or a contractor, the nature of the transaction is covered by the expression 'service' of any description. The housing construction or building activity carried on by a private or statutory body was, therefore, held to be 'service' within the meaning of clause (o) of Section 2(1) of the Act as it stood prior to the inclusion of the expression 'housing construction' in the definition of 'service' by Ordinance No.24 of 1993. Having regard to the nature of the transaction between the appellant-company and its customers which involved much more than a simple transfer of a piece of immovable property it is clear that the same constituted 'service' within the meaning of the Act. It was not a case where the appellant-company was selling the given property with all advantages and/or disadvantages on 'as is where is' basis, as was the position in U.T. Chandigarh Administration v. Amarjeet Singh [2009 (3) TMI 862 - SUPREME COURT]. It is a case where a clear cut assurance was made to the purchasers as to the nature and the extent of development that would be carried out by the appellant- company as a part of the package under which sale of fully developed plots with assured facilities was to be made in favour of the purchasers for valuable consideration. To the extent the transfer of the site with developments in the manner and to the extent indicated earlier was a part of the transaction, the appellant-company had indeed undertaken to provide a service. Any deficiency or defect in such service would make it accountable before the competent consumer forum at the instance of consumers like the respondents - against service provider. Issues:Determining if the appellant-company's activities constitute 'service' under the Consumer Protection Act, 1986.Analysis:The primary issue in this case was whether the activities of the appellant-company fell within the definition of 'service' under the Consumer Protection Act, 1986. The High Court, relying on the decision in Lucknow Development Authority v. M.K. Gupta [1994] 1 SCC 243, held that the appellant was indeed a 'service' provider, making it subject to the jurisdiction of consumer fora under the Act. The High Court highlighted that the transactions between the appellant and the respondents involved not just a simple sale of property but also obligations for development and provision of infrastructure, thus constituting an element of service.The Court extensively analyzed the definitions of 'consumer' and 'service' under the Act. It noted that the term 'consumer' encompassed a wide range of individuals affected by various trade practices, including those who purchase goods or services. The definition of 'service' was also interpreted broadly, extending to any service made available to potential users, including services provided by both private and statutory bodies. The Court emphasized that the Act aimed to protect consumers against services rendered by all entities, whether public or private.Moreover, the Court delved into the concept of housing construction activities carried out by private or statutory bodies, affirming that such activities qualified as 'service' under the Act. It clarified that services rendered in the construction of houses or flats, whether by private builders or statutory authorities, were covered under the Act's definition of 'service.' Any deficiencies in such services, such as delays in possession or substandard construction, constituted unfair trade practices and could be addressed under the Act.The judgment also referenced the Bangalore Development Authority v. Syndicate Bank [2007] 6 SCC 711 case, which highlighted that consumers could claim compensation for harassment and mental agony in cases where full payment was made, but title deeds were not executed without justifiable cause. The Court affirmed that the legal position on the subject was well-settled through previous pronouncements and upheld the High Court's decision, dismissing the appeals without costs.In conclusion, the Court upheld the High Court's ruling that the appellant-company's activities constituted 'service' under the Consumer Protection Act, 1986, and were subject to the jurisdiction of consumer fora. The judgment reaffirmed the broad interpretation of 'service' under the Act, encompassing a wide array of transactions involving the provision of goods or services to consumers.