HC relief for buyers in Seawoods Integrated Complex

n an order that will have a major impact on the ambitious Seawoods Integrated Complex (SIC) project being developed in Nerul node of Navi Mumbai, the Bombay high court has resolved the long-pending tussle that had cropped up between the City and Industrial Development Corporation (CIDCO) and the developer Larsen & Toubro Seawoods Ltd

NAVI MUMBAI: In an order that will have a major impact on the ambitious Seawoods Integrated Complex (SIC) project being developed in Nerul node of Navi Mumbai, the Bombay high court has resolved the long-pending tussle that had cropped up between the City and Industrial Development Corporation (CIDCO) and the developer Larsen & Toubro Seawoods Ltd. (LTSL) over service tax claim payment and issue of no-objection certificate (NOC) and no dues certificate (NDC).

Navi Mumbai, India - March 20, 2023: HC relief for buyers in Seawoods Integrated Complex, at Seawoods, in Navi Mumbai, India, on Monday, March 20, 2023. (Photo by Bachchan Kumar/ HT PHOTO) (HT PHOTO)

LTSL, a special purpose vehicle (SPV) of Larsen & Toubro, is developing the integrated complex near Seawoods Railway Station in sector 40 of Nerul. The complex costing ₹1,809 crore, spread over 16.20 hectare, comprises a railway station, which has been completed, commercial, office, retail and residential spaces, which are being developed in different phases.

The HC bench of justices Gautam Patel and Neela Gokhale has on a petition by the LTSL ordered the CIDCO to issue NDC and NOC and other similar certificates for the project, while accepting the indemnity furnished by the developer on service tax demand, enabling the LTSL to get occupancy certificate (OC) from the Navi Mumbai Municipal Corporation (NMMC).

The CIDCO had received a demand of ₹134 crore from the commissioner of GST and Central Excise dated November 21, 2017, about which the development corporation had written to the LTSL on December 28, 2019. The demand was for service tax for the period of June 2012 to July 2014 for the lease premium paid by the L&T. The CIDCO asked to be indemnified, which the LTSL had initially refused.

While CIDCO filed an appeal against the claim with the appellate tribunal, it asked for an undertaking-cum-indemnity bond from the LTSL affirming that it would pay the service tax demand should it arise if the appeal is decided adversely.

On September 19, 2022, the SPV wrote back that though it had not received any demand, since it had completed the residential project and wanted to ensure no hurdles in delivery of flats to buyers, it was submitting the required indemnity bond for the service tax liability.

The LTSL then approached the HC to direct the CIDCO to issue NDC and NOC to enable it to get OC from the NMMC for the project and to also not withhold such certificates in future on the ground that the developer has disputed its liability to pay service tax accrued for lease premium on DA of April 21, 2008.

The CIDCO through its advocate Ashutosh Kulkarni submitted that since the matter is for appeal, the CIDCO must be fully protected. It claimed that the petition left a potential liability of the CIDCO as the petition spoke of petitioner disputing the tax liability and that the petition did not refer to the indemnity submitted by LTSL. It asked for the indemnity to ‘receive fullest sanctity under law’.

With the court accepting CIDCO’s submission, LTSL through senior advocate Janak Dwarkadas submitted that the undertaking and indemnity already submitted by it may be given effect and be accepted as an undertaking by it to the court subject to which relief may be given to it.

In its order, the bench stated, “On both sides we believe this is a fair approach. We accept the indemnity furnished by the petitioner. We do not see what the remaining impediment is on CIDCO’s part. It is now fully protected not only by the indemnity and undertaking, but also by our acceptance of the undertaking as an undertaking to the court.”

The court orde said, “CIDCO is directed to issue the necessary NOC or NOCs and the NDC or NDCs to the petitioner to enable it to apply to NMMC for the relevant OC or certificates. The CIDCO will issue the NOCs and NDCs within a period of two weeks from today.”

When advocate Dwarkadas pointed out that since the project is being developed in phases, further NOCs and NDCs will be required as the development progresses, the court stated, “The undertaking that we have accepted must continue until such time as the service tax demand issue is resolved one way or the other. In other words, for all future NOCs or NDCs, the condition expressly attached by virtue of this order will be our acceptance of the undertaking and indemnity provided by the petitioner.”

Both sides have refused to comment on the order. The decision is, however, being seen as a relief for buyers, who would otherwise have faced problems while taking possession.