GST authority finds Haryana realtor guilty of profiteering

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Published: March 6, 2019 2:51:32 AM

The firm has realised more price from the buyers than it was entitled to collect and has also compelled them to pay higher GST, the order said.

In an earlier order passed in September last year, the anti-profiteering watchdog had held another Haryana-based developer guilty of profiteering Rs 8.3 crore. 

The National Anti-profiteering Authority (NAA) has found a Haryana-based real estate developer guilty of profiteering over `1.5 crore as it failed to reduce the prices of houses commensurate with the benefit of input tax credit (ITC) accruing to the developer.

This is the second NAA order against a real estate company.

In an earlier order passed in September last year, the anti-profiteering watchdog had held another Haryana-based developer guilty of profiteering `8.3 crore. However, the

Delhi High Court in November stayed the order which was challenged on the grounds of constitutional validity of the mechanism for determining quantum of profiteering.

Experts said that more real estate developers are likely to face NAA action after the GST Council last month cut the GST rates for regular under-construction houses to 5% from 12% and to 1% from 8% for affordable housing projects. The rate cuts are accompanied with denial of ITC, which will now become a cost to developers. If a company is to retain the earlier profit margin, it would have to raise base prices leading to possible complaints of profiteering.

In the order issued on Tuesday, the NAA said that the builder had already started disbursing the profiteered amount as calculated by its investigating arm — directorate general of anti-profiteerig (DGAP).

The order said that it is evident that the respondent (company) has denied benefit of ITC to the buyers of the flats being constructed by him in contravention of anti-profiteering provision under GST Act.

The firm has realised more price from the buyers than it was entitled to collect and has also compelled them to pay higher GST, the order said.

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