HomeDaily NewsDNA: Affordability without connectivity means nothing, say hard-hit real estate developers.

DNA: Affordability without connectivity means nothing, say hard-hit real estate developers.

The Hindu Business Line: Realtor told to refund ₹8.2 cr to home buyers.

Anti-profiteering body says profit was made by not passing on the benefit of GST

 

NEW DELHI, SEPTEMBER 19

The National Anti-Profiteering Authority has asked Haryana-based realtor Pyramid Infratech to return a profit of over ₹8.22 crore made by not passing on the benefits of input tax credit (ITC) to nearly 2,500 buyers. The realtor might also be asked to pay a penalty.

The company, however, can challenge the order by filing a writ petition in the high court.

The order made it clear that the realtor will reduce the price to be realised from the buyers of the flats commensurate with the benefit of ITC received. The benefit till date will need to be passed not just to the petitioners, but to all the buyers as they are identifiable.

Commenting on the order, Anita Rastogi, Indirect Tax Partner at PwC, said close monitoring will be done by the Commissioner to ensure that the buyers are refunded along with 18 per cent interest. Directions have been given to levy penalty by issuing showcause notice. “Overall, a ruling will have huge implications on the real estate sector,” she said.

However, Abhishek A Rastogi, Partner at Khaitan & Co, felt while the news is good for home buyers, the moot point is the constitutional validity of Section 171.

“The output tax rate and the input credits are the relevant factors but not the only factors to determine profitability. Lastly, absence of procedural framework raises the question of correctly computing the profiteering,” he said.

The order covers two projects developed by Pyramid Infratech — Urban Homes in Sector 70A and Urban Homes in Sector 86 at Gurugram near Delhi. Over 100 buyers approached the Haryana Screening Committee (contact point for the NAA in a State) with complaints that the realtor was not giving them the benefits of ITC.

After the initial probe, the matter was referred to the Standing Committee on Anti-profiteering which found merit in the complaints and forwarded it to the Director General-Anti-profiteering (DG-AP)) for final investigation. Based on the report by DG-AP and after hearing buyers and the company, the NAA observed that excess ITC was available to the company and it was required to be passed to the buyers.