Customers Win: INR 8 Crores to Be Returned As Directed by GST NAA

A new profiteering case has come into light as a Gurugram based constructor and home provider, Pyramid Infratech, has been asked by the NAA to refund the benefit availed out of the input tax credit after the effective rate on affordable housing got reduced from 12 percent to 8 percent from January 25, 2018. The home buyers complained that Pyramid Infratech had not passed on their share of benefit which has come through the input tax credit due to the lowering of the rates on affordable housing.

This is the case of Gurugram where 109 home buyers had filed a complaint against two affordable housing projects of Pyramid Infratech; Urban Homes, Sector 70A, Gurugram, and Urban Homes, Sector-86, Gurugram.

NAA in this context has directed the commissioner of State Tax, Haryana, to get into the matter and bring out the fact that whether the profitability has now been passed to the homebuyers or not. He has also been asked to prepare and submit a report regarding the same within four months. On the other side the constructors argued that due to the burden of the increase in the cost of raw materials such as steel and the increased tax charged by the subcontractors, they are not able to retain any benefit of the lowered GST taxes.

As we know, The GST is effective since July 1, 2017. Initially, the effective rate of affordable housing was 12 percent and from January 25, 2018, it got reduced to 8 percent. The case is being investigated from July 2017-February 2018.

The investigation report prepared by the Directorate General of Anti-Profiteering (DGAP) explains that the profiteering has been calculated at 6.1 percent on the base price of Rs 4000 per sq. ft. and the tax amount has been calculated on the reduced payment. The calculated profiteered amount by the company by not passing the GST benefits to the flat owners is Rs 8,22,80,998 which has to be distributed among 2,476 flat owners.

So it is evident that the constructor of Pyramid Infratech has denied to share the benefit of ITC with the buyers of the flats and thus has breached the GST laws 2017 under Section 171(1). Also, he made the buyers pay more GST than required by issuing them incorrect tax invoices. All the above mentioned is the offense under section 122 (1) (i) of CGST Act, 2017. The Commissioner of State Tax, Haryana, has been asked to keep a check whether the benefit has been passed on to the Homebuyers or not and submit a report within four months.

Pyramid Infra Hits Back NAA in Court

The pyramid infra reaches court with a writ petition against the anti-profiteering authority for lacking clear provisional rules. The company claims that there is no clarity on the assessment of fines and penalty. The NAA recently slapped fine of INR 8 crores on the pyramid Infratech under the anti-profiteering measures. In the retaliation, the company said that the anti-profiteering provisions take away the fundamental rights of the citizen.

Also, it was observed that if in case the anti-profiteering mechanism passes an order against any company regarding the anti-profiteering allegation, it might come to chances that the parameters or ratios go wrong which would in return spoil the entire environment of the business industry.