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GST reduction benefit— Rs. 8 crore to be returned as directed by GST NAA

Gurgaon based builder pyramid Infratech has to returned Rs. 8 crore as directed by GST NAA

The National Anti-profiteering Authority (NAA) has asked Gurgaon-based builder company viz. Pyramid Infratech to refund over Rs 8.22 crore to 2,476 flat owners within three months with 18 per cent interest for not passing the GST reduction benefits.

The anti-profiteering authority has directed the builder to either refund the amount or reduce the amount from the last installment to be collected from each home buyer. It has also ordered Haryana’s tax commissioner to monitor the compliance and submit a report within four months.

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.

In the instant case, 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.

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 offence 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.