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Realty firms to face GST anti-profiteering cases

GST anti-profiteering cases

Starting next month, the National Anti-Profiteering Authority (NAA) for goods and services tax is likely to deliver orders in around 60 profiteering cases against realtors. These cases are filed by home buyers against the builders from across the country. Some of the well-known builders facing the charges include Godrej Properties, Salarpuria Sattva, and Hiranandani Realtors, officials aware of the development said.

The investigation arm of the NAA, the Director General of Anti-Profiteering (DGAP), has submitted probe reports in two-third of the cases to the quasi-judicial body which will be hearing the cases. The remaining investigations will also be completed soon.

Multiple projects by these builders in Delhi, Mumbai, Chennai, Bangalore, and other metro cities are under scanner over alleged profiteering by not passing on the benefit of input tax credit (ITC) to customers. According to the complaints, the realtors purportedly didn’t pass on the benefit of the ITC to the customers and instead profiteered from the credits. The builders claimed ITC benefits on the inputs such as steel and cement used for the construction of houses.

Majority of these cases relate to earlier ITC regime before April 1. The ITC mechanism under GST was introduced for the real estate sector to prevent the cascading effect of the tax. However, the Centre withdrew it from April 1 as most builders were reportedly not passing on the benefit to customers. Instead, the government introduced a reduction in overall GST rates to provide relief to the homebuyers.

The anti-profiteering provisions under Section 171 of the Central GST Act (CGST), 2017 states, “A reduction in the rate of tax or any supply of goods and services or the benefit of the input tax credit shall be passed on to the recipient by way of commiserate reduction in prices.” It authorizes NAA to determine whether the benefit of the reduced tax rate or the ITC has been passed on to the recipient, impose a penalty, and cancel the registration.

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