The GST anti-profiteering authority found Ghaziabad-based Gaursons Realtech guilty of failing to pass to homebuyers lower tax rate benefits worth Rs 19.72 crore. Although upholding the profiteering number.
the National Anti Profiteering Authority (NAA) also asked DGAP to investigate Gaursons Realtech's 33 other projects to test if the benefits of lower taxes paid on raw materials used in construction were passed on to flat purchasers.
The case was investigated by the Directorate General of Anti Profiteering (DGAP) on the basis of an allegation that the real estate firm had resorted to profiteering when it sold flat in its '16th Park View' project on Yamuna Expressway (Greater Noida).
The claimant had alleged that Gaursons Realtech had charged him 12 percent of GST on the fee he had paid before Goods and Services Tax was rolled out on 1 July 2017. The claimant claimed he had paid the whole sum for the flat on or before 30 June 2017. The real estate firm, however, raised the demand for payment of 12 percent GST on the sum charged before the implementation of the new indirect tax regime and increased the flat 's cost from Rs 28.78 lakh to Rs 30.62 lakh.
The DGAP in its report found that, in the case of 2,349 homebuyers, the company did not pass on input tax credit ( ITC) gain to the tune of Rs 19,72,09,203 by not reducing the base price by 5.77 percent. Gaursons Realtech has also reported having transferred Rs 28,22,65,749 to 908 home buyers on profit.
In its order, the National Anti Profiteering Authority (NAA) reported that during July 2017-March 2019 Gaursons Realtech had benefited from the additional ITC to the extent of 5.77 percent of turnover and had not passed the gain on to the buyers."So the sum of profiteering is set as Rs 19,72,09,203," NAA said. In the case of 908 flat customers, which the company had not already passed on, the authority asked Gaursons Realtech to pass on ITC 's balance gain of more than Rs 1.04 crore along with 18 percent interest.
This also ordered the real estate firm to lower the price to be obtained from flat buyers and requested DGAP to examine the amount of profit to be transferred from April 1, 2019, to June 30, 2020.NAA asked DGAP to review Gaursons Realtech's 33 other projects and see if its profit was passed on to purchasers in those projects.