The Delhi High Court has ordered two real estate companies to deposit 50 percent of the alleged profiteered amount for not passing GST benefits to home buyers.
The National Anti-profiteering Authority (NAA) had imposed a penalty of Rs 5 crore each on the two builders, whose projects are based in Noida and Gurugram, for allegedly not passing the benefits of the Goods and Services Tax (GST) regime to the home buyers. The projects started in the pre-GST period but continued even after July 2017 when the GST was rolled out. The NAA calculated the profiteered amount from its calculation of input tax credit that is available in the GST system and companies’ gross turnover.
It was contended by the counsel for the petitioners that any real estate project requires substantial investment towards the land cost at the beginning of the project and hence the ratio of the input tax credit to the total turnover may give absurd and inconsistent results.
The NAA rules do not prescribe a specific methodology to calculate the amount of profiteering and leave it to the authority to come out with the figure on a case-to-case basis. Therefore It was further contended that in the absence of declared methodology to determine the quantum of profiteering, the issue requires a detailed analysis of all the factors which would lead to a commensurate reduction of prices.
“The petitioner is directed to deposit 50 percent of the principal profiteered amount. The said amount shall be deposited in two equal monthly instalments,” said the court in one of the orders and also directed that the order of the National Anti-profiteering Authority (NAA) to have stayed till the final ruling.
