The order, dated September 18, was based on a complaint of profiteering filed by 109 home buyers of two affordable housing projects of Pyramid Infratech — Urban Homes, Sector 70A, Gurugram and Urban Homes, Sector-86, Gurugram.
Determining profiteering for the second time under the goods and services tax (GST) regime, the National Anti-Profiteering Authority (NAA) has ordered Gurgaon-based Pyramid Infratech to refund over Rs 8.22 crore to 2,476 flat owners.
The order, dated September 18, was based on a complaint of profiteering filed by 109 home buyers of two affordable housing projects of Pyramid Infratech — Urban Homes, Sector 70A, Gurugram and Urban Homes, Sector-86, Gurugram. The authority has directed the company to refund or reduce Rs 8.22 crore from the buyers’ last instalment along with the interest of 18 per cent per annum to be calculated from the date of the receipt of the excess amount from each buyer, within a period of 3 months.
The homebuyers in their complaint had said that Pyramid Infratech had not passed on the benefit of lower tax arising out of availing of input tax credit (ITC) post roll-out of the GST. Section 171 of the Central GST (CGST) Act provides that any reduction in the rate of tax on supply of goods or services, or the benefit of input tax credit, shall be passed on to the recipient (consumer) by way of a commensurate reduction in prices.
The company contended that there was an increase in the cost of raw materials such as steel and also increased burden of taxes of sub-contractors because of which no benefit of GST accrued to the buyers of the flats.
After investigation, the Directorate General of Anti-Profiteering (DGAP) calculated the profiteering at 6.1 per cent on the base price of Rs 4000 per sq. ft. and accordingly calculated the tax amount on the reduced payment. It then submitted its report to the NAA saying that Pyramid Infratech has profiteered Rs 8,22,80,998 from the flat owners by not passing on the GST benefit.
“It is evident from the above that the Respondent (Pyramid Infratech) has denied benefit of ITC to the buyers of the flats being constructed by him in contravention of the provisions of Section 171(1) of the CGST Act, 2017 and has thus realized more price from them than he was entitled to collect and has also compelled them to pay more GST than that they were required to pay by issuing incorrect tax invoices and hence he has committed an offence under section 122 (1) (i) of the CGST Act, 2017 and therefore, he is liable for imposition of penalty,” the order said. The company, however, would be served a show cause notice to explain non-imposition of penalty.
The GST came into effect from July 1, 2017. The effective rate on affordable housing was 12 per cent initially, and was reduced to 8 per cent from January 25, 2018. The period of investigation was July 2017-February 2018.
The NAA has directed the Commissioner of State Tax, Haryana, to monitor whether the amount profiteered was passed on to all the buyers and submit a report to the authority within 4 months.