Delhi High Court serves notice on govt, GST Council in real estate case

The Delhi High Court has issued a notice to the Union government, national anti-profiteering authority, and the GST Council on a petition over quas­hing the proceedings laun­ched against a real estate player on an anti-profiteering complaint.

The directorate general of anti-profiteering (DGAP) had earlier served a notice on a real estate company over a complaint by a home buyer that the builder had not passed on the benefit of input tax credit to him for a unit bought by it in a residential complex, said Abhishek Rastogi, partner at Khaitan & Co. 

Through the notice, DGAP had sought voluminous details from the builder relating to tax returns filed for the relevant period, tax payments, input tax credit availed and contracts that builder had entered into with the flat buyers.

The petitioner moved the court against the DGAP probe, saying the complainant had booked the unit in a residential project in the 2018-19 financial year after the introduction of goods and services tax (GST) and hence there was no change in the GST rate or availment of input tax credit during such period which would necessitate investigation.

As such, the prima facie evidence as required under the anti-profiteering provisions of the CGST Act does not exist, according to the petitioner.

The case is not pertinent to one home builder, but an order would set a precedence for all those home builders who sold their flats after GST came into effect, said Rastogi. He said anti-profiteering provisi­ons could apply when there is change in either output tax rate or increased input tax credit.

“The flats sold after RERA registration in the GST regime would not be subject to profiteering at all especially when the builder has submitted not to opt for a lower regime,” Rastogi said.

After the GST Council decision, the governments have given real estate players to opt for one of the two regimes — 5 per cent GST without input tax credit or 12 per cent GST with input tax credit.  This option was given till March 31, 2019 after which the lower tax regime came into operation.