Mumbai: Investors in a luxury housing project at Prabhadevi have alleged GST profiteering of ₹140 crore by the promoters and refusal to return the rightful input tax benefits to end-users.
Several investors of the premium project Rustomjee Crown had approached the Directorate General of Anti-Profiteering in 2021 for redressal after promoters and developers – Realgem Buildtech and Bhishma Realty – refused to pass the GST input tax credit (ITC) for flats booked in 2015 and to be completed and delivered by June 2019 with an additional grace period of 12 months.
Case filed with MahaRERA for delay in possession
They have also filed a complaint with the real estate regulator MahaRERA for delay in possession, seeking that developers execute and register sale agreements. They have also demanded additional amounts towards increased carpet area of apartments.
Despite repeated attempts both Realgem and Bhisma Realty did not respond to calls and messages for comments.
An investor in the project alleged, “At the time of original allotment for about 200 flats, VAT was payable at around 6% of value of flats. When the GST regime came in, the promoters and developers were given the option of charging 5% GST without ITC or 12% GST with ITC. The promoters charged 12% GST but refused to pass back ITC to purchasers.”
Additional credit of 5.77% availed by developers
The project began in 2015, which was before the introduction of GST, and fell under the VAT (value added tax) regime. The order issued by the DG-Anti- Profiteering states that the tax credit availed under the old VAT regime was 1.94% and the tax credit availed under the new GST regime was 7.71%. Hence an additional credit of 5.77% has been availed by the developers.
The order mentions that both the promoter firms violated the provisions of section 171 of the CGST Act, which deals with anti-profiteering, and are required to pay the 5.77% of tax credit to 110 home buyers and have additionally stated that the amount profiteered by them is ₹4,97,49,630 and only 26 home buyers have received their tax benefit.
The flat buyers further alleged, “We have not received our tax benefits as the companies said they cannot pay the 5.77% credit, instead they will pay a credit of ₹254 per sqft as per RERA, which is barely 1% of the amount they owe.”
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