Emerald Hills Owners Welfare Association
KULDEEP KUMAR KOHLI
PRESIDENT
Shri
H Badri,
Head,
Emaar
– India,
Gurugram
Dear Mr. Badri,
It was indeed a pleasure meeting you
during our visit to your office organised by Namita ji. We had another
meeting with Namita ji yesterday and we all seem thoroughly convinced that in
spite of the best efforts of Emaar, things would take time in certain ongoing
projects of Emaar and we do appreciate your problems. Namita ji has been kind
in meeting us regularly and has also agreed to keep meeting us in future and
keep updating us.
We are however extremely unhappy with
the reply from your office in the trailing mail regarding refund of Tax
collected from the innocent owners and the intentional delay on the part of
your team more specifically Mr. Aseem, in not refunding our money, and
being “ unjust enriched” by saving interest on the huge amount.
Now let me tell you and your team Mr.
Badri, while you all have all the right to think you all are intelligent but
you all have no right to think we are fools. Also Emaar may be able to
fool one customer in matter of taxes; all the time or all the customers one
time, but Emmar and the team cannot fool all the customers all the time.
I was personally present in a meeting
sometimes early this year when Shri Aseem from your Finance Team had confirmed
that the cheques would be issued shortly towards refund of taxes
collected. How come such a senior officer makes a commitment and then
does not honour it for months and months together and we now get this mail with
no basis.
I hope you are aware that we as an
Association are aware that your company has failed to pass on GST
reduction benefits such as availment of input tax credit (ITC) to more than
10,000.00 flat owners. And believe Mr. Badri all these 10,000 customers do
remain in touch with me on various legal issues more specifically on the GST reduction
benefit.
We as an Association know that Emaar has
unduly profiteered to the extent of more than 100 Crores up to February 28,
2018. Emaar was required to pass on the benefit of excess ITC and that it
cannot appropriate this benefit as this is a concession given by the Government
from its own tax revenue to reduce the prices being charged by the builders
from the vulnerable section of society which cannot afford high value
apartments. The Emaar is not being asked to extend this benefit out of his own
account and Emaar is only liable to pass on the benefit of ITC to which Emaar
has become entitled by virtue of the grant of ITC on the Construction Service
by the Government. Hence the Act of Emaar of not doing so is indeed an
absolute violation of the provisions of Section 171 of the Central Goods and
Services Tax Act (CGST Act), which was an anti-profiteering measure.
In case this amount is not paid to us
within next 15 days, and when I SAY US MEANS ALL THE 10,000 CUSTOMERS
INVOLVED, we will be left with no other option but to move the National
Anti-Profiteering Authority (NAA) who will then be requested to examine the
total amount of profiteering as would be calculated by the Director General,
Anti-Profiteering (DGAP),
You may kindly note that under Rule 133
(3) the builders “should reduce the price to be realized from the buyers of the
flats in commensurate with the benefit of ITC received”. Further, the builder
is bound to pay interest at the rate of 18 percent per annum on the amount
which is available with you and not paid to the customer.
As for the penal action, we must tell
you Mr. Badri, it has already been held by the NAA that the builders who
do not refund the ST collected to the customers, had contravened the provisions
of Section 171 (1) in respect of selling of flats to the buyers and “realized
more price from them than he was entitled to collect and has also compelled
them to pay more GST than 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.
Accordingly, a Show Cause Notice is being issued to the Company and its
Directors and the Heads of Operation in India against whom a complaint is being
filed, wherein they are being directed to explain why the penalty
prescribed under Section 122 of the above Act read with rule 133 (3) (d) of
the CGST Rules, 2017 should not be imposed on them”.
This order is significant as it is the
first one related to the real estate sector and an adverse one. It also gave
some indications about how profiteering by a company is to be calculated.
Mr. Badri, before the GST rollout in
July 2017, Emaar had been recovering central excise duty and state VAT paid to
them by those who had booked flats with them and they were not claiming ITC.
Therefore, there was no undue profiteering by them. However, after the GST
rollout, GST was levied on construction services, first at the rate of 12
percent and later at 8 percent, and builders were availing of ITC for all goods
and services used in building flats. This benefit accruing to builders was
not being passed on to consumers and was undue profiteering.
One of the major aims when GST was
introduced was to bring down the price of goods and services through various
measures. This included ITC right from the production stage to the final
consumption stage, reduction of GST rate and compliance cost, etc. The
government expected that these benefits would be automatically passed on to
consumers, thus bringing down the price of goods and services. The government
further felt that if manufacturers, dealers, etc. did not pass on this benefit
and made extra profit, they must return that amount to the consumer or the
society through the Consumer Welfare Fund. Based on this concept, the
government thought of bringing in some anti-profiteering measures.
Thus, Section 171 of the CGST Act was
brought in. It stipulates that any reduction in the rate of tax on any supply
or any benefit of ITC will have to be passed on to consumers by way of
commensurate reduction in the price of goods or services. It further authorises
setting up of an Anti-Profiteering Authority to ensure this.
Rules 122 to 137 of CGST Rules 2017
cover the details of anti-profiteering measures, including the setting up of a
standing committee and screening committee, duties of the National Anti-Profiteering
Authority, examination of applications by these committees, initiation and
conduct of proceedings, order of the authority, compliance with the order, etc.
A procedure has also been laid down for
applications to NAA. All applications of a local nature will be examined by the
state-level screening committee. Once satisfied that the supplier has not
passed on the benefits specified in Section 171, it will forward the
application with its recommendations to the standing committee on
anti-profiteering. If that committee is also satisfied that there is prima
facie evidence to show that the supplier has not passed on the benefit, it will
refer the matter to the Director General (DG) of Safeguards for detailed
investigation. The DG of Safeguards will then submit its report to NAA,
which will pass an order. If the benefits have not been passed on to the
consumer by way of a commensurate reduction in prices, it may bring in Rule
127.
In our cases Mr. Badri, there is enough
evidence and hence the Committee would automatically get satisfied.
In view of above, Mr. Badri we expect
you to kindly instruct your office to release the amount due to more than
10,000 customers on priority within next 15 days with 18% interest, else
we will be left with no option but to move the concerned authorities as per the
procedure explained to you.
Warm Regards
Yours sincerely
Kuldeep Kumar Kohli,
