Lodha ordered to refund Rs 1.90 cr profiteered in Eternis project

National Anti-Profiteering Authority (NAA) has ordered Mumbai-based Lodha Developers to refund the profiteered amount of Rs 1.90 crore to 92 homebuyers of Lodha Eternis project at Andheri East. It has also ordered investigations into the company's 17 other projects.

Ruling that the realtor profiteered by denying homebuyers the benefit of the additional input tax credit (ITC), the NAA ordered the builder to "pay the amounts to the eligible house buyers along with the interest to be calculated @18% from the date of realisation of the above amount till it is paid". The order was passed in a case filed by a flat owner of project Lodha Eternis.

"The provisions of Section 171 of the Central GST Act (CGST), 2017 have been contravened by the Respondents, as they have profiteered an amount of Rs 1,90,04,456 crore, inclusive of GST @ 12% on the base profiteered amount of Rs 1,69,68,264 crore," the order stated. The builder has also realised an additional amount to the tune of Rs 37,065 from the complainant, it added. A showcase notice will be issued to the company, as the developer is liable for imposition of penalty, the NAA said. The NAA can levy a penalty ranging from Rs 10,000 to a sum which is equivalent to the profiteered amount.

For the new customers, the builder will have to "reduce the prices to be realised from the buyers of the flats commensurate with the benefit of ITC received by them"… the NAA ruled.

Meanwhile, a probe has been ordered into the company's 17 other projects. These are -Allura, Altamount, Amara, Azzuro, Belmondo, Central Park/Downtown/Codename Epic, Codename Finale, Codename Trinity, Kiara, Lakeshore Greens, Marquise, New Cuffe Parade, Parkside, Trump Tower, Upper Thane, Venezia and World One. Director General of Anti-Profiteering (DGAP) will investigate and submit a report on whether the benefits have been passed on to the customers. The direction comes following the developer's self-admission before the NAA that the benefits to the tune of Rs 139 crore have been passed on to the eligible buyers of the projects.

Responding to the order, Lodha Group spokesperson in a statement said, "The case is in respect of one customer of a project called Eternis. Hon'ble NAA has determined an amount of Rs 1.90 crore as the profiteered amount which includes Rs 37,065 of the complainant. Against this amount, the company has already passed the benefit of Rs 1.98 crore which include Rs 190,316 to the complainant."

However, NAA order doesn't seem to agree with the company's claim.

The discount to the homebuyers, including Rs 1,90,316 paid to the complainant, cannot be considered as passing on of the benefit of additional ITC as they are given from profit margins and not on account of the benefit of ITC, the order said.

The NAA has also pulled up the investigation team for wrongly calculating the profiteered amount. "The profiteered amount has been computed by applying the additional benefit of ITC @2.56% whereas it should have been calculated by applying benefit @2.62% which again shows carelessness and negligence on the part of the above team. Therefore, it is apparent that the team has not carried out its duties diligently and faithfully while investigating the above case which has resulted in submitting the revised report in which the profiteered amount was drastically changed and wrongly calculated. Accordingly, the DGAP is advised to look into it administratively and take necessary action," the order said.