Major Cuttack Housing Project Under Scanner for Rs 10 Crore GST Dues
The Commissionerate of Commercial Tax and GST in Cuttack has uncovered a significant pending GST liability of approximately Rs 10 crore linked to a major affordable housing project. This project was executed by a private promoter in partnership with the Cuttack Development Authority (CDA), raising serious questions about tax compliance in public-private partnerships.
Project Details and Tax Evasion Findings
According to the tax evasion report, the project was structured as a joint development agreement under the 'Housing for All' scheme. The developer constructed 550 units for Economically Weaker Sections (EWS) and 320 units for Low Income Groups (LIG) at Naranpur in Cuttack. This affordable housing component was completed in September 2023.
In exchange for building these affordable units, the promoter received development rights over 3.63 acres of prime land in sectors 8 and 11 of Cuttack for private residential and commercial development. The tax department's investigation revealed that the consideration for transfer of developmental rights was calculated at Rs 55.34 crore, making the GST payable on Transfer of Development Rights (TDR) Rs 9,96,25,860.
Outstanding Dues and Escalation to Higher Authorities
While the project developer did discharge GST of Rs 1.32 crore on construction services and paid interest exceeding Rs 26 lakh for delayed compliance, the substantial TDR liability remains completely unsettled. Officials also flagged concerns about wrong entry of input tax credit (ITC) during the 2022-23 financial period.
The case has now been escalated to the Directorate General of GST Intelligence (DGGI), Bhubaneswar zonal unit, for deeper investigation into suspected tax evasion and potential misuse of input tax credit. Enforcement officers have indicated that adjudication proceedings will move forward once necessary clarifications are received from the central investigating counterpart.
Broader Implications for Real Estate Development
This case highlights the complex tax implications involved in joint development agreements between government authorities and private promoters. The substantial Rs 10 crore pending liability represents unpaid tax specifically on the transfer of development rights, a critical aspect of many urban development projects across India. The outcome of this investigation could set important precedents for how similar projects are structured and taxed in the future.
