Punjab developers found taking RERA for a ride
GST raids reveal land pooling agreements were made without actual land, and the Expression of Interest model was used to secure early investments from buyers, even before securing necessary approvals
Several land developers in Punjab, particularly in Mohali and New Chandigarh, are bypassing the Punjab Real Estate Regulatory Authority (RERA) regulations by selling plots and shop-cum-offices through pre-launch offers, ‘land pooling’ and Expression of Interest (EoI) model. This was found during recent GST raids against four prominent builders in the state.
GST officials found that the land pooling agreements were made without actual land, and the developers used the EoI model to secure early investments from buyers at discounted rates, even before securing necessary approvals, which is an unlawful practice.
Further, they did not pay GST on the money collected from buyers as the projects were not registered under the Punjab RERA. Such practices sidestepped legal requirements, putting buyers at risk of financial and legal complications.
Recently, GBP developers and another developer in Zirakpur and Derabassi fled after selling plots without RERA registration.
Punjab RERA chief Rakesh Kumar Goyal said, “We had known that some developers were bypassing RERA regulations by taking money from consumers on unapproved projects but there was no complaint. Now, we will act on the basis of GST department notices served to developers.”
He further said that no developer is allowed to market or sell any project without RERA registration, adding that the regulatory body would impose strict penalties on violators. “Using the EoI route to bypass RERA not only undermines the law but also erodes trust in the real estate market. We will take strong action against the violators to safeguard buyers’ interests,” said the RERA chief.
A senior GST official said that following a tip-off, the teams had raided four developers in Mohali and New Chandigarh, and the information was found correct. The developers were found to be collecting money in new bank accounts, which were not registered with RERA, by selling EOI and ‘land pool agreement” without actual land available, thus evading GST dues worth crores.
The department is now expanding its investigation to assess the extent of tax evasion and other violations in the region, he said, adding that GST liabilities of several crores have been found in such transactions, which the department is investigating.
RERA has taken cognisance of such practices in several states, including Gujarat, and stated that the developers can’t sell property and collect money through pre-launch schemes, issue of EOI and land pool without land.
