New Delhi: Several real estate firms have reportedly challenged the constitutional validity of National Anti-profiteering Authority (NAA) in the Delhi high court, saying that the body does not have the authority to demand interest on penalties slapped by it. It is worth mentioning here that the anti-profiteering watchdog had sent notices to about 50 real estate developers across India for allegedly not passing on the benefit of lower taxes under the goods and services (GST) regime. “In the absence of a judicial member, the constitution of NAA is unconstitutional and untenable,” the Economic Times reported citing the writ plea petition filed in the court. The writ petition further mentioned that the NAA is on par with a tax tribunal but it doesn’t have a single judicial member as part of it. Under GST, the benefit of the rate cut has to be passed on to buyers. If real estate developers fail to do so, they can attract penalties and interest on top of it for profiteering from the tax regime. Several builders based in Delhi, Mumbai, Chennai and Bengaluru were ordered to pay penalties as they failed to pass on the benefits of the input tax credit to the home customers. The GST Act dealing with anti-profiteering mentions: “Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient (consumer) by way of commensurate reduction in prices.” Industry watchers say many first time home buyers had complaints against builders from across India, mentioning that the realty firms have allegedly raised the cost of the houses citing GST. The anti-profiteering authority is examining the matter in detail. The financial daily quoted Abhishek A Rastogi, partner at Khaitan & Co, who is representing the builders in the case, as saying, “The question of interest applicability doesn’t arise as the statutory provisions (Section 171) do not provide for interest.” Many realtors had claimed transition credit on under-construction houses, saying these are stock or inventory for them, but the tax department issued notices and rejected these claims, the report mentioned.