When Undercutting Turns into GST Fraud: A Warning for Architects & Contractors

Undercutting in the architecture and interior execution industry is unfortunately not new.

Architects undercutting other architects, consultants bypassing contractors, or vendors being pushed into unrealistic pricing is something most professionals have encountered at some point in their careers.

But sometimes, these practices go beyond aggressive competition.

Sometimes, they begin to resemble something much more serious.

When Undercutting Crosses the Line

In a recent project executed in Gurugram, what initially appeared to be a routine interior execution assignment gradually unfolded into a troubling situation.

The project involved Ar. Sparshi Gupta of Design Foundation, who was associated with the project as the architect, and the end client for whom the office interiors were being executed.

The work was executed, the site was completed, and the project was handed over. However, after completion, payments due to the contractor and several vendors were repeatedly delayed and eventually stopped altogether.

Communication that initially involved assurances slowly turned into complete silence.

Over time, it became evident that this was not just a simple payment delay.

Several vendors associated with the same project began reporting similar experiences of unpaid dues and unanswered communication connected to the same project involving Ar. Sparshi Gupta of Design Foundation.

A Development That Raises Questions

A particularly concerning development followed soon after.

It has come to light that Ar. Sparshi Gupta from Design Foundation has shifted her office and is now reportedly sharing workspace with the same end client associated with this project.

The timing of this move, especially in the midst of unresolved payments and communication breakdowns, raises serious questions about the nature of the relationship between the architect and the client during the execution of the project.

When an architect involved in a project later moves into a workspace shared with the end client linked to that same project, it naturally raises suspicions of deeper coordination or collusion.

Today, it is understood that not just one contractor, but multiple vendors connected to the same project have faced similar financial losses.

When seven or more vendors associated with a single project report similar experience, it begins to look less like a dispute and more like a systemic issue surrounding the project.

A Pattern Many Professionals Recognize

Situations like these are becoming increasingly familiar within the design and execution ecosystem.

Across the industry, professionals often encounter scenarios where:

• Projects are executed based on confirmed drawings and approvals.• Payments are delayed repeatedly through verbal assurances.• Contractors continue work in good faith to complete the project.• Communication gradually stops once the project is delivered.• Vendors are left chasing payments long after the space is operational.

For smaller studios, contractors, and fabrication vendors, these situations can become financially devastating.

But the most dangerous trap often lies somewhere else.

The GST Trap Most Professionals Ignore

One of the biggest risks in execution projects today is GST liability.

In most cases:

• Contractors raise invoices with GST included.• GST becomes payable to the government regardless of whether the payment is received or not.• If a client delays payment or refuses to pay, the contractor may still remain responsible for the GST.

This creates a dangerous financial exposure.

In simple terms:

You may end up paying tax on money you never received.

For smaller firms or vendors operating on tight cash flows, this can quickly become an unsustainable burden.

And when disputes involve multiple parties — such as the architect, consultants, and end client — recovering those dues can take months or even years.

Lessons Every Architect and Contractor Should Consider

Experiences like these highlight the importance of protecting both payments and compliance obligations.

A few precautions that professionals should consider:

1. Always collect GST along with every stage payment.Never allow GST to accumulate until the final stages of the project.

2. Avoid raising invoices prematurely.Once an invoice is raised, GST liability may be triggered regardless of payment.

3. Document all payment commitments.Verbal assurances often disappear once disputes arise.

4. Watch early warning signs.Repeated delays during execution often signal deeper issues.

5. Protect vendor liabilities. Contractors frequently end up absorbing vendor payments when clients default.

Why This Matters for the Profession

Architecture and design projects operate on trust between architects, contractors, vendors and clients.

When undercutting evolves into payment withholding, suspected collusion, or financial misrepresentation, it damages the credibility of the entire professional ecosystem.

When multiple vendors connected to a project involving Ar. Sparshi Gupta of Design Foundation are left unpaid despite the project being executed and operational, it becomes important for the larger professional community to be aware of such experiences.

Sharing such incidents is not about creating controversy.

It is about raising awareness so that other professionals can protect themselves.

Because if this can happen in one project, it can happen to many others.

And when GST liabilities are involved, the consequences can extend far beyond the project itself.

Earlier Documentation of This Case

We had earlier documented the initial sequence of events related to this project in a separate article.

You can read the earlier report here:

https://www.rat-lab.org/post/a-35-lakh-fraud-in-design-execution-a-professional-learning-on-undercutting-collusion-cheating

A Final Moral Note

Fraud, cheating, and collusion may appear calculated—but consequences are never controllable.

Whether one believes in law, karma, or conscience — every action has an echo.

Money withheld is someone else’s labour. Someone else’s responsibility. Someone else’s survival.

Keep your conscience clear. Keep your profession clean. Because no project, no client, no short-term gain is worth destroying trust.

As we often say—quietly but firmly—

God is watching. And so is the profession.

Closing Note

We regret being part of this project.We do not regret sharing this learning.

If this prevents even one execution agency from being cheated,or one designer from misusing their position,then this disclosure has served its purpose.

Final Disclaimer

This article reflects documented professional experiences and ongoing legal proceedings. It is shared solely for industry awareness and does not constitute a judicial finding. All matters are subject to due legal process.