Shri Diwakar Bansal Vs M/s Horizon Projects Pvt. Ltd. (National Anti-Profiteering Authority)
The Respondent has also submitted that vide Notification No. 3/2019-Central Tax (Rate) dated 29.03.2019 the rate of tax on the construction service had been changed without benefit of ITC and any such benefit availed by a registered person would have to be reversed in case he opted for the new rate of tax and therefore, all the credit availed w.e.f. 01.07.2019 could not be passed on to the customers and it might also result in excess release of the benefit. However, the above plea of the Respondent is incorrect as the provisions of the above Notification will come in to force w.e.f. 01.04.2019 only and any benefit of ITC which has been availed by the Respondent before the above date will have to be passed on to the home buyers. There is also no question of reversal of the ITC except when it pertains to the unsold flats on which he has not been asked to pay ITC benefit. There is also no issue of excess payment of ITC benefit as he can always adjust the same in the future instalments.
Based on the above facts the excess collection or the profiteered amount is determined as Rs. 3,20,49,507/- which includes GST @ 12/8% on the base profiteered amount of Rs. 2,90,55,908/-, as per the provisions of Rule 133 (1) of the above Rules as has been computed vide Table D of the Report dated 10.12.2018 @ 3.51% of the taxable turnover which is required to be passed on by the Respondent to the flat buyers. The profiteered amount in respect of the Applicant No. 1 is held to be Rs. 1,00,232/- including the GST on the base profiteered amount of Rs. 90,709/-. The DGAP has contended in para 18 and 24 of his Report dated 10.12.2018 that he has verified that the Respondent has suo-moto passed an amount of Rs. 84,896/-, accordingly, the profiteered amount in respect of the above Applicant is held to be Rs. 15,336/-. It would be pertinent to mention here that the DGAP vide his revised Report dated 11.03.2019 as per Serial No. 1 of Table C has claimed that the Respondent has profiteered an amount of Rs. 98,808/-from the Applicant No. 1 and has suo-moto passed on the benefit of ITC of Rs. 93,875/- to him and hence the balance amount of Rs. 4,933/-only was required to be passed to him. However, since the details of the computations of the benefit of ITC given in the revised Report have not been held to be correct and hence the above Applicant is held entitled to an amount of Rs. 15,336/- as benefit of ITC. Accordingly, the balance amount of Rs. 3,19,49,275/- is directed to be passed on to the flat buyers, who are identifiable as per the details given in Annexure-27 of the Report dated 10.12.2018, without taking in to account the benefit of ITC which has been claimed to have been passed on by the Respondent to his recipients except in the case of the above Applicant in respect of whom the benefit of ITC passed has been duly verified by the DGAP. Needless to mention that the above amount of benefit of ITC shall be passed on along with interest @ 18% per annum payable from the date from which the additional amount was collected by the Respondent from the flat buyers till the payment is received by them. The above amount shall further be passed within a period of 3 months from the date of this Order failing which the same shall be recovered by the concerned Commissioner CGST/SGST as per the provisions of the CGST/SGST Act.
In view of the above facts this Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him as has been detailed above. Since the present investigation is only up to 30.06.2018 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondent. The Commissioners CGST/SGST shall ensure that the above benefit is passed on to the eligible buyers. The Applicant No. 1 as well as the other flat buyers will also be at liberty to maintain proceedings against the Respondent for violation of the provisions of Section 171 of the CGST Act, 2017, in case the benefit of additional ITC is not passed on to them.
It is also evident from the above narration of the facts that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his ‘Runwal My City’ Project in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus profiteered an amount of Rs. 3,20,49,507/- from his customers, hence he has committed an offence under section 171 (3A) of the CGST Act, 2017 and therefore, he is liable for imposition of penalty under the provisions of the above Section. Accordingly, a Show Cause Notice be issued to him directing him to explain why the penalty prescribed under the above Section read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him. Accordingly, the notice dated 12.12.2018 issued to the Respondent vide which it was proposed to impose penalty under Section 29 and 122-127 of the above Act is hereby withdawn to that extent.
The Authority as per Rule 136 of the CGST Rules 2017 directs the Commissioners of CGST/SGST Maharashtra to monitor this order under the supervision of the DGAP by ensuring that the amount profiteered by the Respondent as ordered by the Authority is passed on to all the eligible buyers. A report in compliance of this order shall be submitted to this Authority by the Commissioners CGST /SGST within a period of 4 months from the date of receipt of this order.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. This Report dated 10.12.2018, has been received from the Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP) after detailed investigation under Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules, 2017. The brief facts of the case are that vide his application dated 31.05.2018 filed before the Maharashtra State Screening Committee on Anti-profiteering, under Rule 128 (2) of the CGST Rules, 2017 the Applicant No. 1 had alleged profiteering by the Respondent, in respect of purchase of Flat No. 2204 in Tower B2, in the Respondent’s project. “Runwal My City” situated on Diva Manpada Road, Kalyanshil Road, Dombivili, Thane, Maharashtra-400612. The above Applicant had stated in his application that the benefit of Input Tax Credit (ITC) had not been passed on to him by the Respondent by way of commensurate reduction in the price of the above flat and the Respondent had also charged from him GST @ 12% w.e.f. 01.07.2017.
2. The Maharashtra State Screening Committee on Anti-profiteering had examined the said application and found that the Respondent had not passed on the benefit of input tax credit to the above Applicant as the ITC available to the Respondent should have been apportioned against the instalments towards the price of the flat. The above Committee had forwarded the application with its recommendation to the Standing Committee on Anti-profiteering on 15.06.2018 for further action, in terms of Rule 128 (2) of the above Rules. The above recommendation was examined by the Standing Committee on Anti-profiteering in its meeting held on 02.07.2018 and it was decided to forward the complaint to the DGAP, for conducting a detailed investigation.
3. The above Applicant had submitted copy of the e-mail dated 15.05.2018 to the DGAP wherein he had sought clarification from the Respondent regarding 12% GST being charged from him after passing on the benefit of ITC @ 3.2% only. The above Applicant had furnished the following documents along with his application:-
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