Ms. Santosh Kumar Vs M/s Aster Infrahome Pvt. Ltd, (National Anti-Profiteering Authority)
NAA carefully considered the Report of the DGAP, submissions made by the Respondent and based on the record it is revealed that the above Applicants had purchased flats from the Respondent in his “Green Court” project situated in Sector 90, Gurugram, Haryana which was got approved by him under the Affordable Housing Policy-2013 of the Government of Haryana. The above Applicants have complained to the Haryana State Screening Committee under Rule 128 (2) of the CGST Rules that the Respondent has not granted them the benefit of ITC which he has obtained after coming in to force of the CGST Act, 2017 by commensurate reduction in the price of the flats and was also charging VAT from them @12%. The above Committee has forwarded their complaints to the Standing Committee which has sent their applications to the DGAP for detailed investigation under Rule 129 (1) of the above Rules. The DGAP after investigation has furnished the present Report dated 28.02.2019 to this Authority under Rule 129 (6) of the CGST Rules, 2017 stating that the Respondent has not passed on the benefit of additional ITC to his flat buyers including the above Applicants and has violated the provisions of Section 171 of the CGST Act, 2017 by profiteering an amount of Rs. 5,30,34,074/- which was required to be passed on to them as per the details given in Annexure-25 of his Report.
Respondent has profiteered by an amount of Rs. 5,30,34,074/- for the period under investigation. Therefore, this Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce/refund the price to be realized from the buyers of the flats commensurate with the benefit of ITC received by him as has been detailed above. The present investigation is only up to 30.08.2018 therefore, any additional benefit of ITC which shall accrue subsequently to the Respondent shall also be passed on to the buyers by the Respondent. In case this additional benefit is not passed on to the Applicant No. 1 to 12 or any other buyer they shall be at liberty to approach the State Screening Committee Haryana for initiating fresh proceedings under Section 171 of the above Act against the Respondent. The concerned CGST or SGST Commissioner shall take necessary action to ensure that the benefit of additional ITC is passed on to the eligible house buyers in future.
It is evident from the above that the Respondent has denied the benefit of ITC to the buyers of the flats being constructed by him in contravention of the provisions of Section 171(1) of the CGST Act, 2017 and has thus committed an offence as per the provisions of Section 171 (3A) of the above Act. Therefore, he is liable for imposition of penalty under Section 171 (3A) of the CGST Act, 2017. Accordingly, a Show Cause Notice be issued to him directing him to explain why the penalty prescribed under the above provision should not be imposed on him. Accordingly, the notice dated 05.03.2019 vide which it was proposed to impose penalty on the Respondent as per the provisions of Section 29, 122-127 of the CGST Act, 2017 read with Rule 21 and 133 of the CGST Rules, is withdrawn to that extent.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING APPELLATE AUTHORITY
1. The present Report dated 28.02.2019 has been furnished by the Applicant No. 13 i.e. the Director General of Anti-Profiteering (DGAP), under Rule 129 (6) of the Central Goods & Services Tax (CGST) Rules, 2017. The brief facts of the present case are that the Haryana State Screening Committee on Anti-profiteering, vide the minutes of its meeting held on 20.06.2018 had referred 7 applications to the Standing Committee on Anti-profiteering under Rule 128 (2) of the Central Goods and Services Tax Rules, 2017, alleging profiteering by the Respondent in respect of purchase of flats in the Respondent’s project “Green Court” situated in Sector 90, Gurugram, Haryana. Sh. Shaurabh Prabhakar has filed the above application on behalf of the Applicant No. 1. The above Applicants had alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to them by way of commensurate reduction in the price of the flats. These complaints were examined by the Standing Committee on Anti-profiteering in its meetings held on 07.08.2018 & 08.08.2018 and were forwarded to the DGAP for detailed investigation under Rule 129 (1) of the CGST Rules, 2017. Further, 05 more applications were forwarded to the DGAP by the Standing Committee on Anti-profiteering vide minutes of its meetings dated 6.09.2019, taxguru.in 08.10.2019, 04.10.2019 and 25.10.2018. As the investigation was already underway, these Applicants were made co-Applicants in the ongoing investigation. Therefore, the Report covers a total number of 12 applications filed against the Respondent.
2. The DGAP on receipt of the above minutes from the Standing Committee on Anti-profiteering had called upon the Respondent vide his notice dated 10.09.2018 to submit his reply as to the whether the ITC benefit was passed on by him to his recipients and also asked him to suo-moto determine the quantum of benefit to be passed on. The Respondent vide letters dated 24.09.2018, 03.10.2018, 17.10.2018, 26.10.2018, 12.11.2018, 16.11.2018, 07.12.2018, 28.12.2018, 31.12.2018, 02.01.2019, 09.01.2019, 12.02.2019, 14.02.2019 and 22.02.2019 has filed replies. The Respondent was given opportunity to inspect the evidence supplied by the above Applicants between 17.09.2018 to 19.09.2018 however, he did not inspect it. The above Applicants were also afforded opportunity by the DGAP to examine the evidence furnished by the Respondent between 31.12.2018 to 02.01.2019 which was availed by the Applicants No. 1, 5, and 8. Time limit to complete the above investigation was extended till 28.02.2019 by this Authority vide its orders dated 27.11.2018 and 29.01.2019. The present investigation pertains to the period between 01.07.2017 to 31.08.2018. The written submissions of the Respondent are summed up as follows:-
a. That the Respondent was under regular/normal Scheme with regard to Value Added Tax (VAT) in Haryana and as such, he had availed VAT credit in the pre-GST period on the purchases made during that period.
b. That as the service of construction of affordable housing, provided by the Respondent, was exempted from Service Tax, vide Notification No. 25/2012-ST dated 20.06.2012, as amended by Notification No. 9/2016-ST dated 01.03.2016, the Respondent was exempted from any Service Tax liability on his receipts in the pre-GST era (01.03.2016 onwards) and was also not eligible to avail any CENVAT credit. As Service Tax was not leviable on the projects related to Affordable Housing Policy, 2013, he did not charge any Service Tax from his clients w.e.f. 01.03.2016.
c. That the Respondent did not contest the fact that the benefit of ITC had not been passed on to the recipients by him prior to this investigation.
d. That the Respondent contended that since credit of Central Excise Duty was not allowed to the developers/builders in the pre-GST regime, the Central Excise Duty was cost to the Respondent and as per the provisions of Section 171 of the Central Goods and Services Tax Act, 2017, the Respondent was ready to pass on the benefit of additional ITC of GST to his customers.
3. The Respondent has also submitted the following documents along with his replies:-
(a) Copies of GSTR-1 and GSTR-3B Returns for the period from July, 2017 to August, 2018.
(b) Copies of Tran-1 and Tran-2 Returns for the period July, 2017 to December, 2017.
(c) Copy of Electronic Credit Ledger for the period from July, 2017 to August, 2018.
(d) Copies of VAT Returns and ST-3 Returns for the period from April, 2016 to June, 2017.
(e) Copies of all Demand letters issued in the names of the Applicants.
(f) Copies of CENVAT/Input Tax Credit Register for the FY 2016-17, 2017-18 and from April, 2018 to August, 2018.
(g) Details of applicable tax rates, Pre-GST & Post-GST.
(h) Copies of Balance Sheets for the FY 2016-17 & 2017-18.
(i) Copy of Certificate regarding expenses and sources of funds, issued by Ws Design Axis Architects and details of numbers of flats.
(j) Details of VAT, Service Tax, ITC of VAT, CENVAT Credit for the period from April, 2016 to June, 2017 and output GST and ITC of GST for the period from July, 2017 to August, 2018 for the project “Green Court”.
(k) Reconciliation of turnover reported in GSTR-36 Returns with that in the list of home buyers.
(I) Details of amount received from home buyers till 30.06.2017 and during the period from 01.07.2017 to 31.08.2018.
(m) Applicability of provisions of Haryana VAT Act, 2003 to developers/builders of affordable residential complexes under regular/normal Scheme.
(n) Category-wise details of sold and unsold flats as on 30.06.2017 and 31.08.2018 and copy of RERA registration.
4. The DGAP in his Report has stated that the Respondent submitted the demand and payment schedule in respect of the flat measuring 526 sq. ft. booked by Ms. Santosh Kumar’, Applicant No. 1 at the basic sale price of Rs. 40001- per sq. ft. The details of instalments and taxes paid by the Applicant No. 1 to the Respondent are furnished in Table-IA’ below.
Table-‘A’
(Amount in Rs.)
