Sanjay Devan Vs Vatika Ltd. (National Anti-Profiteering Appellate Authority)
No profiteering found in Sanjay Devan Vs Vatika Ltd. case. DGAP reports no ITC benefit or tax rate reduction. Section 171 not applicable.
The only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. On this issue, the DGAP in his Report, has stated that ITC as a percentage of the turnover which was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 0.30% and during the post-GST period (July-2017 to December-2018), it was 0.20%. On this basis, the DGAP has concluded his Report with the findings that the Respondent had neither been benefited from additional ITC nor there had been a reduction in the tax rate in the post GST period. We have no reason to differ from the Report of DGAP and we therefore agree with his findings since there was no reduction in the rate of tax nor there was increased additional benefit on account of ITC. Hence, the provisions of Section 171 of CGST Act, 2017 are not liable to be invoked in this case, notwithstanding the contention of the Applicant No. 1 that the Respondent had issued a credit note to him which indicated that an amount of Rs.1,12,080/- was being passed on to him. We take cognizance of the Report of DGAP dated 07.10.2019 that this issue had already been considered by him during the investigation and was found extraneous to the computation of profiteering since the communications regarding the credit note issued by the Respondent were based on a mere provisional computation of the amount of profiteering on his (Respondent) part. We also find that on his part, the Applicant No. 1 has also not substantiated his allegations during the course of the hearings. Therefore, we do not find any ground to differ from the Report of the DGAP in this regard as also in the computation of profiteering made in the DGAP’s Report.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING APPELLATE AUTHORITY
1. The present Report dated 19.06.2019 has been received from the Applicant No. 12 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 present case are that the Haryana State Screening Committee on Anti-Profiteering, had forwarded an application dated 28.09.2018 filed by the Applicant No. 1 to the Standing Committee on Anti-Profiteering under Rule 128 of the CGST Rules, 2017 on 30.10.2018. The Applicant No. 1 had stated in his application that the Respondent had resorted to profiteering in respect of supply of construction services related to purchase of Flat No. 31, GF, E1, Premium Floor, Vatika Indian Next, Gurgaon 122004. The Applicant No. 1 had also alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) by way of commensurate reduction in the price of the apartment purchased by him, on implementation of GST w.e.f. 01.07.2017. The said application was examined by Haryana State Screening Committee and upon being prima facie satisfied that the Respondent had contravened the provisions of Section 171 of the CGST Act, 2017 forwarded the same with its recommendation to the Standing Committee on Anti-Profiteering for further action in terms of Rule 128 of the CGST Rules, 2017 on 30.10.2018. The said application was examined by the Standing Committee on Anti-Profiteering in its meeting held on 13.12.2018 and it had referred the application to the DGAP for investigation under Rule 129(1) of the CGST Rules, 2017 to determine whether the benefit of reduction in the rate of tax or ITC had been passed on by the Respondent to his recipients.
2. The DGAP has stated that the Applicant had submitted the duly filled in Form APAF-1 and copies of demand letters along with his application.
3. Thereafter, the DGAP issued a notice to the Respondent on 14.01.2019 under Rule 129 of the above Rules, calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the Applicant No. 1 by way of commensurate reduction in prices and if so, to suo-moto determine the quantum thereof and indicate the same in his reply to the notice as well as furnish all supporting documents. The Respondent was also given an opportunity to inspect the non-confidential evidences/information furnished by the above Applicants during the period 21.01.2019 to 23.01.2019. However, the Respondent did not avail said opportunity. The Applicant No. 1 was also given an opportunity to inspect the non-confidential evidences/reply furnished by the Respondent on 13.06.2019 or 14.06.2019. The Applicant No. 1 availed of the said opportunity and inspected the documents on 13.06.2019. The DGAP had carried out investigation in this case for the period from 01.07.2017 to 31.12.2018.
4. The DGAP in his Report stated that the in response to the notice dated 14.01.2019, the Respondent replied vide letters/e-mails dated 29.01.2019, 29.05.2019, 06.06.2019, 12.06.2019 and 14.06.2019. Vide the aforementioned letters, the Respondent also submitted the following documents/information:
(a) Copies of GSTR-1 Returns for the period July, 2017 to December,
(b) Copies of GSTR-3B Returns for the period July, 2017 to December, 2018.
(c) Copies of Tran-1 Returns for transitional credit availed by the
(d) Copies of VAT & ST-3 Returns for the period April, 2016 to June,
(e) Electronic Credit Ledger for the period July, 2017 to December, 2018.
(f) Tax rates, pre-GST and post-GST.
(g) Copy of Balance Sheet for FY 2016-17 & 2017-18.
(h) Details of turnover and ITC in respect of the project “Vatika Premium Floors”.
(i) List of home buyers in the project “Vatika Premium Floors”.
5. The DGAP in his Report has mentioned that he has carefully examined the various replies of the Respondent and the documents/evidences on record. The main issues for determination were whether there was benefit of reduction in the rate of tax or the ITC on the supply of the construction service by the Respondent after implementation of the GST w.e.f. 07.2017 and if so, whether such benefit was passed on by the Respondent to the recipients, in terms of Section 171 of the CGST Act, 2017.
6. The DGAP in his Report has further stated that the Respondent had submitted a copy of the sale agreement dated 12.06.2012, for the sale of Flat No. 31, GF, E-1, to the Applicant No. 1 in his project “Vatika Premium Floors”, measuring 1620 square feet, at the base price of Rs. 7,512/- per square feet. The details of amounts and taxes paid by the Applicant 1 to the Respondent, are furnished in Table-A’ below:‑
Table-`A’
(Amount in Rs.)
