Gautam Semwal Vs Revital Reality Pvt. Ltd. (National Anti-Profiteering Authority)
NAA observed that the reversal of the ITC has been effected by the Respondent even before occupancy certification/ completion certificate was issued by the competent authority. The above voluntary reversal of the credit has been effected by the Respondent only in August 2019, i.e. much after the expiry of the period of investigation of the DGAP i.e. from 01.07.2017 to 31.12.2018. Further, Rule 42 of the CGST Rules, 2017 lays down the mode of computation of mandatory reversal of the unutilized input tax credits in respect of unsold flats/shops of a real estate project at the time of receipt of completion Certificate (CC)/ occupancy certificate (OC) or on the date of first occupancy, whichever is earlier. This is the only method prescribed for reversal of ITC under the CGST Rules and the same requires that such reversal is effected only after the date on which completion/ occupancy certificate has been issued or from the date of first occupancy, whichever is earlier. In this case, however, the Respondent has affected reversal much before the above dates and hence the said reversal by the respondent has to be viewed as an act that was carried out with the mala-fide intent of denying the passage of benefit of ITC to his customers/ homebuyers. It is also a fact that at the time of reversal a number of units were yet to be sold and occupancy certificate has not yet been received which implies that this act of reversal was not only premature on the part of the Respondent but apparently also an afterthought aimed at avoiding the passing on of the benefit of ITC to his customers/ homebuyers. It would also be relevant to add here that the profiteered amount has been calculated by DGAP only in respect of the sold units on which the GST is being charged by the Respondent from his customers in proportion to the ITC available on such units and therefore, in case the ITC would be required to be reversed in the case of the unsold flats/shops in future the same can be easily done by the Respondent from the balance available ITC. Therefore also the above argument of the Respondent cannot be accepted.
The Respondent vide his submissions dated 17.09.2019 has also submitted the details of the profiteered amount claimed to have been passed on by him to all his customers along with sample copies of Journal Vouchers issued to the customers. Perusal of the CD enclosed by the Respondent with his above submissions shows that he has claimed to have passed on ITC benefit of Rs. 3,30,91,398/- to his buyers. He has also furnished copies of 26 Journal Vouches issued on 06.08.2019 to claim that he has passed on the benefit of ITC. However, perusal of these vouchers shows that they have been issued on the same date which makes their genuineness doubtful. The Respondent has neither produced the acknowledgement receipts from the recipients nor he has furnished the tax invoices to prove that he has passed on the above amount as benefit of ITC. The Respondent has also not furnished the above details to the DGAP during the course of the investigation. Hence, there is hardly any doubt that the above record has been prepared by the Respondent subsequently to mislead the present proceedings. Therefore, the above claim of the Respondent of his having passed on the benefit of ITC to the eligible buyers cannot be accepted as no reliable and irrebutable evidence has been furnished by the Respondent to prove his above claim.
Based on the above facts the profiteered amount is determined as Rs. 3,32,61,809/- in terms of Rule 133 (1) of the CGST Rules, 2017, during the period from 01.07.2017 to 31.12.2018. This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 also orders that the Respondent shall reduce the prices to be realized from the buyers of the flats/shops commensurate with the benefit of ITC received by him as has been detailed above. The above amount of Rs. 3,32,61,809/- which includes 12% GST on the base profiteered amount of Rs. 3,04,01,093/- has been profiteered by the Respondent from the Applicant No. 1 to 8 and other flat buyers which is required to be refunded to the above Applicant No. 1 to 8 and the other flat buyers as per the Annexure-20 of the DGAP Report dated 02.07.2019 alongwith interest @18% from the date from when the above amount was profiteered by him till the date of payment as per the provisions of Rule 133 (3) (b) of the above Rules. The present investigation is only up to 31.12.2018 and any additional benefit of ITC which shall accrue subsequently 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 8 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. The profiteered amount along with applicable interest shall be paid by the Respondent 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, 2017, under the supervision of the DGAP. This Authority as per Rule 136 of the CGST Rules 2017 directs the jurisdictional Commissioners of CGST/SGST Haryana to monitor this order under the supervision of the DGAP by ensuring that the amount profiteered by the Respondent as ordered by this 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.
It is also evident from the above narration of facts that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his Project `Supertech Basera’ in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus apparently committed an offence under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section. Accordingly, a notice be issued to him directing him to explain as to why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING APPELLATE AUTHORITY
The present Report dated 02.07.2019 has been received from the Applicant No. 9 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 Applicants No. 1 to 8 had filed applications before the Haryana State Screening Committee stating that the Respondent had resorted to profiteering in respect of supply of construction services related to the purchase of the apartments in his project “Supertech Basera” and had also alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) by way of commensurate reduction in the prices of the apartments purchased by them, on implementation of the GST w.e.f. 01.07.2017. The said applications were examined by the Haryana State Screening Committee in its meeting and upon being prima facie satisfied that the Respondent had contravened the provision of Section 171 (1) of the CGST Act, 2017, had forwarded the same with its recommendation to the Standing Committee on Anti-Profiteering for further action in terms of Rule 128 (2) of the CGST Rules, 2017. The said applications were examined by the Standing Committee on Anti-Profiteering in its meeting held on 27.12.2018 and it had referred the applications to the DGAP for investigation under Rule taxguru.in 129 (1) of the CGST Rules, 2017 to determine whether the benefits of reduction in the rate of tax or ITC had been passed on by the Respondent to his recipients.
2. The Standing Committee on Anti-Profiteering had examined two other similar references against the Respondent in its meetings held on 11.03.2019 & 11.04.2019 and it had again referred these applications to the DGAP for conducting detailed investigation.
3. Thereafter, the DGAP on receipt of the reference from the Standing Committee on Anti Profiteering, had issued a notice to the Respondent on 15.01.2019 under Rule 129 (3) 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 to 8 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 the supporting documents. The Respondent was also given an opportunity to inspect the non-confidential evidences/information furnished by the above Applicants No. 1 to 8 during the period from 21.01.2019 to 23.01.2019. However, the Respondent did not avail of the said opportunity. The Applicants No. 1 to 8 were also given an opportunity to inspect the non-confidential evidences/reply furnished by the Respondent on 21.06.2019, 24.06.2019 and 25.06.2019. However, they also did not avail of the said opportunity.
4. The DGAP in his above Report has stated that the period covered by the current investigation was from 01.07.2017 to 31.12.2018. Also, the time limit to complete the investigation was extended upto 06.07.2019 by this Authority vide its Order dated 19.03.2019 in terms of Rule 129 (6) of the CGST Rules, 2017.
5. The DGAP has also stated that in response to the notice dated 15.01.2019, the Respondent has submitted replies vide letters dated 04.02.2019, 15.02.2019, 28.02.2019, 05.03.2019, 14.06.2019 and 18.06.2019 and has stated that:-
a. He has never denied the benefit of excess ITC to his customers and the customers were duly informed vide e-mail dated 24.11.2018 that they were required to withhold payment upto Rs. 50,000/- to account for any benefit that might accrue to him.
b. He had claimed balance of credit of Service Tax of Rs. 3,41,41,867/- in TRAN-1 statement, duly submitted on the GST Portal. However, Service Tax Credit was not excess credit, rather it was to be adjusted towards his output GST liability on payment receivable from his customers as the project had not been granted Occupancy Certificate. He had no balance of credit of VAT as on 01.07.2017
c. The benefit of ITC claimed in TRAN-1 statement had not been accepted by the GST authorities due to some technical glitch for which he had been running from pillar to post and had filed a Writ Petition before the Hon’ble Punjab & Haryana High Court.
6. The DGAP in his Report has further stated that vide the aforesaid letters, the Respondent had submitted the following documents/information:-
a. As the GSTR-1 & GSTR-3B Returns were not filed due to technical glitch, he had submitted a summary of the sales details for the period of July, 2017 to January, 2019.
b. Service Tax and VAT Returns for the period from April, 2016 to June, 2017.
c. Allotment letters issued to the Applicants.
d. CENVAT Credit Register for the F.Y. 2016-17, 2017-18 and from April, 2018 to January, 2019
e. Applicable tax rates, pre-GST and post-GST.
f. Balance Sheets for the F.Y. 2016-17 and 2017-18.
g. Copy of RERA Report.
h. List of all the home buyers of the project “Supertech Basera”.
7. The DGAP in his report has further stated that various replies of the Respondent and the documents/evidences on record have been carefully examined by him and the main issues to be examined were (a) whether there was benefit of reduction in rate of tax or ITC on the supply of construction service by the Respondent after implementation of the GST w.e.f. 01.07.2017 and if so, (b) Whether the Respondent has passed on such benefit to the recipients by way of commensurate reduction in prices, in terms of Section 171 (1) of the CGST Act, 2017.
8. The DGAP in his report has mentioned that the Respondent, vide letter dated 05.03.2018, submitted the project report of the project “Supertech Basera” wherein payment schedule for the purchase of flats at the basic sale price of Rs. 4,000/- per sq. ft. for carpet area and Rs. 500/- per sq. ft. for Balcony area was enclosed. The details of payment schedule have been furnished by the DGAP in Table- ‘A’ below:-
Table- ‘A’
