Anonymous Vs Aryan Hometec Pvt. Ltd. (NAA)
It is revealed from the plain reading of Section 171 (1) that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP’s Report that there has been no reduction in the rate of tax in the post GST period; hence the only issue to be examined is as to whether there was any additional benefit of ITC with the introduction of GST availed by the Respondent or not. On this issue it has been revealed from the DGAP’s Report that no ITC has been availed by the Respondent in the post-GST period and therefore, there was no additional benefit of ITC which had accrued to the Respondent post-GST as compared to pre-GST period.
It is also revealed from the above Report that the project under investigation was started in the year 2012 and most of the work had been completed in 2014, however, the project was completed in March, 2018 and the OC was obtained on 11.04.2018. Further, the Respondent had not paid his Service Tax liability in the pre-GST period and had also defaulted in the payment of GST and filing of GST Returns. The DGAP has also claimed that on scrutiny of the Service Tax and GST Returns submitted by the Respondent, it was observed that the Respondent had not availed any CENVAT credit of the input services during the period from 01.04.2016 to 30.06.2017 and had also not availed any ITC in the post-GST period from 01.07 2017 to 30.04.2019 in respect of the above project. The State GST Authorities had also cancelled the GST registration of the Respondent on 31.08.2018 as he had not filed the GSTR-3B Returns from September 2018 onwards and GSTR-1 Returns from January 2019 onwards. Based on the above facts it can be concluded that this case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act. 2017 as the Respondent had not availed benefit of additional ITC in the post-GST regime. Hence, the allegation of not passing on the benefit of ITC is not established against the Respondent. Therefore, the Respondent is not liable to pass on the benefit of ITC to the Applicant No. 1 and the other recipients. Accordingly, the provisions of Section 171 (1) of the CGST Act, 2017 have not been contravened in the present case.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING APPELLATE AUTHORITY
1. The present Report dated 31.01.2020 has been received from the Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP) after a detailed investigation, under Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules, 2017. The brief facts of the case are that the Applicant No. 1, who has sought anonymity, had filed an application under Rule 128 (1) of the CGST Rules, 2017 against the Respondent alleging profiteering in respect of construction service supplied by him. The Applicant No. 1 had stated that he had purchased a flat in the Respondent’s project “Aryan Founttain Square”, Attiblele-Surajpura Road. Bengaluru and had alleged that the Respondent had included VAT and Service Tax in the MRP of the flat at the time of booking and demanded 12% GST on the pending amount which had resulted in double taxation, whereas the Respondent was actually required to pass on the benefit of ITC for the construction done after the GST implementation which he had not passed on.
2. The Standing Committee on Anti-profiteering had referred the above application to the DGAP recommending a detailed investigation and to collect evidence necessary to determine whether the benefit of ITC had been passed on by the Respondent to the recipients in respect of the construction service supplied by the Respondent. On receipt of the reference from the Standing Committee on Anti-profiteering, a notice under Rule 129 (3) of the above Rules was issued on 16.05.2019 by the DGAP, calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to his recipients by way of commensurate reduction in prices of the flats 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 documents in support of his reply. The Respondent was also allowed to inspect the relied upon non-confidential evidence/information which formed the basis of the investigation between 22 05.2019 and 24.05.2019 which was however not availed of by the Respondent.
3. The DGAP has stated in his Report that the Respondent did not submit the requisite documents on due date and hence, reminders dated 12.06.2019, 01.10.2019 and 09 10.2019 were issued to him. The Respondent did not submit complete documents even after several reminders, therefore, summons dated 10.10.2019 & 17.10.2019 under Section 70 of CGST Act, 2017 read with Rule 132 of the above Rules were issued to Ms. Rashmi Bharath and Mr. S. Bharath Govindareddy. Directors of the Respondent to appear in the DGAP’s office on 16.10.2019 and to submit the requisite documents/information, however the above persons had not appeared.
4. The DGAP has also stated that in compliance of the second summons dated 17 10 2019, the Respondent had again not appeared on 25 10 2019 and did not submit any documents/information/letter.
5. The DGAP has further stated that in response to the notice dated 16 05 2019, subsequent two reminders and two summons. the Respondent did not submit necessary documents required for investigation and therefore, under the provisions of Section 67 of CGST Act, 2017 read with Rule 139 of the above Rules. the DGAP’s officers had visited the premises of the Respondent on 20.11.2019 & 21.11.2019 and collected the requisite information and documents necessary for investigation.
6. The DGAP has also reported that the Applicant No. 1 was also given opportunity to inspect the non-confidential documents/reply furnished by the Respondent on 20.01.2020 and 21.01.2020 which was however not availed of by the Applicant No. 1.
7. The DGAP has also stated that the period covered by the current investigation was from 01.07.2017 to 04.2019.
8. The DGAP has further stated that the time limit to complete the investigation was extended up to 01.02 2020 by this Authority, vide its order dated 31 10.2019 , in terms of Rule 129 (6) of the above Rules.
9. The DGAP has also submitted that in response to the notice dated 05.2019, subsequent reminders and at the time of visit at the premise of the Respondent, the Respondent had submitted his replies vide letters and e-mails dated 23 05 2019, 17.06.2019, vide statement dated 21 11.2019 and email dated 17.01.2020, the summary of which has been furnished by the DGAP as has been mentioned below:-
a. That the Respondent was a Pvt. Ltd_ company incorporated under the Companies Act, 1956 in the year 2017. The Respondent had only filed GSTR-3B Returns for the period from July, 2017 to August, 2018 and GSTR-1 Returns for the period from July, 2017 to December, 2018.
b. That he was engaged in the real estate activities like formation of layouts and construction of residential villas, apartment and other construction related contracts in and around Bengaluru. The details of all the projects undertaken by the Respondent have been furnished by the DGAP as is mentioned below:-
