Ram Prakash Sharma Vs BPTP Ltd. (NAA)
Conclusion: National Anti-profiteering Authority (NAA) directed the Director General of Anti-Profiteering (DGAP) to investigate the profiteering charges against 14 projects of BPTP Ltd and furnish his Report under Rule 129 (6) of the CGST Rules, 2017. The investigation should be carried out w.e.f. July 1, 2017 to November 31, 2020 or till the date OC had been received by BPTP in respect of the Project.
Held: Assessee had filed applications before the Standing Committee on Anti-profiteering, under Rule 128 (1) of the CGST Rules, 2017 and submitted that they had purchased flats in the BPTP’s Project “Discovery Park” but BPTP had not passed on the benefit of Input Tax Credit (ITC) to them by way of commensurate reduction in prices of the flats, in terms of Section 171 (1) of the CGST Act, 2017. The Standing Committee on Anti-profiteering on prima facie having satisfied itself that BPTP had not passed on the benefit of ITC had forwarded the applications of assessee with its recommendation to the DGAP for detailed investigation under Rule 129 (1). DGAP has concluded that the benefit of additional ITC of 10.06% of the taxable turnover had infact accrued to BPTP and the same was required to be passed on to the assessee and other recipients. Thus, the company had contravened the provisions of Section 171 of the CGST Act, 2017 in as much as the additional benefit of ITC @10.06% of the base price received by BPTP during the period from 01.07.2017 to 30.06.2019, had not been passed on to the above Applicants and other recipients. However, the Respondent had suo moto passed on an amount of Rs. 3,41,44,848/- to all the customers. Amount (Rs. 6,11,09,771/-) included both the profiteered amount @10.06% of the taxable amount (base price) and GST on the said profiteered amount from other recipients as well who were not Applicants in the present proceedings. Therefore, the additional amount of Rs. 6,11,09,771/- was required to be returned to such eligible recipients. It was held to be a fit case for further investigation as per the provisions of Rule 133(4) of the CGST Rules 2017. Accordingly, the Authority directed the DGAP to reinvestigate the above issues and furnish his Report under Rule 129 (6) of the CGST Rules, 2017. The investigation should be carried out w.e.f. 01.07.2017 to 31.11.2020 or till the date OC had been received by the Respondent in respect of the above Project. There were sufficient grounds to believe that the Respondent was liable to pass on the benefit of ITC to the home buyers of these Projects in terms of Section 171(1) as he had himself admitted that he was liable to pass on the benefit in respect of the present under construction Project. Under the provisions of Section 171 (2) of the above Act, this Authority was competent to suo moto examine all such cases where the benefit of additional ITC was required to be passed on and then determine the benefit. Since, the Respondent was availing the benefit of ITC post-GST under one registration, hence, all the above Projects were required to be investigated so that the exact quantum of benefit could be determined.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
A Report dated 23.03.2020 has been received from the Applicant No. 3 i.e. the Director General of Anti-Profiteering (DGAP) on 15.04.2020 after detailed investigation under Rule 129 (6) of the Central Goods & Services Tax (CGST) Rules, 2017. The brief facts of the Report are that the Applicant No. 1 and 2 had filed applications before the Standing Committee on Anti-profiteering, under Rule 128 (1) of the CGST Rules, 2017 and submitted that they had purchased flats in the Respondent’s Project “Discovery Park” but the Respondent had not passed on the benefit of Input Tax Credit (ITC) to them by way of commensurate reduction in prices of the flats, in terms of Section 171 (1) of the CGST Act, 2017. The Standing Committee on Anti-profiteering on prima facie having satisfied itself that the Respondent had not passed on the benefit of ITC had forwarded the applications of Applicant No. 1 and 2 with its recommendation to the DGAP for detailed investigation under Rule 129 (1).
2. The DGAP on receipt of the applications and supporting documents from the Standing Committee on Anti-profiteering had issued notice under Rule 129 (3) of the CGST Rules, 2017 on 08.07.2019 calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the above Applicants by way of commensurate reduction in prices charged from them 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. Vide the above mentioned notice dated 08.07.2019, the Respondent was also given opportunity to inspect the non-confidential evidence/information furnished by the above Applicants during the period from 15.07.2019 to 17.07.2019, which he had not availed. Vide e-mail dated 10.01.2020, the above Applicants were also given an opportunity to inspect the non-confidential documents/replies furnished by the Respondent on 15.01.2020 to 16.01.2020, which was not availed of by the Applicant No. 1 & 2.
3. The DGAP has reported that the time limit to complete the investigation was extended up to 27.03.2020 by this Authority, vide its order dated 24.12.2019 in terms of Rule 129 (6) of the CGST Rules, 2017 and the period of current investigation was from 01.04.2016 to 30.06.2019.
4. The DGAP has further reported that the Respondent had submitted his replies vide letters dated 19.07.2019, 26.07.2019, 22.08.2019, 14.10.2019, 01.11.2019, 07.11.2019, 18.12.2019, 07.01.2020, 20.01.2020, 28.02.2020, 11.03.2020, 17.03.2020, 18.03.2020, 19.03.2020, 20.03.2020 vide which he had stated:-
a. That as per the CA’s Certificate issued on computation of profiteering, the percentage of ITC benefit would be 0.78% on the invoices raised till March 31, 2019 and that he had been passing on discounts to the customers of the Project duly considering the benefit of ITC.
b. That out of the total 622 customers under the Project, there was settlement arrived at with 332 customers relating to the amount charged for area escalation, cost escalation, difference of Service Tax and GST due to delay in possession and excess ITC to be passed on and various other issues. The settlement inter alia included settlement on account of passing on the benefit of excess ITC. The Respondent has also submitted copies of settlement deeds signed with the two customers wherein “Special Credit 2” was allowed towards excess GST ITC and other miscellaneous taxes. As the Respondent had already passed on the benefit to these 332 customers, no further benefit was to be passed on to them. The Respondent had submitted sample copies of settlement deeds entered into with the two customers.
c. That he had received Occupation Certificate (00) for 05 towers on 31.10.2018 and reversed ITC of Rs. 1,87,27,180/- on account of receipt of OC. Out of total 622 units, in 45 units either booking was cancelled or sale of units was after receipt of OC and no GST was charged. Accordingly, these 45 customers were not eligible for any benefit on account of ITC.
d. That in approx. 115 cases, there was litigation by the customers, due to which either demand raised has not been fully paid or has been partly paid and due to the non-payment of the demand by these customers they were not entitled to the benefit of ITC.
e. That the Respondent has passed on GST benefit of 3.56% on GST demands raised till June, 2019 through the entries made in the accounts of the customers.
f. That as per the Notification for real estate issued in March, 2019, the Respondent was barred from taking benefit of ITC of GST in respect of old Project as on 31.03.2019 against any Project in future and such ITC would lapse. Further, the Respondent was still to incur lot of expenditure in respect of the Project ‘Discovery Park’ which would result in more ITC against which there would be hardly any further billing and thus ITC would lapse.
g. That the Respondent has already passed on an amount of Rs. 3,41,44,848/- on account of profiteering.
h. That the Respondent has not raised any demand in respect of the EWS flats and the commercial properties sold post-GST.
5. The DGAP has also stated that vide the aforementioned letters/e-mails, the Respondent has submitted the following documents/information:-
(a) Copies of GSTR-1 Returns from July, 2017 to June, 2019.
(b) Copies of GSTR-3B Returns from July, 2017 to June, 2019.
(c) Copy of Tran-1 Statement.
(d) Copies of VAT & ST-3 Returns from April, 2016 to June, 2017.
(e) Electronic Credit ledger for the period from July, 2017 to June, 2019.
(f) Copies of all demand letters and Flat buyer agreements in the name of the Applicants.
(g)Details of applicable tax rates- pre-GST and post-GST.
(h) Copies of Balance Sheets with Profit & Loss Accounts and other Annexures for FY 2016-17 and 2017-18.
(i) Copy of Project Report submitted to the RERA including all periodic progress Reports.
(j) Payment Schedule for the applicants.
(k) Details of total units in Project “Discovery Park” and total units sold.
(l) Details of taxable turnover and ITC for the Project “Discovery Park”.
(m) Project wise ITC availed by the Respondent.
(n) Details/ List of home buyers of the Project “Discovery Park”.
(o) Ledger of 50 customers reflecting the benefit of ITC credited to their account.
6. The DGAP in his Report has also stated that the above applications, the various replies of the Respondent and the documents/evidence on record had been carefully examined. The main issues for investigation were:-
(i) Whether there was benefit of reduction in rate of tax or ITC on the supply of construction service by the Respondent after the introduction of GST w.e.f. 01.07.2017 and if so,
(ii) Whether such benefit was passed on to the recipients in terms of Section 171 of the CGST Tax Act, 2017 by the Respondent?
7. It has also been reported by the DGAP that vide letter dated 26.07.2019, the Respondent has submitted copies of the payment schedule for purchase of apartments by the above Applicants. The details of the amounts and taxes paid by the Applicant No. 1 to the Respondent have been furnished by the DGAP in Table-A’ below:-
Table-A’
(Amount in Rs.)
