Jitendra Kumar Vs Adhiraj Constructions Pvt. Ltd. (NAA)
It is observed from the DGAP’s report and documents submitted during the investigation that the instant project (Samyama City Tower 1-D) has received RERA approval for the period 08.01.2018 to 31.03.2023. It is also noted that all bookings have been made after GST was introduced and that all payments have been received after 01.07.2017.
However, the Authority also observes that provision of the RERA Act, 2016 make it mandatory for a real estate developer/promoter to maintain separate bank accounts for each of his projects registered separately under the RERA Act, 2016. In the case of the Respondent, the above provision implies that he was required to maintain ten separate escrow/bank accounts in respect of all projects as mentioned in Table-B’ of the DGAP report dated 27.11.2020. However the DGAP’s Report has no mention of this aspect. As the Respondent had obtained ten separate RERA registrations for his ten projects, he should have maintained separate escrow/bank accounts.
It is also noted that the Respondent has single GST registration for the all ten projects and is maintaining a joint ITC Register and is availing ITC on all the projects. He is executing all projects from a common pool of ITC, to discharge his tax output liability on these projects through the combined GSTR-3B Returns and that he has availed substantial CENVAT/VAT credit in pre and post GST period in respect of these other projects. In view of the above said facts, there exist reasons to believe that other nine projects on which the Respondent is availing ITC from the common pool may be investigated to determine whether he has passed on the benefit of ITC to the buyers of each project, which are being executed by him.
For the reasons discussed earlier i.e. RERA approval of the project Samyama City Tower 1-D was given for the period 08.01.2018 to 31.3.2023, that all bookings and fixation of price have been made after GST was introduced and that all payments have been received after 01.07.2017; as such in the given facts and circumstances, the Authority finds that no case of profiteering under section 171(1) of the CGST Act, 2017 can be made out against the Respondent in respect of “Samyama City Tower 1-D”.
However, the Authority finds that the Respondent is also executing other nine projects and the issue of profiteering has not been examined by the DGAP in respect of them. In view of the observation made in the earlier paragraph, the Authority finds that there exists reason to investigate other nine projects for the purpose of determination of profiteering. Accordingly, this Authority as per the provisions of Section 171 (2) of the above Act take suo-moto cognizance of the same and in terms of Rule 133(5) of the said Rules, directs the DGAP to conduct investigation in respect of the other nine projects and submit Report to this Authority for determination whether the Respondent is liable to pass on the benefit of ITC in respect of the other 9 projects/towers as mentioned in ‘Table-B’ of the DGAP’s Report to the buyers or not as per the provisions of Section 171 (1) of the above Act.
The Respondent is directed to extend all assistance to the DGAP and furnish them necessary documents or information as required during the course of the investigation.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. Present Report dated 27.11.2020 had been furnished by 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 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 “Samyama City Tower 1-D” and had alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in the prices.
2. The DGAP in its report dated 27.11.2020, inter-alia, has stated that:-
(i) the aforesaid Application was examined by the Standing Committee on Anti-profiteering in the meeting held on 13.09.2019 and the minutes of which were received by the DGAP on 09.10.2019, whereby it was decided to forward the same to the DGAP to conduct a detailed investigation in the matter. Accordingly, investigation was initiated to collect evidence necessary to determine whether the benefit of Input Tax Credit had been passed on by the Respondent to the Applicant No. 1 in respect of construction service supplied by him (Respondent).
(ii) the Standing Committee has forwarded the following documents along with the minutes of meeting:-
(a) Copy of complaint.
(b) Copy of Tax Invoice issued in the name of the Applicant No. 1.
(c) Applicant No. l’s ledger statement.
(d) Demand letter for the booked flat in the name of the Applicant No. 1.
(iii) after receipt of the reference from the Standing Committee on Anti-profiteering, a Notice under Rule 129 of the Rules was issued by the DGAP on 23.10.2019, 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 price 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 said Notice; the Respondent was also given an opportunity to inspect the non-confidential evidences/information furnished by the Applicant No. 1 during the period 30.10.2019 to 31.10.2019. However, the Respondent did not avail of this opportunity.
(iv) the period covered by the current investigation was from 01.07.2017 to 30.09.2019.
(v) the time limit to complete the investigation was 08.04.2020. However, in terms of Notification No. 35/2020-Central Tax dated 03.04.2020, where, any time limit for completion/furnishing of any Report, had been specified in, or prescribed or notified under the CGST Act, 2017 which falls during the period from the 20th day of March, 2020 to the 29th day of June, 2020, and where completion or compliance of such action had not been made within such time, then, the time limit for completion or compliance of such action, was extended up to the 30.06.2020. Further, vide Notification No. 55/2020-Central Tax dated 27.06.2020 and by Notification No.65/2020- Central Tax dated 01.09.2020 the time limit for compliance was extended up to 30.11.2020. This Authority, vide its Order dated 26.08.2020 in terms of Rule 129(6) of the Rules allowed further extension of three months.
(vi) in response to the Notice dated 23.10.2019, the Respondent submitted his reply vide letters and e-mails dated 05.11.2019, 27.12.2019, 20.01.2020, 11.02.2020, 03.07.2020, 24.07.2020, 28.07.2020, 30.07.2020, 31.07.2020, 05.08.2020 and 15.10.2020. The detailed submissions of the Respondent to the DGAP have been summed up below wherein, inter-alia, it was stated that:-
a) the Respondent had duly passed on the benefit of ITC to his customers by way of commensurate reduction in prices. For booking made after 1st July, 2017, booking price had been reduced factoring benefit from the introduction of GST. The Applicant No. 1 had made booking after 1st July, 2017; therefore the question of passing on of the benefit, on introduction of GST did not arise.
b) in respect of a real estate developer, statutory provisions of Anti-profiteering in GST law meant that if developer had benefited from the introduction of GST in terms of lower Rate of tax, or additional ITC, the benefit should be passed on to the homebuyers. Question of passing on of benefit on introduction of GST in terms of lower rate of tax, or additional ITC for the units booked before GST came into force i.e. 1st July, 2017. The Respondent had duly passed on the benefit of ITC to his customers by way of commensurate reduction in prices.
c) the details of VAT, Service Tax, ITC of VAT, Cenvat Credit for the period April, 2016 to June, 2017 and output GST and ITC of GST for the period July, 2017 to September, 2019 for the project “Samyama City Tower 1-D” are furnished as below:
