Sh. Arbind Biswal Vs Sahej Realcon Pvt. Ltd. (NAA)
It is apparent from the DGAP’s Report and the available record that the Completion Certificate for the project Sahej Valley was issued on 31.03.2016, i.e. prior to the date of introduction of GST through which the provisions of Anti-Profiteering were introduced. In support of the claim. the Respondent has also produced a copy of sale deed for other units sold post completion in October, 2017, to establish that the project was completed in March, 2016 and that no Service Tax/GST was charged on such units sold post completion. Since, the Completion Certificate was obtained for the subject project before the introduction of GST and also there has not been any reduction of GST rate in the instant case, the provisions of Section 171 dealing with Anti-profiteering cannot be made applicable to the said project in the view of the fact that there was no additional ITC which had been utilized by the Respondent, which was relevant for establishing allegation of profiteering. Further, no fresh demand has been raised by the Respondent upon Applicant No.1 in the post-GST regime, only a reminder for previous demand was issued. Launching of the project, Agreement to sell and Completion Certificate of the project had taken place in the pre-GST regime and hence, there was no post-GST tax rate or ITC structure which could be compared with the pre-GST tax rate and ITC and also the anti-profiteering provisions related to Section 171 were not in existence at that time. Accordingly. it is clear that the Respondent had neither benefited from additional ITC nor had there been a reduction in the tax rate in the post-GST period and therefore it does not qualify to be a case of profiteering.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. The present Report dated 30.12.2020 has been received in this Authority from the Applicant No. 2 i.e. the Director General of Anti-Profiteering Authority (DGAP) in response to the Authority’s 10 no. 13/2020 dated 19.03.2020 passed under Rule 133(4) of the Central Goods & Service Tax (CGST) Rules, 2017. The said order was passed to remand the DGAP’s Report dated 20.09.2019 which was furnished by the DGAP after 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 dated 07.01.2019 under Rule 128 of the CGST Rules and alleged profiteering by the Respondent while he had purchased Duplex Row House-B3 in the Respondent’s project “Sahej Valley”, situated at Dandipalli, Rourkela. The Applicant No. 1 had also alleged that the Respondent had not passed on the benefit of ITC although he had charged GST @12% w.e.f. 01.07.2017 from the said Applicant. This application was forwarded to the Odisha State Screening Committee on Anti-Profiteering on 05.02.2019 and was considered by the Standing Committee on Anti-Profiteering in its meeting held on 11.03.2019, wherein, the Standing Committee referred the complaint to the DGAP for conducting detailed investigation on the allegations levelled by the Applicant No. 1.
2. The said application was examined by the Director General of Anti-Profiteering and the .Investigation Report dated 20.09.2019 under Rule 129(6) of the Rules, was furnished to this Authority. Vide the said Report, it was concluded by the DGAP that the construction service was completed well before the introduction of GST, and any liability of GST of the Applicant No. 1 was only on account of the dues left on account of his booking of the unit prior to issue of Completion Certificate. The DGAP further reported that there was no additional accrual of Input Tax Credit to the Respondent as a result of introduction of GST as the construction service was completed prior to introduction of GST. In support of the said claim, the DGAP had emphasized on the Completion Certificate dated 31.03.2016, submitted by the Respondent to the DGAP. The DGAP also stated that the project had 14 flats, each with 1700 sq. ft. of super built up area, and out of the total, only two units were sold before completion, one of which was allotted to the Applicant No. 1. The DGAP, in his Report dated 20.09.2019, had established that the Applicant No. 1 had booked the Unit in the project on 23.10.2014, Agreement to sell was executed on 24.04.2016, and the tri-partite agreement between the Applicant No. 1, the Respondent and ICICI Bank, financer for the Applicant No. 1 was signed on 17.05.2016. Thus, the conclusion was that the provision of Section 171(1) of the CGST Act, 2017 had not been contravened.
3. However, this Authority, vide its Interim Order No. 13/2020 dated 19.03.2020, referred the matter back to the DGAP under Rule 133(4) of the Rules, and directed the DGAP to reinvestigate the matter and submit a comprehensive report under Rule 129(6) of the CGST Rules, 2017 specifically on the following grounds:-
i. What was the basis of accepting the Completion Certificate issued by a private Architect?
ii. Which is the Competent Authority to issue the Completion Certificate in the State of Odisha?
iii. Whether the above Respondent has earned ITC on the above project during the period from July, 2017 till date?
iv. Whether the above Respondent has utilised ITC during the period from July, 2017 till date for discharging his output GST liability in respect of the above project?
v. Whether the Respondent has claimed transitional credit through the TRAN-1 statements filed in respect of the above project?
vi. Whether the Respondent has availed benefit of additional ITC since July, 2017 till date and he is liable to pass on the same to his buyers?
vii. Whether the above land owners have sold their share of the houses and, if so, whether they have passed on the benefit of ITC to the buyers of these houses?
viii. Whether Applicant No. 1 is entitled to the benefit of ITC?
ix. Whether rest of the 8 house buyers are eligible for the benefit of ITC?
4. On receipt of the aforesaid Interim Order from this Authority, the DGAP re-examined the documents/information submitted by the Respondent and cross-verified them with his Investigation Report dated 20.09.2019. Further, letter dated 26.08.2020 followed by reminder letters dated 07.09.2020 & 30.09.2020 and summons dated 03.11.2020 & 09.12.2020 were issued to the Respondent by the DGAP, seeking clarifications. The DGAP also sent a letter dated 09.12.2020 to the jurisdictional office (State Jurisdiction) of the Respondent i.e. the Additional Commissioner (State Tax), CT & GST Territorial Range, Sundergarh, Rourkela, to collect the necessary documents. The State Jurisdiction Office submitted his reply to the DGAP vide e-mails dated 11.12.2020 & 22.12.2020.
5. On the basis of the above facts, the DGAP has re-investigated the matter and submitted his Investigation Report dated 30.12.2020 to this Authority, wherein, the DGAP has submitted as under:-
(a) That as directed by this Authority in its I.O. No. 13/2020 dated 19.03.2020; all the nine issues as mentioned above, had all been duly covered in the report.
(b) That the Respondent submitted his replies to the Notice issued by the DGAP, vide letters and e-mails dated 10.09.2020, 06.11.2020, 23.12.2020 & 29.12.2020.
(c) At the time of submission of earlier investigation report dated 20.09.2019, the Respondent had submitted all the necessary information and data for the period covered under investigation. The main issues to be examined were the points raised by this Authority in its I.O. which were as: –
(i) What was the basis of accepting Completion Certificate issued by a private Architect?
Reply of the DGAP
That Section 66E (b) of the Finance Act 1994, provided for levy of Service Tax on declared services which provided as under:
(b) Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration was received after issuance of completion-certificate by the competent authority.” “
Explanation for the above clause provided that for the purpose of this clause provides that
(1) the expression “competent authority” means the Government or any authority authorized to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely (A) architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 1972); or (B) chartered engineer registered with the Institution of Engineers (India); or (C) licensed surveyor of the respective local body of the city or town or village or development or planning authority,”
The DGAP further claimed that the above explanation made it clear that completion certificate was must to get benefit of non-chargeability of Service Tax or if there was no such local law requirement then any of the above three documents would fulfill law requirement for not charging Service Tax. Requirement of completion certificate varied from state to state. Above law requirement was further substantiated by Point 6.2.7 of Education Guide issued by CBIC dated 20.06.2012 which provides:
“In terms of Explanation to clause (b) of section 66E in such cases the completion certificate issued by an architect or a chartered engineer or a licensed surveyor of the respective local body or development or planning authority would be treated as completion certificate for the purposes of determining chargeability of service tax.”
The DGAP has also stated that he had received an email dated 22.12.2020 from CT & GST Office, Rourkela-1, Circle- Jurisdiction office (State Administration) of the Respondent. The officer had forwarded the reply of Respondent to the DGAP. A copy of completion certificate issued by Ar. Arijit Sarkar bearing hand written note “Registration No. CA/2000/27049” Screenshot of verification from website was enclosed in the footnote of said certificate. From the said note & enclosed screenshot, the DGAP has claimed that the Architect Mr. Arijit Sarkar was registered with Council of Architecture having Registration No. CA/2000/27049. Accordingly, Completion Certificate was valid and accepted in the DGAP report.
(ii) Which was the competent Authority to issue the completion certificate in the state of Odisha?
Reply of the DGAP
