Jotbir Singh Bhalla Vs Suncity Projects Pvt. Ltd. (NAA)
Authority determines that the Respondent has profiteered an amount of Rs. 2,62,56,652/-. Therefore, given the above facts, the Authority under Rule 133(3)(a) of the CGST Rules orders that the Respondent shall reduce the price to be realized from the buyers of the flats commensurate with the benefit of ITC received by him. The details of the recipients and benefit which is required to passed on to each recipient/homebuyer (including Applicant No. 1) alongwith the details of the unit are contained in the Annexure’ A’ to this order. The Authority directs that such profiteered amount as determined shall be passed on/returned by the Respondent to the recipients of supply alongwith interest @18% from the date such amount was profiteered by the Respondent uptil the date such amount is passed on/returned to the respective recipient of supply.
For the reasons mentioned hereinabove and in the given facts and circumstances and also stated position of law we find that the Respondent has denied the benefit of ITC to the buyers of his flats in contravention of the provisions of Section 171 (1) of the CGST Act, 2017. We hold that the Respondent has committed an offence by violating the provisions of Section 171 (1) during the period from 01.07.2017 to 08.08.2019, and therefore, he is liable for imposition of penalty under the provisions of Section 171 (3A) of the shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.07.2017 to 08.08.2019 when the Respondent had committed the above violation. Hence, the said penalty under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, notice for the imposition of penalty is not required to be issued to the Respondents.
The concerned jurisdictional CGST/SGST Commissioner is also directed to ensure compliance of this Order. It may be ensured that the benefit of ITC as determined by the Authority as per the Annexure A of this Order be passed on along with interest @18% to each homebuyer, if not already passed on. In this regard an advertisement may also be published in a minimum of two local Newspapers/vernacular press in Hindi/English/local language with the details i.e. Name of the builder (Respondent) — M/s Suncity Projects Pvt Ltd., Project- “Suncity Avenue-102”, Location- Gurugram, Haryana and amount of profiteering Rs.2,62,56,652/- so that the Applicants along with Non-Applicant homebuyers can claim the benefit of ITC which has not been passed on to them.Homebuyers may also be informed that the detailed NAA Order is available on Authority’s website naa.gov.in. Contact details of concerned Jurisdictional Commissioner CGST/SGST for compliance of this Authority’s order may also be advertised through the said advertisement.
Further, this Authority as per Rule 136 of the CGST Rules 2017 directs the concerned jurisdictional CGST/SGST Commissioner shall also submit a Report regarding the compliance of this order to the Authority and the DGAP within a period of 4 months from the date of receipt of this order.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. The present Report dated 27.01.2021 has been received from the the Director-General of Anti-Profiteering (DGAP) after a detailed investigation as per the directions contained in this Authority’s Order No. 81/2020 dated 10.12.2020. The brief facts of the case are that the DGAP had submitted an Investigation Report dated 23.03.2020 before this Authority in the case of Respondent. This Authority, vide its Order No. 81/2020 dated 10.12.2020 upheld the investigation and profiteered amount reported by the DGAP for the period 01.07.2017 to 30.06.2019 and directed the DGAP to further investigate the case till the time of issuance of the occupancy certificate to the Respondent from the perspective of Section 171 of the CGST Act, 2017.
2. The DGAP vide his Report dated 27.01.2021 has inter-alia submitted the following points:-
I. The period covered by the current investigation is from 01.07.2017 to
08.08.2019 i.e. the date when the Respondent received the Occupancy Certificate (00) which was extended in terms of this Authority Order No. 81/2020 dated 10.12.2020.
II. As per the directions of this Authority vide Order. No. 81/2020 dated 10.12.2020; the case was to be re-investigated based on the fresh data up to the OC period i.e 08.08.2019 hence, the Respondent vide letter dated 31.12.2020 was asked to submit documents concerning issues raised in Para 28 of the aforesaid Order. The Respondent submitted his reply vide letters/e-mails dated 08.01.2021, 15.01.2021, and 25.01.2021. The Respondent stated that the Project “Suncity Avenue-102” comprises 761 residential units and 51 commercial shop units. As per the DGAP’s report dated 23.03.2020, while computing the profiteered amount the area of residential units only had been considered whereas the area of the commercial shop units had not been taken into consideration. However, in the total input tax credit; ITC of commercial shop units was also included. Hence, the ratio of turnover and ITC given in the report dated 23.03.2020 was incorrect and the said profiteered amount was required to be recomputed after considering the area of commercial shop units as per the practice followed by this Authority in all other cases.
III. The Respondent submitted the following documents/information to the DGAP:
a. GSTR-1 & GSTR-3B returns for the period from July 2019 to August 2019.
b. Details of input tax for the period from July 2019 to August 2019, along with reconciliation with GSTR-3B Returns.
c. Electronic Credit Ledger for the period from ‘July 2019 to 08.08.2019.
d. Copy of O.C. dated 08.08.2019.
e. List of home buyers in the project “Suncity Avenue-102” from April 2016 to 08.08.2019.
f. Details of ITC of GST for the period 01.07.2019 to 08.08.2019.
IV. It was observed that the contentions of the Respondent were correct as no Commercial shop units had been sold till receipt of the Occupancy Certificate and if this area was to be taken in computation then proportionate CENVAT credit/Input tax credit had to be allocated for this area. If CENVAT credit/Input tax credit was not allocated for this area, then the ratio of turnover to Cenvat/ITC would be incorrect. Accordingly, the profiteering had been calculated by adding the total area i.e. Residential flats + commercial shop units and total Cenvat credit/ITC availed. The computation of profiteering up to the period of the Occupancy Certificate had been done by considering the above contention of the Respondent.
V. As per Para 5 of Schedule II and Para 5 of Schedule II of CGST, 2017 the ITC in relation to the residential units which were under construction but not sold was provisional ITC which might be required to be reversed, if such units remain unsold at the time of issue of the Occupancy Certificate, in terms of Section 17(2) & Section 17(3) of the CGST Act, 2017. Therefore, the ITC on the unsold units will not fall within the ambit of the investigation.
VI. Before the GST regime, the service of construction of affordable housing provided by the Respondent, was exempted from Service Tax, vide Notification No. 25/2012-ST dated 20.06.2012, as amended by Notification No. 9/2016-ST dated 01.03.2016. Therefore, the Respondent was not eligible to avail the CENVAT credit of Central Excise Duty paid on the inputs or Service Tax paid on the input services, as per the CENVAT Credit Rules, 2004, which were in force at the material time. However, the Respondent was eligible to avail credit of Service Tax paid on the input services (CENVAT credit of Central Excise Duty was not available) for the commercial shop units sold by him. The Respondent was also eligible to avail ITC of VAT paid on the inputs. Further, post-GST, the Respondent could avail ITC of GST paid on all the inputs and input services including the sub-contracts. From the information submitted by the Respondent for the period April 2016 to 08.08.2019, the details of the ITC availed by them, his turnovers from the project “Suncity Avenue 102” the ratios of ITCs to the turnovers, during the pre-GST (April 2016 to June 2017) and post-GST (July 2017 to 08.08.2019) periods, were furnished as given in table-A’ .
Table-A
(Amounts in Rs.)
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