Sh. Arnav Datta Vs Prescon Realtors and Infrastructure Pvt. Ltd. (NAA)
It has been revealed from the DGAP’s Report that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April, 2016 to June, 2017) was 1.43% and during the post-GST period (July, 2017 to September, 2019), it was 5.69% in Project ‘Silver Oak’. This clearly confirms that post-GST, the Respondent has benefited from additional input tax credit to the tune of 4.26% [5.69% (-) 1.43%] of the turnover and the same was required to be passed on to the customers/flat buyers/recipients. The DGAP has calculated the amount of ITC benefit to be passed on to all the flat buyers as Rs. 3,45,28,279/- for the project ‘Silver Oak’ which was availed by the Respondent the details of which are mentioned in Table- C supra.
The Authority finds no reason to differ from the above-detailed computation of profiteering in the DGAP’s Report or the methodology adopted and hence, this Authority determines the profiteered amount for the period from 01.07.2017 to 30.09.2019, in the instant case, as Rs. 3,45,28,279/- for the project ‘Silver Oak’. This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats/shops commensurate with the benefit of ITC received by him as has been detailed above.
The Respondent is also liable to pay interest as applicable on the entire amount profiteered, i.e. Rs. 3,45,28,279/- for the project ‘Silver Oak’. Hence the Respondent is directed to also pass on interest @18% to the customers/ flat buyers/ recipients on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ payment, as per provisions of Rule 133 (3) (b) of the CGST Rules 2017.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. The present Report dated 26.06.2020 has been received from 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 an application was filed before the Standing Committee on Anti-profiteering, under Rule 128 of the CGST Rules, 2017 by the Applicant No. 1 alleging profiteering in respect of construction service supplied by the Respondent. The above Applicant alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in the price of the Flat No. 801 purchased from the Respondent in his project “Silver Oak”, situated at Ghodhbunder Road, Thane West Prestige Residency on introduction of GST w.e.f. 01.07.2017, in terms of Section 171 of the CGST Act, 2017. The above application was examined by the Standing Committee on Anti-profiteering in its meeting held on 13.09.2019, 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 ITC had been passed on by the Respondent to the Applicant No. 1 in respect of construction service supplied by him.
2. The DGAP has stated that on receipt of the reference from the Standing Committee on Anti-profiteering, a Notice under Rule 129 of the CGST Rules was issued by the DGAP on 23.10.2019, calling upon the Respondent to reply as to whether he admit 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. 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. The Applicant No. 1 vide e-mail dated 09.03.2020, was afforded an opportunity to inspect the non-confidential documents/reply furnished by the Respondent on 13.03.2020 or 16.03.2020, which the Applicant did not avail of. The DGAP has stated that the period covered by the current investigation was from 01.07.2017 to 30.09.2019.
3. The DGAP has also mentioned that the time limit to complete the investigation was 08.04.2020 in terms of Rule 129(6) of the Rules. However, vide Notification No. 35/2020-Central Tax dated 03.04.2020 where, any time limit for completion/furnishing of any report, has been specified in, or prescribed or notified under the Central Goods and Service Tax Act, 2017 which fell 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 has not been made within such time, then, the time limit for completion or compliance of such action, shall be extended up to the 30.06.2020. Accordingly, time limit to complete the investigation was extended up to 30.06.2020.
4. The DGAP has reported that the Respondent had submitted the following documents/information vide letters and e-mails dated 31.10.2019, 07.11.2019, 12.11.2019, 06.01.2020, 07.02.2020, 19.03.2020 and 10.06.2020:-
a) Copies of GSTR-1 returns for the period July, 2017 to September, 2019.
b) Copies of GSTR-3B returns for the period July, 2017 to September, 2019.
c) Tran-1 and Tran-2 for the period July, 2017 to December, 2017.
d) GSTR-9 return for the F.Y. 2017-18.
e) Electronic Credit Ledger for the period July, 2017 to September, 2017.
f) Copies of VAT returns & ST-3 returns for the period April, 2016 to June, 2017.
g) Copies of all demand letters issued and sale agreement made with the Applicant No. 1.
h) Copy of Balance Sheet for FY 2016-17, 2017-18& 2018-19.
i) Copy of Agreement Registry between the land owners and the developers for the project “Silver Oak”.
j) Status of the project “Silver Oak” as on 30.09.2019.
k) 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 all the projects including “Silver Oak”.
l) Copy of Electronic Credit Ledger for the period 01.07.2017 to 30.09.2019.
m) Cenvat/Input Tax Credit Register for the F.Y. 2016-17, 2017-18, 2018-19 and for the period April, 2019 to September, 2019 reconciled with VAT, ST-3 and GSTR-3B return along with details of credit reversals.
n) Details of applicable tax rates, Pre-GST and Post-GST.
o) List of home buyers in the project “Silver Oak” along with details of benefit passed on.
p) Progress Report submitted to RERA till September. 2019.
5. The DGAP has also stated that the Respondent vide Notice dated 23.10.2019, was informed that if any information/documents were provided on confidential basis, in terms of Rule 130 of the Rules, a non-confidential summary of such information/documents was required to be furnished. The Respondent vide his e-mail dated 10.06.2020 had informed that all the documents and information including copies of the returns submitted were to be considered confidential information and should not be shared with any third party/person.
6. The DGAP on perusal of the subject application, various replies of the Respondent and the documents/evidences on record has mentioned that the main issues for determination were: –
(i) Whether there was benefit of reduction in rate of tax or ITC on the supply of construction service by the Respondent after implementation of GST w.e.f. 01.07.2017 and if so.
(ii) Whether the Respondent passed on such benefit to the recipients by way of commensurate reduction in price, in terms of Section 171 of the CGST Act, 2017.
7. The DGAP has further reported that the Respondent vide his letter dated 06.01.2020 had submitted copies of demand letters issued to the Applicant No. 1. The details of schedule of payment in installment plan are furnished in Table-A below:-
