Rahul Gautam Vs Himalya Real Estate Pvt. Ltd. (NAA)
The Authority finds that, the DGAP has given a categorical report based on its verification that, the benefit of ITC has been passed on by the Respondent to all 189 homebuyers/customers who have booked their units on or after 1.07.2017 by way of giving deduction in the demand note itselfas per the example reproduced above. The findings at para 10 and 11 of the DGAP’s Report dated 30.11.2020 are reproduced at paragraphs 5(i), 5(j) and 5(k) above and the DGAP states that it has scrutinized the demand notes and allotment letters issued to these 189 homebuyers/customers by the Respondent.
Hence, the Authority determines the profiteered amount for the period from 01.07.2017 to 31.12.2018, in the instant case, as 2,26,76,700/- with respect to the other 500 homebuyers/customers i.e. those who have booked their units prior to 1.07.2017 (excluding those from whom no demand was raised/ consideration received from 1.07.2017 to 31.12.2018) for the Project “Himalaya Pride”.
The Authority finds that, in order to verify the claim of the Respondent that the benefit of ITC had already been passed on to 500 homebuyers/customers who had booked Units in the pre-GST period, the DGAP has sent e-mails to 300 homebuyers/customers picked up randomly to confirm whether the Respondent has passed on the benefit of ITC to them or not. Out of these 300 homebuyers/customers, only 51 confirmed that they had received the benefit of ITC from the Respondent. Hence, we hold that, with respect to such category of homebuyers/customers i.e. those who have booked their units prior to 01.07.2017 (excluding those from whom no demand was raised/ consideration received from 1.07.2017 to 31.12.2018), the DGAP’s verification is inconclusive and it cannot be concluded that all such homebuyers/customers have got the benefit of ITC that was required to be passed on by the Respondent.
In view of the above discussions, the Authority finds that the Respondent has profiteered by an amount of Rs. 2,26,76,700/- during the period of investigation i.e. 01.07.2017 to 31.12.2018. The above amount that has been profiteered by the Respondent from his home buyers shall be refunded by him, along with interest @18% thereon, from the date when the above amount was profiteered by him till the date of such payment, in line with the provisions of Rule 133 (3) (b) of the GCST Rules 2017.
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 Units 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. 2,26,76,700/-. Hence the Respondent is directed to also pass on interest @18% to the homebuyers/customers 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.
The Authority also order that the profiteered amount of Rs. 2,26,76,700/- along with the interest @ 18%, from the date of receiving such amounts from the homebuyers/customers till the date of passing on/return of such amount, shall be paid/passed on by the Respondent within a period of 3 months from the date receipt of this order failing which it shall be recovered as per the provisions of the CGST Act, 2017.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. A Report dated 30.12.2020 has been received from the Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP) after detailed re-investigation under Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules, 2017 pursuant to Interim Order No 06/2020 dated 03.01.2020 passed by National Anti-Profiteering Authority (NAA or Authority) in respect of the investigation report of DGAP dated 01.07.2019. The Authority had ordered reinvestigation under the rule 133 (4) on the following grounds:-
a. Whether the Respondent’s claim of passing on of Rs. 9,45,78,855/- benefit of GST ITC to his homebuyers/customers by way of reduction in GST rate was correct or not?
b. Whether the Respondent’s claim that for the customers who had made the bookings prior to implementation of GST, i.e. 01.072017, he had charged only 4.5% GST (i.e., equal to the rate of erstwhile Service Tax) from them and borne the remaining 7.5% GST himself and he had given 100% reduction in GST rate for new bookings of the flat to attract new customer was correct or not?
c. Whether the Respondent had passed on the benefit of ITC of GST of Rs. 2,94,078/- to the Applicant No. .1?
d. Whether the Respondent had given an amount of Rs. 3,41,963/- as the discount in addition to reduction in GST rate of 7.5% to the Applicant No. 1?
e. Whether the above amounts claimed to have been passed on by the Respondent are in line with the provisions of Section 171 of the CGST Act?
f. After carefully considering above issues, exact amount of profiteering which is to be passed on by the Respondent to every homebuyers/customers?
2. The brief facts of the case are that the Applicant No. 1 had filed an application dated 16.10.2018 before the Haryana State Screening Committee on Anti-profiteering, under Rule 128 of the CGST Rules, 2017 in respect of purchase of a Flat in the Respondent’s project “Himalaya Pride” situated at Plot No. 10-B,Techzone-IV, Greater Noida (West), UP-201306 and had alleged that the Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in price, in terms of Section 171 of the CGST Act, 2017. The Haryana State Screening Committee on Anti-profiteering on being prima facie satisfied that the Respondent had not passed on the benefit of ITC had forwarded the said application with its recommendation to the Standing Committee on Anti-profiteering for further action, in terms of Rule 128 of the above Rules. The above reference was examined by the Standing Committee on Anti-profiteering and vide its minutes of the meeting dated 13.12.2018 it had forwarded the same to the DGAP for detailed investigation. The DGAP has carried out the investigation and submitted the report dated 01.07.2019 to the Authority, stating therein that:-
a. On receipt of the application he had issued notice dated 18.01.2019 to 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 the supporting documents.
b. The period of the investigation was from 01.07.2017 to 31.12.2018.
c. In response to the DGAP’s Notice dated 18.01.2019, reminders dated 28.01.2019, 01.02.2019 and 13.02.2019, followed by Summons dated 12.03.2019, issued to Shri Vishal Sharma, Director of the Respondent to appear on 19.03.2019, the Respondent submitted his reply vide letters/e-mails dated 14.02.2019, 19.03.2019, 20.05.2019, 28.05.2019, 10.06.2019, 20.06.2019 and 25.06.2019 vide which he furnished the following documents to the DGAP:-
i. Copies of GSTR-1 returns for the period July, 2017 to December, 2018.
ii. Copies of GSTR-3B returns for the period July, 2017 to December, 2018.
iii. Copy of TRAN-1.
iv. Copies of VAT & ST-3 returns for the period April, 2016 to June, 2017.
v. Copies of all demand letters, sale agreement/contract issued to the Applicant No. 1.
vi. Copy of Balance Sheet for FY 2016-17 & 2017-18.
vii. Copy of Electronic Credit Ledger for the period 01.07.2017 to 31.12.2018.
viii. CENVAT/Input Tax Credit register for the period April, 2016 to December, 2018.
ix. Copy of Project report submitted to the RERA.
x. List of home buyers in the project “Himalaya Pride”.
d. The Respondent, vide his letter dated 14.02.2019 submitted that he had passed on the benefit of ITC to his customers including the Applicant No 1. He also submitted a copy of the allotment letter dated 26.09.2018, issued in favour of the Applicant No. 1, executed on a non-judicial stamp paper, wherein it was explicitly mentioned that the Applicant No. 1 had to pay only the basic consideration for the flat which was Rs. 40,96,800/- and the applicable GST would be borne by the Respondent. The Respondent did not claim confidentiality of any details/ information furnished by him, in terms of Rule 130 of the CGST Rules, 2017.
e. The DGAP further stated that though the Respondent had mentioned that he had passed on the benefit of ITC to the home-buyers, he failed to provide any documentary evidence of such discounts offered to the individual home-buyers except the allotment letter dated 26.09.2018 issued to the Applicant No. 1, wherein it was mentioned that all GST liability would be borne by the Respondent as discount and the Applicant No. 1 would have to pay only the basic consideration of Rs. 40,96,800/-.
f. The DGAP further observed that prior to 01.07.2017, i.e., before GST was introduced, the Respondent was eligible to avail CENVAT credit of Service Tax paid on the input services.
However, CENVAT credit of Central Excise Duty paid on the inputs was not admissible as per the CENVAT Credit Rules, 2004, which were in force at the material time. The Respondent had submitted that he was neither availing any ITC of VAT, nor was he charging VAT from his customers, as would be evident from the demand letters. However, he was discharging his output VAT liability on deemed 20% value addition to the purchase value of the inputs. Hence, there was no direct relation between the turnover reported in the Respondent’s VAT returns for the period April, 2016 to June, 2017and the actual consideration received from the home buyers. Therefore, the ITC of VAT and the VAT turnover had not been considered for computation of the ratio of ITC to the turnover for the pre-GST period. Further, post-GST, the Respondent could avail ITC of GST paid on all the inputs and the input services. From the information submitted by the Respondent for the period April, 2016 to December, 2018, the DGAP has furnished the details of the ITC availed by him, his turnovers from the present project, the ratio of ITCs to turnovers, during the pre-GST (April, 2016 to June, 2017) and post-GST (July, 2017 to December, 2018) in the table given below:-
Table ‘A’
(Amount in Rs.)
