Case Law Details
Sh. Deepak Naik Vs Prestige Estates Projects Ltd. (NAA)
Authority funds that the Respondent has gained the benefit of ITC on the supply of Construction Services after the implementation of GST w.e.f 01.07.2017 and the Respondent was required to pass on such benefit of ITC to the homebuyers/customers by way of commensurate reduction in prices in tents of Section 171 of the CGST Act, 2017. However, it is observed that the benefit was not commensurately passed on by the Respondent to his recipients.
The Authority finds that, taking into account the aforesaid Input Tax Credit availability post GST and the details of the amount collected from the home buyers during the period 01.07.2017 to 30.09.2019, the amount of benefit of ITC not passed on to the recipients or in other words, the profiteered amount comes to Rs. 7,90,95,475/- (i.e. 7,06,20,959/- Rs. 84,74,515/- i.e. OST thereon) in respect of 452 homebuyers.
The Respondent has claimed that be had already passed on a substantial amount of GST ITC per the requirements of Section 171 of the CGST Act, 2017 to the homebuyers. The Respondent had submitted that he had passed on the benefit of Rs. 8,28,91,520/- to all the homebuyers/customers. The Respondent has also claimed that he has passed on excess ITC benefit to his buyers/customers. The DGAP has responded to such claims as tabulated at Table A above and fund that Respondent has not passed commensurate benefit to all homebuyers/customers. The Authority agrees with such verification report of the DGAP as such verification has been conducted in accordance with the directions of this Authority.
The Authority finds that, provisions of law i.e. Section 171 of the CGST Act, 2017 mentioned herein above provide that benefit of the ITC needs to be provided to each and every supply in the commensurate manner. As such, the excess of the ITC benefit provided to some of the homebuyers/customers cannot be offset against others to whom less ITC benefit has been provided or no benefit have been provided at all. The Authority finds that the verification as done by the DGAP in terms of this Authority’s Order No. 01/2021 dated 16.03.2021 does not substantiate the submissions and contentions of the Respondent that they have passed on the profiteered amount along with interest to each recipient of supply. The Authority finds that, the DGAP has made all efforts towards verification in terms of the said Order No. 01/2021 dated 16.032021 of the Authority, but, the Respondent was unable to provide the requisite evidence which was directed in the said Order. Hence, the Authority determines that the Respondent has profiteered an amount of Rs. 7,90,95,475/- (i.e. Rs. 7,06,20,959/- Rs. 84,74,515/- i.e. GST thereon). The details of all eligible homebuyers/customers and the amount of the benefit to be passed on to each of them is enclosed as the Annexure-A to this Order.
Therefore, given the above facts, the Authority under Rule 133(3)(a) of the CGST Rules orders that the Respondent shall reduce the prices to be realized from the buyers of the Flats/customers commensurate with the benefit of ITC received by him. The details of the recipients and benefit which is required to be passed on to each recipient/homebuyer along with the details of the unit arc contained in the Annexure ‘A’ to this order. The Authority directs that the profiteered amount as determined shall be passed on/returned by the Respondent to the recipients of supply along with interest (4)18%, as prescribed under Rule 133(3)(b) of the CGST Rules, 2017, from the date such amount was profiteered by the Respondent up till the date such amount is passed on/returned to the respective recipient of supply (if not already passed on) within a period of three months form the date of this order.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. The present Report dated 18.11.2021 has been received from the Director General of Anti-Profiteering (DGAP) after a detailed investigation as per the directions contained in this Authority’s Internal Order No. 01/2021 dated 16.03.2021 in relation to Project- “Prestige Lake Ridge”, Location- Bengaluru, Karnataka of M/s Prestige Estates Projects Ltd.
2. In the said Internal Order No. 01/2021 dated 16.03.2021 this Authority had determined that additional ITC benefit @3.86% had been available to the Respondent during the GST regime, during the period of investigation from 1.07.2017 to 30.09.2019, as compared to the pre GST period as per the computation done in Investigation Report dated 28.08.2020 of the DGAP. Such computation in Investigation Report dated 28.08.2020 of the DGAP was not contested by the Respondent. The Respondent has also not contested the said Internal Order No. 01/2021 dated 16.03.2021 of this Authority. The total profiteered amount calculated in such Investigation Report dated 28.08.2020 of the DOAP and Interim Order of this Authority was Rs.7,90,95,474/-(i.e. Rs. 7,06,20,959/- + Rs. 84,74,5151- i.e. GST thereon).
3. The brief facts of the case are that the DGAP had submitted an Investigation Report dated 28.08.2020 before this Authority in the case of the Respondent. This Authority, vide Order No. 01/2021 dated 16.03.2021 referred the matter back to the DGAP to reinvestigate the case on the following issues:-
a. The Respondent’s claim of having passed on the benefit of ITC of Rs. 8,28,91,520/- was required to be verified against third party evidence in the form of written acknowledgment receipts Lim the home buyers evidencing the receipt of ITC benefit, including the quantum and also evidencing that the said benefit was passed on in terms of Section 171 of the CGST Act, 2017. For this, acknowledgments from the homebuyers along with their contact details i.e. emails, Mobile Nos. were to be produced by the Respondent to the DGAP.
b. To verify whether the applicable interest on the profiteered amount has been paid or not.
4. The DGAP, on receipt of the above mentioned I. 0. No. 01/2021 dated 16.032021, reinvestigated the matter as per the directions of this Authority and submitted his Investigation Report dated 18.11.2021, wherein, he had, inter alia, stated that:-
a. The Authority went through the aforesaid Investigation Report submitted by the DGAP in the subject case and passed an Interim Order No. 01/2021 dated 16.03.2021 which was received in the DGAP on 22.03.2021. Vide pars 36 of the aforesaid order, the Authority made the following observation:
36. We were of the considered opinion that once the Respondent had claimed that he had passed on the benefit of ITC to his customers/fat buyers/recipients, and claimed the benefit of such amount, the onus to prove that the benefit of ITC WO3 actually passed on to the eligible buyers was on the Respondent The sample checking of the evidence by the DGAP by contacting the customers could at best give provisional Indication of passing on the benefit of ITC, however, It would not provide true and complete picture. In the present case the amount of ITC benefit claimed to had been passed on was huge — Rs 8,28,91,520/-, Hence it was the responsibility of the Respondent to submit proper and complete evidence. The evidence should had included the details of payments, how such payments were made (through cheque/draft/credit note etc.), that it was relatable to GST benefit (because of additional ITC) and a third party verification certificate validating such claim.
b. Further, vide pare 39 and 40 of the aforesaid order, the Authority issued following directions:
“39. On the basis of the above reasons and without going info the merits of the other submission filed by the Applicants and the Respondent at this stage, we find this to be a fit case where the Respondent’s claim of having passed on the benefit to his recipients/home buyers requires to be verified against third party evidence in the form of written acknowledgments receipts from the home buyers evidencing the receipt of the benefit. including his quantum and also evidencing that the said ben* is in terms of section 171(1) of the CGST Act, 2017 which states that “Any reduction in the rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices”. Needless to state that the claim made by Respondent of having passed on the benefit had to be supported by acknowledgments which the Respondent shall procure from the home buyers along with his contact details i.e., e-mail and Phone/Mobile No., failing which his claim had to be considered as not established. The Respondent shall submit the home buyer wise evidence, as detailed above within a period of 30 days of this Order and the same shall then be verified by the DGAP. Accordingly, the matter is sent back to the DGAP for further investigation as per the provisions of Section 171 (2) of the CGST Act, 2017 read with Ride 133(4) of the CGST Act, 2017. This Authority directs the DGAP to verify the evidences submitted by the Respondent to evidence the passage of 17C benefit from the Respondent to the home brow, and submitted his Report, along with all the relied upon documents/evidence. The DGAP is accordingly directed to reinvestigate the above issue and furnish his report under Rule 129(6) of the CGST Rules, 2017.
40. It had also been observed that the Report of the DGAP is silent on the issue whether the Respondent had paid applicable interest to all the eligible recipients/flat buyers/ customers or not. In view of the above, we direct the DGAP to investigate and verify whether applicable interest on the profiteered amount, which the Respondent had already claimed to had been passed on to his customers/flat buyers, had been paid by him or not from the date from the above amount was profiteered till the date of passing on/payment, as per the provisions of Rule 133 (3) (b) of the CGST Rules, 2017.
c. On the basis of above reasons, the Authority, sent back the matter to DGAP for further investigation as per the provisions of Section 171(2) of the CGST (hereinafter referred to as “the CGST” Act, 2017 read with Rule 133(4) of the CGST Rules, 2017 and directed the DGAP to reinvestigate on the issues/directions contained in pare 39 and 40 of the above said Order and furnish the report under Rule 129(6) of the CGST Rules, 2017.
d. Under Rule 129(1) of the Rules, the DOAP received a reference from the Standing Committee on Anti-profiteering on 09.10.2019. to conduct a detailed investigation under Rule 129(6) of the Rules on the basis of an application received by the Standing Committee against the Respondent.
e. On the basis of above, the DGAP had investigated and submitted his Investigation Report dated 28.082020 to the Authority which was further examined by the Authority wherein the Authority observed some deficiencies and directed the DGAP for further investigation in the said matter vide his Interim Order No. 01/2021 dated 16.03.2021.
f. On perusal of the aforesaid Order received from the Authority on 23,03,2021, it was observed that the DGAP was required to verify the claim of the Respondent of having been passed on the benefit of Fit and also to verify whether applicable interest on the profiteered amount had been passed on or not. Therefore, vide letter dated 31.05.2021, the Respondent was requested to provide the contact details i.e., and Phone/Mobile No. of the home buyers and details of payments of ITC benefit and applicable interest along with documentary evidences as per the directions contained in the aforesaid order of the NAA.
g. The period covered by the current reinvestigation is the same as covered in Investigation Report dated 28.08.2020 i.e., from 01.07.2017 to 30.09.2019.
h. As directed by this Authority in I.O. No. 01 of 2021 dated 16.03.2021, all rho issues as mentioned above, had ban duly covered in this report within the confines of the data/information supplied by the Respondent and home buyers.
i. The time limit to complete the investigation was 21.09.2021 in terms of Rule 129(6) of the Rules However, due to force majeure caused in the light of Covid-19 pandemic, the investigation could not be completed on or before the above date. Further, Hon’ble Supreme Court of India passed an Order dated 08.03.2021 in Suo Motu Writ Petition (Civil) No. 3 of 2020, wherein, it was stated that “in cases where the limitation would had expired during the period between 15.03.2020 till 14.03.2021, notwithstanding the actual balance period of limitation remaining, all persons shall had a limitation period of 90 days from 15.03.2021. In the event the actual balance period of limitation remaining, with effect from 15.03.2021, is greater than 90 days, that longer period shall apply”. The above relief had been extended and the period from 14.03.2021 till further orders shall also stand excluded in computing the limitation period as per the Hon’ble Supreme Court’s Order dated 27.04.2021 passed in Miscellaneous Application No. 665/2021 in SMW(C) No. 3/2020. Prather, the above relief had been extended and the period from 02.10.2021 shall had limitation period of 90 days from 03.102021 as per the Hon’ble Supreme Court’s Order dated 23.09.2021 passed in Miscellaneous Application No. 665/2021 in SMW(C) No. 3/2020.
j. In response to the DGAP letter dated 31.05.2021 and subsequent reminders and emails issued by the DGAP to the Respondent, the Respondent replied and submitted documents/information vide e-mails dated 29.09.2021, 20.10.2021, and 28.10.2021. The submissions of the Respondent were summed up as follows: –
i. As directed in the order, he was in the process of collating e-mail ID’s and contact details of the customers of the project Prestige Lake Ridge’.
ii. The Prestige Lake Ridge project had been completed and apartment/ units had already been handed over to the respective customers. Hence, the Email ID’s of customers that were available with him had been provided. Further, he did not have email ID’s of rest of the customers.
iii. The Respondent had already passed on ITC GST benefit as per the provisions of the Act by way of issuing credit note to customers wherein, balance due from customer was reduced to the extent of GST benefit Under these circumstances, it was not possible to provide bank statement evidencing passing of GST benefit Copies of the credit notes of all the customers evidencing the ITC GST benefit passed on of Rs. 8,28,91,520 along with interest @ 18% per annum had already been provided in his earlier submissions.
iv. Based on the above, he had provided copies of credit notes, customer ledger accounts to an independent Chartered Accountant who had examined in details the books of accounts of the company and confirmed that the company had paid and credited to customers a total amount of Rs. 8,28,91,520 towards input tax benefit received by the company under Section 171 of the Central GST Act/ Karnataka GST Act in the project ‘Prestige Lake Ridge’ along with interest at 18% per annum. Copy of the CA certificate was enclosed for ready reference.
K. Vide the aforementioned mails, the Respondent submitted the following documents/information:
(i) Copies of confirmation (e-mails) from 4 customers acknowledging the receipt of input tax credit
(ii) Certificate from Chartered Accountant certifying the total amount of input tax benefit received by the Respondent and passed on to the customers along with applicable interest
(iii) E-mail Ids of 174 home buyers.
1. As per the directions of this Authority vide 1.0. No. 01/2021 dated 16.03.2021, the DGAP initiated reinvestigation of the case. At the time of submission of earlier investigation report dated 23.08.2020. the Respondent had submitted the copies of Credit Notes, Ledgers, Customer’s communication letter and Customers Master List only which were found insufficient by the Authority to corroborate his claim of having been passed on the benefit of rm. Accordingly, during the reinvestigation, vide letter dated 31.05.2021, the Respondent was requested to provide the contact details i.e., e-mail and Phone/Mobile Nos. of the home buyers and details of payments of ITC benefit and applicable interest along with documentary evidences as per the directions contained in the aforesaid order of this Authority. Further, reminders were issued on 08.07.2021, 10.08.2021, 23.09.2021, 06.10.2021, 14.10.2021 and 22.10.2021 to the Respondent. A letter was also sent to the jurisdictional Central GST Authorities on 27.10.2021, requesting him to collect the requisite information/data/documents from the Respondent and forward the same to this office. However, no reply was received. The main issues to be examined/verified were:
i. As per the directions contained in pare 39 of the aforesaid order of this Authority, the Respondent’s claim of having been passed on the benefit of ITC of Rs.8,28,91,520/- was required to be verified against third party evidence in the form of written acknowledgments receipts from the home buyers evidencing the receipt of the ITC benefit, including his quantum and also evidencing that the said benefit is in terms of section 171(1) of the CGST Act, 2017. For this, the Respondent was required to procure the acknowledgements from the home buyers along with his contact details i.e., email and Phone/Mobile No. The Respondent was also required to submit these evidences to the DGAP which were further required to be verified by the DGAP.
ii. As per the directions contained in pars 40 of the aforesaid order of this Authority, the DGAP had to investigate and verify whether the applicable interest on the profiteered amount had been paid or not.
m. Now, as regards the first issue that the Respondent was required to procure and submitted the acknowledgements/receipts along with contact details, it was observed that the Respondent had again submitted the acknowledgements (in the form of mails) from the 4 home buyers which the Respondent had already submitted at the time of initial investigation which had already been submitted to the Authority along with Investigation Report dated 28.08.2020. The Authority, vide pare 37 of the aforesaid order, had noticed several discrepancies in these acknowledgements and therefore did not consider the same. Further, it was observed that the Respondent had claimed that the benefit of ITC was passed on to all the home buyers by issuing Credit Notes and he had already submitted the copies of Credit Notes along with Ledges of the home buyers. Hence, it was not possible for the Respondent to provide any bank statement evidencing payments/passing on ITC benefit of GST to the home buyers. Furthermore, the Respondent had also claimed that the ‘Prestige Lake Ridge’ project had been completed and the possession had been handed over to the home buyers of the project. Hence, the Respondent had showed his inability in procuring acknowledgments/receipts and contact details from the home buyers. However, the Respondent had provided the Chartered Accountant’s Certificate as third-party verification certificate, certifying his claim of having been passed on the benefit of ITC (GST) of Rs.8,28,91,52131- along with interest @18%.
n. Further, it was observed that out of the 454 home buyers, profiteering of Its.7,90,95,474/- was computed in respect of 452 home buyers (As reported in Pant 27 of the Investigation Report dated 28.08.2021) only. In respect of remaining two home buyers, no profiteering could be computed as no demands were raised from these two home buyers in post-GST period. However, out of these two, the Respondent had claimed to be passed on an amount of Its.6,482/ to one home buyer. Further, the Respondent had provided the email ids of 174 (including Applicant No. 1) home buyers only. In order to verify the claim of the Respondent, c-mails were sent to these 173 buyers. In respect of remaining 1 home buyer, e-mail was not sent as no profiteering could be computed in respect of this home buyers as no demands were raised by the Respondent to this home buyer during post-OST period. Out of 173 emails, replies from only 32 home buyers had been received. Out of these 32 home buyers, 30 had continued that the benefit of GST Input Tax Credit had beat received, 2 had denied that benefit of GST/Input Tax Credit had not been received by him from the Respondent. It is pertinent to mention here that the email II) of the Applicant No. 1 was available in the Application Form (APAF-l) and email was sent to him by the DGAP at the time of initial investigation. The Applicant No. 1 had already confirmed the receipt of 1ts.1,75,850/- from the Respondent vide email dated 28.08.2020. Further, in respect of remaining 140 home buyers to whom emails were sent by this office, no reply had been received so far. Also, in respect of remaining 279 home buyers whose e-mails ids were not provided by the Respondent, no verification could be done by the DGAP. A summary of benefit of ITC claimed to bad been passed on to the Applicant No. I and other home buyers and the benefit of ITC passed on and duly verified by the DGAP on the basis of confirmation entails received, is tabulated in Table- ‘A’ below: –
–
(“The amount of excess benefit passed on to the 198 buyers cannot be appropriated with 255 other home buyers.)
Therefore, as per the directions contained in pare 39 of the aforesaid order of this Authority for the DGAP, necessary verification of the claim of the Respondent was done on the basis of emails provided. From the Table-A above, it is verified that the Respondent had passed on an amount of 14.36,84,259/- to 31 home buyers including an amount of Rs.1,75,850/- passed on to the Applicant No. 1. However, it was observed that the Respondent bad claimed to have passed on more benefit of ITC of GST to 198 buyers against the profiteered amount whereas in case of 255 home buyers, the Respondent had claimed to had passed on less benefit of ITC of GST. The excess benefit passed on to 198 home buyers cannot be appropriated with the due benefit of 255 home buyers. Therefore, even if the claim of the Respondent with regards to passing or. of the benefit of additional ITC of Rs.8,28,91,520/- was accepted, the Respondent was still required to pass on the benefit of additional ITC of GST of Rs.72,06,438/- to 255 home buyers, over and above the benefit of the additional ITC of GST to the tune of Its. 8,28,91,5201- already claimed to had been passed on to the borne buyers.
o. As regards the second issue whether the applicable interest out the profiteered amount had been paid or not by the Respondent to home buyers, it was observed that the Respondent had claimed that he bad passed on the benefit of ITC of GST including applicable interest @18% to all the home buyers. However, the Respondent was requested to provide the details of payment of interest along with computation in terms of the guidelines for computation of interest on profiteered amount available on website of this office. The Respondent did not provide the same. Further, the Respondent also not provided the details required for computation of interest amount i.e., amounts raised to home buyers along with his dates, amounts received from the home buyers along with date of receipt In absence of these details, the computation of the interest @18% and necessary verification thereof could not be done by the DGAP. Furthermore, as the benefit of ITC of GST claimed to had been passed on by the Respondent could not be verified fully, the necessary verification of claim of the Respondent of having passed on the interest amount also could not be done.
p. On the basis of aforesaid discussions and findings it was concluded that in the initial investigation Report dated 28.08.2020, the profiteered amount was computed as Rs.7,90,95,474/- in respect of 452 home buyers. The Respondent claimed to had already passed on the ITC benefit of Rs.8,28,91,520/- to all the home buyers. However, the Authority did not consider the Respondent’s claim and vide Interim Order 01/2021 dated 16.032021, directed the Respondent to procure the acknowledgement receipts from all the home buyers and also provide the contact details of all the home buyers to the DGAP for further verification along with third party verification certificate validating such claim. It was submitted that the Respondent failed to produce acknowledgements receipts from all the home buyers as directed by this Authority. Further, the Respondent also failed to provide contact details of all the home buyers. However, the Respondent provided the email ids of 174 home buyers (including applicant). &nails were sent to 173 home buyers leaving out 1 home buyer in respect of which no profiteering was computed and the Respondent also did not claim to have passed any amount as ITC benefit. Out of 173 home buyers to whom entails were sent, 32 home buyers had replied, In the 32 replies received from the home buyers, 30 home buyers had confirmed the receipt of benefit of ITC from the Respondent and 2 had denied the receipt of ITC benefit. Further, email to the Applicant No. 1 was sent by the DGAP at the time of initial investigation. The Applicant No. 1 had already confirmed the receipt of Rs.1,75,850/- from the Respondent vide email dated 28.08.2020. However, the amount of profiteering computed in respect of Applicant No. 1 is Rs.1,71,662/- as mentioned at SI. No. 1 of the Table-A above. Further, in respect of one more home buyer, the Respondent had passed on the benefit of ITC of Rs.1,29,728/- against the profiteered amount of Rs.94,154/- as mentioned at SI. No. 2 of the Table-A above. Further, in respect of 29 home buyers, the Respondent had passed on Rs.33,78,681/ against the profiteered amount of Rs.43,95,687/- thereby having passed on less benefit of ITC as computed in the investigation report. Therefore, the benefit of ITC of Rs.36,44,497/- passed on to 31 home buyers including an amount of Rs.1,71,662/- of profiteered amount determined and confirmed in respect of Applicant No. 1 and an amount of Rs.34,72,835/- in respect 30 home buyers other than Applicant No. 1 stands verified by the DGAP.
q. Despite the best efforts made by the DOAP, the necessary verification in respect of only 31 home buyers out of 452 could be done. However, in respect of remaining 421 home buyers’ necessary verification could not be completed as;
i. the Respondent had failed to provide contact details of 278 home buyers;
ii. out of 174 home buyers (whose entails ids were provided by the Respondent), who were contacted by the DGAP to verify the claim of the Respondent via entails, 142 had not responded.
Therefore, as stated in above pares, the Respondent is required to pass on the benefit of profiteered amount on account of additional ITC to the tune of Rs.7,54,50,978/- to 450 home buyers.
5. The above Report dated 18.11.2021 was carefully considered by this Authority. Since, the quorum of the Authority of minimum three Members, as provided under Rule 134 was not available till 23.02.2022, the matter was not decided. With the joining of two new Technical Members in February 2022, the quorum of the Authority was restored from 23.2.2022 and a Notice dated 25.02.2022 was issued to the Respondent to explain why the Report dated 18.11.2021 furnished by the DGAP should not be accepted and his liability for profiteering it. violation of the provisions of Section 171 should not be fixed. The Respondent was directed to file written submissions, which had been filed on 05.04.2022 wherein the Respondent had, inter-alia submitted following:-
a. He had sent communications as early as October 2017 to the Customers of ‘Prestige Lake Ridge’ stating that the effective prices had reduced since the implementation of GST in India. The factors on the basis of which the prices would undergo the change were also stipulated and circulated in these communications to the Customers. The Respondent fluffier stated in these communications that the exact impact had to be analyzed in detail and that the Respondent would require time and clarity frown all the suppliers and contractors so that the accurate amount of savings is passed on to the Customers. The Respondent also communicated to the Customers that he had initiated negotiations with the suppliers and contractors analyzing the potential benefits on account of GST implementation which had to be passed on to all the Customers. The Respondent also stated that the benefit of ITC and reduction in costs on account of GST implementation would be adjusted before the final closure of account. fleece, the allegation of profiteering was incorrect and was liable to be set aside.
b. The application filed by Complainant Shri. Deepak Naik V was unwarranted as the Respondent had not evaded from complying with anti-profiteering provisions. The Respondent passed on the due benefit to the Applicant No. 1 which had been confirmed by the complainant in reply to the DGAP’s verification email sent to the Applicant No. I. Furthermore, the Respondent in the intimations sent to customers had already undertaken to pass on the benefits of increase in Input Tax Credit/Cost Reduction when the benefits were realized by the Respondent.
c. Accordingly, upon analyzing all the factors in detail, as stated above and in the intimations sent to the Customers, the Respondent had worked out an amount of Rs. 8,28,91,5201- which had consequently been passed on to the Customers by way of reduction in prices. Therefore, the Respondent submitted that he had already passed on the amount of Its. 8,28,91,520i- to the Customers. Apartment wise break up of GST benefit passed on to Customers was enclosed. The Company vide his earlier submissions had provided the methodology based on which the ITC benefit had been computed and how the same had been apportioned between all the Customers.
d. The amount of ITC that had been worked out by the DGAP is Rs. 7,90,95,475/- whereas the amount of ITC that had been passed on the Customers is Rs. 8,28,91,520/- which is higher the amount computed by the DGAP. Copy of the confirmation letters received from the Customers evidencing receipt of benefit of ITC were also enclosed.
e. Based on the above, the provisions of section 171 of the CGST Act, 2017 would have been contravened, had the Respondent not passed on the benefit of the GST ITC to his Customers. As stated above, the Respondent had actually passed on an extra amount of Rs. 37,96,045/- to his customers. Therefore, the allegations that the Respondent had contravened the provision of section 171 of the CGST Act, 2017 are not sustainable in view of the fact that the benefit of ITC received by the Respondent had already been passed on to all his Customers.
f. He had passed on the benefit of ITC amounting to 1,78,251/-to the Applicant No. 1, Mr. Deepak Naik V as well. Copy of confirmation received from Mr. Deepak Naik V evidencing receipt of benefit of ITC was enclosed.
g. Being a part of a large public group of Companies and always being compliant with various Central and State laws, the Respondent had ensured that it had lawfully complied with all the taxation laws as well.
h. The Respondent is customer friendly, part of large public Group of Companies in India and the intention had always been to pass on the accurate amount of savings to his customers. The Respondent had adopted a very scientific approach as far as the workings of the accurate savings on ITC and cost reduction is concerned. Experts were engaged to arrive at the final amount of savings on account of GST implementation which had been passed on to the Customers.
i. Based on the above submissions, the allegation that he had contravened the provisions of section 171 of the CGST Act, 2017 was not sustainable in view of the fact that the benefit of additional ITC received had already been passed on to all his Customers.
j. He had gone through the Report of the DGAP dated 25 February 2022 (as submitted by the Respondent) and he did not agree to the said Report of the DGAP considering the fact that the benefit of ITC had already been passed on and the same had been considered in the earlier report of the DGAP.
k. He commenced the subject Project named ‘Prestige Lake Ridge’ in January, 2017 and the OC for the said Project had been received in October, 2020 based on which the apartments had been handed over to the Customers. Before handing over the apartment units, the ac benefit wilting to Its. 8,28,91,520/- had been passed on to the Customers vide issuance of Credit Notes. In the Real Estate Sector, once the possession of the apartment/flat is handed over to the customers, the customers do not bother to confirm the benefits provided by the developer to them. This could he corroborated with the fact that out of 173 emails sent to the customers by the DGAP for verification of the Respondent’s claim of having been passed on the benefit of ITC of GST, 140 customers did not reply to the same. Hence, if these customers bad not replied then from this it cannot be inferred dud the benefit of ITC was not passed on to these customers. Furthermore, as stated in the DGAP Report, that out of 33 customers who replied to the DGAP’s confirmation emails, 31 customers (approx. 94%) had already confirmed the fact of receiving the ITC benefit by him and merely 2 customers had denied. However, the due benefit of ITC was passed on by the Respondent to these 2 customers also which if this Authority thinks fit so, might ask these customers to appear before this Authority and might specifically ask him as to why he had denied so whereas the Respondent had actually passed on the benefit of ITC and submitted the genuine documents like Credit Notes, Customers Account Ledger in support of the claim of having been passed on the due benefit to all the customers.
l. To further substantiate the fact of having been passed on the ITC benefit and as directed by this Authority vide 1. 0. dated 16.03.2021 to obtain a thud-party verification certificate validating the claim of the Respondent, the Respondent had also obtained a certificate from an independent Chartered Accountant who had verified the books of account of the Company and confirmed the fact that the ITC amount as stated above had been passed on by him. Copy of the Certificate obtained from the independent Chartered Accountant was enclosed. This also author evidences the fact that the ITC benefit had been passed on by the Respondent. Also, copies of the Credit Notes and corresponding customer statement of accounts further evidencing this fact were enclosed.
m. The methodology and procedure/mechanism of computation of “profiteering amount” adopted by the DGAP is wrong, incorrect, arbitrary, illegal and bad in law. As per Rule 126 of the Rules, this Authority bad been empowered to determine the methodology and procedure for determination as to whether the reduction in the rate of tax or the benefit of ITC had been passed on by the registered person to the recipients by way of commensurate reduction in prices. Till date, no specific methodology and procedure had been framed by this Authority under the powers conferred under Rule 126 of the Rules. Hence, the methodology/mechanism of computation of “profiteering amount” adopted by the DGAP is wrong and intoned. In this regard, the Respondent further submitted that after implementation of GST in India w.e.f. 01.07.2017, the Respondent suo-moto initiated the compliance of Section 171 of the CGST/SGST Act, 2017 and in absence of any specific methodology and procedure and with the scientific approach, computed the additional benefit of ITC accrued to hint due to change in the tax regime and passed on the same to customers in respect of all the projects undertaken by the Respondent However, even if the methodology/mechanism of computation of “profiteering amount” adopted by the DGAP is accepted, then in that case, the Respondent had passed on the more benefit than the actual amount of profiteering computed by the DGAP.
n. Further, the time periods taken by the DGAP for comparison of fit in pre and post GST is incorrect. In pre-GST, the D(JAP had taken the period of 15 months i.e., from 01.04.2016 to 30.06.2017 whereas the time period taken fox’ ITC available in post GST is 30 months i.e., from 01.07.2017 to 30.09.2019 which is legally incorrect. there should be equal periods of time in pre and post GST periods for comparison of ITC availed/available to the Respondent, to evaluate the actual benefit of ITC accrued to the Respondent in post GST period as compared to the pre-GST period. However, in Real Estate Sector, the supply of the construction services to be provided to the customers do continue for long span of time period. Hence, at a particular point of time it is difficult to assess actual benefit accrued to any service provider due to change in tax regime. Construction services were entirely based on milestones. At a particular milestone, the service provider raises the demands to customers and as per law, merely raising the demands, the service providers become liable to pay Service Tax/GST on the demanded amount whereas the actual realization of that amount takes long time. Hence, in several cases, the service providers discharge the tax liability from his own without having received the actual demands raised to customers. Therefore, the actual benefit of ITC accrued to the service provider could only be ascertained at the time of completion of the project In view of this fact, the time periods taken by the DGAP for comparison of ITC available to the Respondent was incorrect and bad in law.
o. Further, he had passed on the benefit of ITC to the customers of the project ‘Prestige Lake Ridge’ before completion of the project and handing over the possession of the apartment/flat/unit to the customers. Hence, it would be incorrect to say that the Respondent is liable to pay interest on the benefit actually passed on the customers before handing over the possession of the apartment/flat/unit and actual completion of the project However, the Respondent had already passed on more benefit of ITC as computed by the DGAP in his investigation reports. Therefore, in light of these facts, the Respondent had passed on more benefit of ITC which was actually required to be passed on as per the DGAP’s investigation and that had also been passed on well within the time and thus no interest is liable to be passed on further to the customers of this project.
p. Further, for imposition of penalty there should be an intention to evade payment of tax and in the present case, the Respondent made all attempt to comply with the law and had even communicated to the DGAP as well as before this Authority that he had passed on the benefit of ITC that had accrued to the Respondent and also submitted the relevant documents in support of the claim of having been passed on the benefit of ITC and acted in a bona fide manner. Hence, in such a situation no penalty might be imposed on the Respondent as the Responder t had not contravened the provisions of Section 171 of the CGST/SGST Act, 2017.
6. Copy of the above submissions dated 05.001.2022 filed by the Respondent was supplied to the DGAP for supplementary Report under Rule 133(2A) of the CGST Rules, 2017. The DOAP filed his clarifications dated 09.05.2022 on the. Respondent’s submissions and, inter-alia clarified:-
a. The Respondent had already made these submissions before the DOAP during investigation of the case. The averments and contentions made by the Respondent under these submissions had duly been addressed in the investigation reports submitted by the DGAP on 28.08.2020 (under Rule 129(6) of the CGST Rules,2017) and on 18.11.2021 (under Rule 133(4) of the CGS? Rules, 2017).
b. The Authority vide Interim Order No.01/2021 dated 16.03.2021, specifically directed the Respondent to procure the acknowledgements from all the home buyers to substantiate his claim of having been passed on the benefit of ITC to all the customers and also directed the DGAP to verify the claim of the Respondent from all the home buyers through emails and Phone Mobile Nos. which were required to be provided by the Respondent to the DGAP. The Respondent failed to produce the acknowledgements from the home buyers. Further, the Respondent provided email ids of 173 home buyers only to which entails were sent by the DGAP and necessary verification was done accordingly and on getting confirmation reply through entails from the respective home buyers, the claim of the Respondent was considered in the report dated 18.11.2021 submitted by the DGAP under Rule 133(4) of the CGST Rules, 2017.
c. This submission was also made by the Respondent before DGAP during re-investigation of this case tinder Rule 133(4) of the CGST Rules, 2017 and had duly been mentioned in the report dated 18.11.2021 submitted by the DGAP. This certificate was submitted by the Respondent in compliance with the observations made by the Authority in Para 36 of the I. 0. No.01/2021 dated 16.03.2021, requiring him to produce a third party verification certificate validating his claim of having passed on the benefit of ITC. Therefore, the Authority might decide on the issue of submission of “C A Certificate” made and contested by the Respondent
d. The contention of the Respondent is erroneous. As per Rule 126 of the CGST Rules, 2017, the Authority had been empowered to determine the methodology and procedure for determination as to whether the reduction in the rate of tax or the benefit of ITC had been passed on by the registered person to the recipients by way of commensurate reduction in prices.
The Authority in exercise of power delegated to it under Rule 126 of the CGST Rules, 2017, had notified the Methodology & Procedure vide Notification dated 7.8.03.2018 which is also available on the website. No fixed/uniform mathematical methodology could be determined for alt the cases of profiteering as the facts and circumstances of each case as well as the nature of goods or services supplied in each case differ. Therefore, the determination of the profiteered amount had to be computed by taking into account the particular facts of each case.
The computation of commensurate reduction in prices is purely a mathematical exercise which is based upon the above parameters and hence it would vary from product to product and from service to service and hence no fixed mathematical methodology could be prescribed to determine the amount of benefit which a supplier is required to pass on to a recipient or the profiteered amount.
Furthermore, on the basis of information/data provided by the Respondent, the actual ITC available to the Respondent in pre and post GST regime and consequently the actual quantum of profiteering or the benefit of additional ITC available to Respondent had been clearly outlined in the report dated 20.043.2020 of the DGAP. However, the Authority might decide the issue of the `Methodology and Procedure” as contested by the Respondent.
e. The contention of the Respondent is not tenable. The Respondent had raised objection over the time periods taken in the pre and post-GST. In this regard, the period of investigation had neither been prescribed in the Central Goods and Service Tax Act, 2017 nor in the corresponding Rules/ Notifications. However, it is clarified that the Input Tax Credits in pre-GST (01.04.2016 to 30.06.2017) and post-GST (01.07.2017 to 30.09.2019) periods was not compared alone. In the instant case, the DGAP had compared the percentage (%) of ratio of ITC to the taxable turnover in pre and post-GST periods. In pre-GST period (01.04.2016 to 30.06.2017), to ascertain the percentage of ratio of FTC to the taxable turnover, a considerable period of 15 months had been considered which is reasonable period of time. In any business, inputs and outputs were correlated. If, in any business, inputs were increased then correspondingly outputs would also increase and vice-versa. Therefore, ITC which is related to inputs and taxable turnover which is related to outputs, were mutually dependent on each other. Thus, the ratio of ITC to taxable turnover in pre-OST regime would not change drastically even if the long span of period is considered.
Further, in respect of post-GST period i.e., from 01.07.2017 to 30.09.2019, in the instant case, the DGAP received reference from the Standing Committee on Anti-Profiteering on 09.102019 to investigate the matter, hence the period from 01.07.2017 (date of implementation of GAT law) up to the preceding up to preceding month of receipt of reference was taken up for investigation (post- GST) i.e., from 01.07.2017 to 30.092019. This practice is uniformly adopted by DGAP in respect of all investigations to cover the period of investigation up to the preceding month of the month when the reference is received in this office. It was further clarified that the DGAP and the Authority was statutorily required to complete his task within a given time frame. Therefore, the ITC availed and the consequential profiteering, if any, had to be determined at a given point of time and such determination cannot be deferred tilt the completion of the project. Hence, the investigation was done up to 30.09.2019 which could not be deferred till the completion of the project.
Furthermore, to address the contention of the Respondent that the construction services was entirely based on milestones and taxable turnover and actual receipt of demands differ in general, it is submitted that even the home buyers pay belatedly oven after completion of the milestone, a reasonably long periods of 15 months in pre. GST period and 30 months in post-GST periods bad been considered to compute the profiteering. Moreover, the 1TC taken into consideration is proportionate with the area sold in respective periods. Therefore, the periods taken in pre and post-GST was justifiable and was within the confines of the law.
7. The above clarifications furnished by the DGAP were supplied to the Respondent and the Applicant No. 1 to file re-joinder, if any. In response the Respondent had filed his rejoinder dated 12.07.2022, wherein, he, inter-alia, stated as under-
7.1 He has actually passed on an amount of Rs. 8,28,91,520/- to his customers including the applicable interest at 18% that is higher than the amount computed by the DGAP.
7.2 He has submitted copy of Credit Notes, Account Ledgers of Customers, Customers’ communication letters, Customers’ Master List and Acknowledgements on sample basis along with CA Certificates.
7.3 Further, the evidence of passing on of the benefit of ITC, 31 customers had already confirmed the receiving of ITC benefit as mentioned by the DGAP.
7.4 The Authority may pass appropriate order in the case at this stage.
8. Further, the Applicant No. 1 vide his email dated 25.07.2022 has submitted that he has received an amount of Rs. 1,78,251/- as benefit of ITC from the Respondent and he requested to close the case. However, there is no such provision in the CGST Act, 2017 and Rules minting to Anti-Profiteering which stipulates that investigation will not be carried out where complaint has been withdrawn.
9. We have carefully considered the Report furnished by the DOAP, the clarifications filed by him and the records of the case. Section 171 of the CGST Act, 2017 provides that any reduction in the rate of tax on any supply of goods or services or benefit of Input Tax Credit shall be passed on to the recipients by way of commensurate reduction in prices. In the instant case, there is no reduction of rate of tax during the relevant period and the only issue that is required to be decided by the Authority is whether Respondent is required to pass on the benefit of Input Tax Credit to his recipients. It is pertinent to mention here that the Respondent had not contested the mathematical computation of the benefit of ITC available to him during the (1ST regime for the impugned Project as calculated by the DGAP in its Investigation Report dated 28.08.2020 and has agreed to pass on the benefit of such ITC to the recipients. Hence, the Authority vide its I. 0. No. 01/2021 dated 16.032021 accepted the mathematical computation of the benefit of ITC available to the Respondent during the GST regime as calculated by the DGAP in its Investigation Report dated 28.08.2020 for the impugned Project as well as determined that if such amount of ITC benefit is not passed on then it would be the amount profiteered by the Respondent in terms of Section 171 of the CGST Act, 2017. There has been no contest by the Respondent to such 1. 0. No. 01/2021 dated 15.03.2021 of this Authority. Hence, this Authority finds that, the matter relating to availability of benefit of 1TC to the Respondent with respect to the impugned Project and calculation thereof recipient wise stand concluded.
10. However, as mentioned in earlier paragraphs, as per the directions of this Authority’s I. 0. No. 01/2021 dated 16.032021, the DOAN has carried out this investigation in the subject matter to establish whether the benefit of ITC had actually been passed on to the recipients as claimed by the Respondent and accepted by the DOAP in his previous Investigation Report dated 28.08.2020 and, secondly, whether the applicable interest on the profiteered amount had been paid by the Respondent to his recipients.
11. In relation to the first issue, it is observed that the Respondent was required to submit the acknowledgment receipts from the home buyers evidencing the receipt of the ITC benefit, including its quantum and also evidencing that the said benefit was in terms of Section 171 (1) of the CGST Act, 2017. For this the Respondent was required to produce the acknowledgments from the home buyers along with their contact details to the DGAP which were then required to be verified by the DOAP. Further, it is noted that the Respondent had submitted the Credit Notes issued to the homebuyers, Customer wise (apartment-wise) break up of the lit benefit passed on by hint, CA Certificate as third party verification certificate and Confirmation (4 on sample basis) from the homebuyer as supporting documents against his claim. However, the Respondent had failed to procure the acknowledgments/receipts from all the buyers and contact details of all the homebuyers.
12. The DOAP then collected relevant information/evidences from the Respondent and after the analysis of the same, the DGAP has come to a conclusion that the Respondent has gained benefit of tic on the supply of Construction services after the implementation of GST w.et 01.072017 and the Respondent was required to pass on such benefit to the homebuyers by way of commensurate reduction in prices in tents of Section 171 of the CGST Act, 2017 during the period from 01.07.2017 to 30.09.2019. The DGAP has calculated that an amount of benefit of ITC not passed on to the recipients or in other words, the profiteered amount comes to Rs. 7,90,95,475/- i.e. Rs. 7,06,20,959/- Rs. 84,74,515/- i.e. GST thereon in respect of 452 homebuyers. Further, the DGAP claimed that the Respondent had already passed on substantial amount of benefit of ITC to the homebuyers in accordance with the requirements of Section 171 of the CGST Act, 2017 at the time of offer of possession to the homebuyers and the Respondent had submitted the Credit Notes jutted to the homebuyers, Customer wise (apartment wise) break-up of the ITC benefit passed on by him, CA Certificate (as Third patty verification) and Confirmation (4 on sample basis) from the Homebuyers as supporting documents against his claim. Further, to cross check the claim of the Respondent, 174 home buyers (whose emails ids were provided by the Respondent), who were contacted by the DGAP to verify the claim of the Respondent via mails, 142 had not responded and 31 homebuyers including the Applicant No. 1 confirmed the receipt of the payment made by the Respondent. The Applicant No. 1, vide his email dated 25.07.2022 to this Authority, has also confirmed receiving an amount of Its. 1,75,850/- from the Respondent, however, it is observed that the amount of profiteering computed in respect of the Applicant No. 1 by the DGAP was Rs. 1,71,662/-. The Respondent had submitted that he bad passed on the benefit of Rs. 8,28,91,520t- to 453 homebuyers. However, the DGAP could only verify the amount of Rs. 36,44,497/- passed on to the 31 home buyers, who had confined the receipt of the benefit of 1TC from the Respondent Hence, it is concluded by the DGAP that the Respondent’s claim of passing on benefit of Its. 8,28,91,520/- could not be verified and the Respondent is yet to pass on the benefit of Ks. 7,54,50,978/- to 450 homebuyers.
13. The second issue was to verify whether the applicable interest on the profiteered amount has been paid by the Respondent to the recipients as claimed by the Respondent. In this regard, it is observed that the Respondent had failed to provide the details of payment of interest along with computation in terms of the guidelines for computation of interest on profiteered amount. Hence, this claim made by the Respondent could also not be verified by the DGAP.
14. Further, the Authority finds that the Respondent vide his submissions dated 05.04.2022 had raised few contentions as under:-
14.1 The Respondent has contended that, the methodology and procedure/mechanism of computation of profiteering amount adopted by the DOAP is wrong. The Authority finds that, this contention of the Respondent that absence of prescribed method/formula for calculation of profiteering and following a method on case-to-case was arbitrary and thus the investigation was liable to be set aside, is not tenable. In this regard, it is pertinent to mention that the “Methodology and Procedure” had been notified by the Authority vide his Notification dated 28.03.2018 under Rule 126 of the CGST Rules, 2017. The main contours of the “Procedure and Methodology” for passing on the benefits of reduction in the rate of tax and the benefit of ITC was enshrined in Section 171 (1) of the CGST Act, 2017 itself which states that “Any reduction in rate of tar on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices”. It is clear from the perusal of the above provision that it mentions “reduction In the rate of fax on way supply of good or services” which does not mean that the reduction in the rate of tax was not required to be passed on to each recipient. Further, the above section mention “any supply” i.e. each taxable supply made to each recipient was entitled to receive the benefit of tax reduction on each invoice raised to him. The word “commensurate” mentioned in the above Section gives the extent of benefit to be passed on by way of reduction in the prices which had to be computed in respect of each supply based on the benefit of ITC as well as the existing base price (price without GST) of the supply. To give thither clarifications and to elaborate upon the legislative intent behind the law, the Authority had been empowered to determine/expand the procedure and methodology in detail. However, one formula which fits all unmet be set while determining such a “Methodology and Procedure” as the facts of each case were different. In one real estate project, date of start and completion of the project, price of the house/commercial unit, mode of payment of price, stage of completion of the project, timing of purchase on inputs, rates of taxes, amount of ITC availed, total saleable area, area sold and the taxable turnover realized before and after the GST implementation would always be different than the other project and hence the amount of benefit of additional ITC to be passed on in respect of ne project would not be similar to another project. Issuance of Occupancy Certificate/Completion Certificate would also affect the amount of benefit of ITC as no such benefit would be available once the above certificates were issued. Therefore, no set parameters could be fixed for determining methodology to compute the benefit of additional ITC which would be required to be passed on to the buyers of such units.
14.2 The Respondent has contended that, the time periods taken by the DGAP for comparison of ITC in pre and post GST period is Incorrect. The Authority finds that, the period of investigation had neither been prescribed in the Central Goods and Service Tax Act, 2017 nor in the corresponding Rules/ Notifications. However, it is clarified that the Input Tax Credits in pre-GST (01.04.2016 to 30.06.2017) and post GST (01.07.2017 to 30.09.2019) periods were not compared alone. In the instant case, the DGAP had compared the percentage (%) of ratio of ITC to the taxable turnover in pre and post-GST periods. In pre-GST period (01.04.2016 to 30.06.2017), to ascertain the percentage of ratio of ITC to the taxable turnover, a considerable period of 15 months had been considered which is reasonable period of time. In any business, inputs and outputs were correlated. If, in any business, inputs were increased then correspondingly outputs would also increase and vice-versa. Therefore, ITC which is related to inputs and taxable turnover which is related to outputs, were mutually dependent on each other. Thus, the ratio of ITC to taxable turnover in pm-GST regime would not change drastically even if the long span of period is considered.
Further, in respect of post-GST period ie., from 01.07.2017 to 30.09.2019, the DGAP received a reference from the Standing Committee on Anti-Profiteering on 09.10.2019 to investigate the matter, hence, the period from 01.072017 (date of implementation of GST law) up to the preceding month of receipt of reference was taken up for investigation (post- GST) i.e., from 01.07.2017 to 30.09.2019. This practice is uniformly adopted by DGAP in respect of all investigations to cover the period of investigation up to the preceding month of the month when the reference is received. Therefore., the ITC availed and the consequential profiteering, if any, had to be determined at a given point of time and such determination cannot be deferred till the completion of the project. Hence, the investigation was done up to 30.092019 which could not be deferred till the completion of the project. Hence, the Respondent’s contention is not tenable.
15. In view of the above facts. the Authority funds that the Respondent has gained the benefit of ITC on the supply of Construction Services after the implementation of GST w.e.f 01.07.2017 and the Respondent was required to pass on such benefit of ITC to the homebuyers/customers by way of commensurate reduction in prices in tents of Section 171 of the CGST Act, 2017. However, it is observed that the benefit was not commensurately passed on by the Respondent to his recipients.
16. The Authority finds that, taking into account the aforesaid Input Tax Credit availability post GST and the details of the amount collected from the home buyers during the period 01.07.2017 to 30.09.2019, the amount of benefit of ITC not passed on to the recipients or in other words, the profiteered amount comes to Rs. 7,90,95,475/- (i.e. 7,06,20,959/- Rs. 84,74,515/- i.e. OST thereon) in respect of 452 homebuyers.
17. The Respondent has claimed that be had already passed on a substantial amount of GST ITC per the requirements of Section 171 of the CGST Act, 2017 to the homebuyers. The Respondent had submitted that he had passed on the benefit of Rs. 8,28,91,520/- to all the homebuyers/customers. The Respondent has also claimed that he has passed on excess ITC benefit to his buyers/customers. The DGAP has responded to such claims as tabulated at Table A above and fund that Respondent has not passed commensurate benefit to all homebuyers/customers. The Authority agrees with such verification report of the DGAP as such verification has been conducted in accordance with the directions of this Authority.
18. The Authority finds that, provisions of law i.e. Section 171 of the CGST Act, 2017 mentioned herein above provide that benefit of the ITC needs to be provided to each and every supply in the commensurate manner. As such, the excess of the ITC benefit provided to some of the homebuyers/customers cannot be offset against others to whom less ITC benefit has been provided or no benefit have been provided at all. The Authority finds that the verification as done by the DGAP in terms of this Authority’s Order No. 01/2021 dated 16.03.2021 does not substantiate the submissions and contentions of the Respondent that they have passed on the profiteered amount along with interest to each recipient of supply. The Authority finds that, the DGAP has made all efforts towards verification in terms of the said Order No. 01/2021 dated 16.032021 of the Authority, but, the Respondent was unable to provide the requisite evidence which was directed in the said Order. Hence, the Authority determines that the Respondent has profiteered an amount of Rs. 7,90,95,475/- (i.e. Rs. 7,06,20,959/- Rs. 84,74,515/- i.e. GST thereon). The details of all eligible homebuyers/customers and the amount of the benefit to be passed on to each of them is enclosed as the Annexure-A to this Order.
19. Therefore, given the above facts, the Authority under Rule 133(3)(a) of the CGST Rules orders that the Respondent shall reduce the prices to be realized from the buyers of the Flats/customers commensurate with the benefit of ITC received by him. The details of the recipients and benefit which is required to be passed on to each recipient/homebuyer along with the details of the unit arc contained in the Annexure ‘A’ to this order. The Authority directs that the profiteered amount as determined shall be passed on/returned by the Respondent to the recipients of supply along with interest (4)18%, as prescribed under Rule 133(3)(b) of the CGST Rules, 2017, from the date such amount was profiteered by the Respondent up till the date such amount is passed on/returned to the respective recipient of supply (if not already passed on) within a period of three months form the date of this order.
20. 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 (I) of the CGST Act 2017. The Authority holds that the Respondent has committed an offence by violating the provisions of Section 171 (1) during the period from 01.07.2017 to 30.09.2019, and therefore, he is liable for imposition of penalty under the provisions of Section 171 (3A) of the above Act. However, perusal of the provisions of the said Section 171 (3A) 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 30.09.2019, when the Respondent had committed the above violation. Hence, the said penalty under Section 171 (3A) cannot be imposed on the Respondent retrospectively.
21. However, the Authority finds that the Respondent may also be executing other projects under the same GST Registration No. 29A ABCP8096K 12P and the issue of profiteering may arise in the other projects as well. In view of the observation made in the earlier paragraph, the Authority fords that there exists reason to investigate other 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-mute cognizance of the same and in terms of Rule 133(5) of the said Rules, directs the AGA? to conduct investigation in respect of the other projects executed under the said registration 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 projects/towers to the buyers or not as per the provisions of Section 171 (I) of the above Act.
22. 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/customer, 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 Prestige Estates Projects Ltd., Project- ‘Prestige Lake Ridge”, Location-Bengaluru, Karnataka and amount of profiteering Rs. 7,90,95,475/- (which includes GST) so that all the homebuyers/customers can claim the benefit of ITC which has not been passed on to them. homebuyers/customers 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.
22. 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 this order.
23. Further, the Hon’ble Supreme Court, vide its Order dated 23.03.2020 in Suo Moto Writ Petition (C) No. 03/2020 while taking suo-moto cognizance of the situation arising on account of the Covid-19 pandemic, has extended the period of limitation prescribed under the general law of limitation or any other special laws (both Central and State) including those prescribed under Rule 133(1) of the CGST Rules, 2017, as is clear from the said Order which states as follows:-
“A period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or special laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further order/s to he passed by this Court In present proceedings.”
Further, the Hon’ble Supreme Court, vide its subsequent Order dated 10.01.2022 has extended the period(s) of limitation till 28.02.2022 and the relevant portion of the said Order is as follows:-
“The Order dated 23.03.2020 is restored and in continuation of the subsequent Orders dated 08.03.2021. 27.01.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general of special laws in respect of all judicial or quasi-judicial proceedings. “
Accordingly, this Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017.
25. A copy each of this Order be supplied free of cost to the Applicants, the Respondents, Commissioners CGST/SGST Karnataka, the Principal Secretary (Town and County Planning), Government of Karnataka as well as Karnataka
