Shubham Saxena Vs New World Realty LLP (NAA)
The Present Report dated 30.12.2020 had been received from the Applicant No. 4 i.e. the Director-General of Anti-Profiteering (1)GAP) alter a detailed investigation under Rule 129(6) of the Central Goods & Service Tax (CGST) Rules, 2017. alleging profiteering by Respondent in respect of purchase of flats in the Respondent’s project “Tinsel Town”. The Applicant No. 1. 2 and 3 vide their complaint had alleged that the Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in prices after implementation of GST w.e.f. 01.07.2017, in terms of Section 171 of the Central Goods and Services ‘fax Act. 2017.
The Respondent is in the business of the supply of Construction services and he has executed project by the name of Tinsel Town in Pune. Additional Input tax Credit was available to the Respondent for the project due implementation of the GST wef 01.07.2017 which was required to passed on in terms of Section 171 of the CGST Act, 2017.
On the issue of reduction in the tax rate, it is apparent from the DGAP’s Report that there has been no reduction in the rate of tax in the post GST period. I fence. the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST.
We finds 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 1.15%, whereas, during the post-GST period (July-2017 to Mar, 2019), it was 7.67%. This confirms that in the post-GST period, the Respondent has been benefited from additional ITC to the tune of 632% (7.67%-1.15%) of his turnover and the same is required to be passed on by him to the recipients of supply, including the Applicant No. 1.2 & 3. The Authority finds that the computation of the amount of ITC benefit to be passed on by the Respondent to the eligible recipients works out to Rs. 2.03.03.720/- The DGAP has calculated the amount of ITC benefit to he passed on to all the eligible recipients as Rs.2,03,03,720/- on the basis of the information supplied by the Respondent.
This Authority under Rule 133 (3) (a) of the Cost Rules, 2017 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 Authority directs the Respondent to return/pass on/refund the profiteered amount along with interest as prescribed to each homebuyer/recipient of supply along with interest @ 18% p.a. as prescribed from the date the profiteered amount was collected until the date of such return/passing on/refund. The names of such homebuyers along with unit number, profiteered amount and the benefit already passed on is enclosed with this order as Annexure-A.
It is also evident from the above narration of the facts that the Respondent has denied benefit of ITC to the buyers of his flats in contravention of the provisions of Section 171 ( I ) of the CGST Act. 2017 and he had thus resorted to profiteering. Hence, he has committed an offence for violation of the provisions of Section 171 (1) during the period from 01.07.2017 to 31.03.2019 and therefore, appears to be liable for imposition of penalty tinder the provisions of Section 171 (3A) of the above Act. However, the provisions of Section 171 (3A) have 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 01.17.2017 to 31.03.2019 when the Respondent had committed the above violation and hence, the penalty under Section 171 (3A) cannot be imposed on the Respondent for such period. Accordingly, notice for imposition of penalty is not required to be issued to the Respondent.
The concerned jurisdictional CGST/SGST Commissioner is also directed to ensure compliance of this Order within three months of receipt of this order by the Respondent. It may be ensured that the benefit of ITC has been passed on to each homebuyer as per this Order along with interest C)18% if not already passed on. In this regard an advertisement may also be published in minimum of two local Newspapers/vernacular press in Hindi/English/local language with the details i.e. New World Reality 1.12. Project: Tinsel Town. loacated at Pune and the Profiteering Amount 2,03,03.720/- so that the Applicants along with Non-Applicant homebuyers can claim the benefit of ITC which is not passed on to them. homebuyers may also be informed that the detailed NAA Order is available on Authority’s websitc www.naa.gov.in. Contact details of concerned Jurisdictional CGST/SGST who arc nodal officer for compliance of the NAA’s order may also be advertised through the said advertisement.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. The Present Report dated 30.12.2020 had been received from the Applicant No. 4 i.e. the Director-General of Anti-Profiteering (1)GAP) alter a detailed investigation under Rule 129(6) of the Central Goods & Service Tax (CGST) Rules, 2017. alleging profiteering by Respondent in respect of purchase of flats in the Respondent’s project “Tinsel Town”. The Applicant No. 1. 2 and 3 vide their complaint had alleged that the Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in prices after implementation of GST w.e.f. 01.07.2017, in terms of Section 171 of the Central Goods and Services ‘fax Act. 2017. The Standing Committee forwarded the copies of the Complaint of the Applicants along with demand letters to the DGAP for further investigation.
2. The DGAP vide the above said Report dated 30.12.2020 had inter-alia stated the following: –
I. On receipt of the reference from the Standing Committee on Anti-profiteering, a Notice under Rule 129 of the Rules was issued by the DGAP on 21.10.2019, calling upon the Respondent to reply as to whether he admit that the benefit of ITC had not been passed on to the recipients 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 documents in support of his reply. Further, the Respondent was afforded an opportunity to inspect the non-confidential evidences/information which formed the basis of the said Notice. during the period 30.10.2019 to 31.10.2019. The authorized representative of the Respondent availed of the said opportunity on 14.11.2019.
II. The period covered by the current investigation was from 01.07.2017 to 30.09.2019.
III. As complete and relevant documents were not submitted by the Respondent even after repeated requests, Summons under Section 70 of the Central Goods and Services Tax Act, 2017 read with Rule 132 of the Rules was issued on 01.06.2020 to Shri Vinect Goyal, Partner of the Respondent to produce the relevant documents. In response to the Summons dated 01.06.2020. the Respondent furnished the documents and clarifications vide E-mail dated 09.06.2020.
IV. The Respondent has claimed all the documents submitted as confidential in terms of Rule 130 of the COST Rules, 2017.
V. The Respondent vide email dated 17.12.2020, submitted that the company was engaged in construction of residential complex. In the context of “Tinsel Town project”, the company had executed agreements of Its. 139 Crorcs pertaining to approx. 2.74 lakh sq. 11. in the pre-GST regime. The anti-profiteering benefit was restricted to the extent of items which Were non-creditable in earlier regime, which had now become creditable. Before implementation of CST. ITC on goods procurement under VAT was not available; however, post implementation of GST, ITC of the same was available. Accordingly. after applying cost reduction method, benefit to be passed on was calculated as under:
