Case Law Details
Anil Kumar Kota Vs IJM Lingamaneni Township Pvt. Ltd (NAA)
Applicant alleged that JM Lingamaneni Township Pvt. Ltd had not passed the benefit of input tax credit (ITC) by way of commensurate reduction in price in respect of project ‘Raintree Park’.
The present Report dated 23.03.2020 has been received on 16.04.2020 by this Authority from the Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP), under Rule 129 (6) of the Central Goods & Services Tax (CGST) Rules, 2017. The brief facts of the case are that a reference was received on 01.07.2019 from the Standing Committee on Anti-profiteering under Rule 129 of the CGST Rules, 2017 to conduct a detailed investigation in respect of an application filed by the Applicant No. 1, under Rule 128 of the CGST Rules, 2017, alleging profiteering in respect of construction service supplied by the Respondent. The Applicant No. 1 had submitted that he had purchased flat No Willows 1040 in the Respondents project “Raintree Park”, Dwaraka, Krishana Phase-II, Opp Nagarjuna University, Kanteru (PO), Nambure (via), Guntur (Dist.) and had alleged that the Respondent had not passed on the benefit of input tax credit (ITC) to him by way of commensurate reduction in price. As mentioned in the application, the Applicant No. 1 had lodged the complaint directly with the DGAP.
This Authority has carefully considered the Report filed by the DGAP, all the submissions and the documents placed on record and the arguments advanced by the Respondent and the submissions of the Applicants on record. On examining the various submissions, the Authority finds and directs as follows. –
i The Respondent vide his submissions dated 06.07.2020 has submitted that it has given the entire construction contract of the project to M/s. IJM (India) Infrastructure Limited and the Respondent has not purchased any construction material for use in this project. It was submitted by the Respondent that IJM (India) Infrastructure is exempt from VAT liability and he is liable to pay Service Tax @6% which is charged and collected from the Respondent during the pre GST period. It was also submitted that, during the said period, the Respondent was eligible to claim ITC of the entire amount of Service Tax charged by M/s. IJM (India) Infrastructure Limited to the Respondent as the said amount has been paid to him. Similarly, during the GST period, M/s. IJM (India) Infrastructure Limited charged GST @ 18% to the Respondent which has been paid by the Respondent to M/s. IJM (India) Infrastructure Limited and the Respondent is entitled to claim ITC of the same and it can adjust this ITC against the output tax collected from the customers. It is claimed that, in this process whatever amount has been paid by the Respondent towards tax, whether Service Tax or GST, the Respondent is eligible to recover the same amount from its customers as customers are the ultimate consumers who are to bear the tax component in the supply of services. It is therefore submitted that the Respondent has, not made any profit out of this input tax credit amount because whatever amount of tax has been paid by it to its supplier of service, such amount has been claimed as ITC and it cannot be said that the Respondent had made undue profit in this process.
ii. With respect to the above contention of the Respondent, this Authority finds that profiteered amount (if any) in the said project i.e.’ “Raintree Park” and the beneficiaries, if any to whom such amount needs to be passed on, cannot be determined under Section 171 of the CGST Act, 2017 until the information relating to the Cenvat/ITC availed and utilised by M/s. IJM (India) Infrastructure Limited in the pre and post GST in relation to the Project “Raintree Park” is collected and investigated to first determine the benefit of ITC, if any accruing to M/s. IJM (India) Infrastructure Limited. It is necessary for the DGAP to also issue Notice to and investigate M/s. IJM (India) Infrastructure Limited because the entire construction of the said project i.e, supplying construction services was done by M/s. IJM (India) Infrastructure Limited as per the provisions of the Service Tax and GST laws and such supply was made to the present Respondent and the fatter had made supply to his customers/recipients in consequence of being recipient of such supply from M/s. IJM (India) Infrastructure Limited in this project.
iii. During such investigation the DGAP must examine as to whether M/s. IJM (India) Infrastructure Limited is passing on the benefit of ITC to the Respondent, who in turn would pass .on such benefit to its home buyers/customerst/recipients of supply:
iv. Therefore, without going into the merits and the other submissions made by the Respondent and the Applicants at this stage, this Authority finds this case must be re-investigated by the OGAP based on the above observations of this Authority by issuing requisite notice to M/s. IJM (India) Infrastructure Limited In addition to the present Respondent and consequently determine the profiteered amount, if any, on account of availability of ITC to. M/s. IJM (India) Infrastructure Limited and liability of such entity to pass on such benefit to the present Respondent/recipients of supply and consequent liability of the present Respondent to pass,on such benefit to its customers/recipients of supply.
v. Thus, we direct the DGAP to reinvestigate the matter as per the provisions of Rule 133(4) of the CGST Rules, 2017 and submit his report before this Authority.
