Smt. Rekha Gamaprasad Yadav Vs Rushi Builder and Developers (NAA)
The Present Report dated 23.09.2021 had been received in National Anti-Profiteering Authority (NAA or Authority) from the Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP) after a detailed investigation under Rule 128 of the Central Goods & Service Tax (CGST) Rules, 2017, on the complaint of the Applicant No. 1 alleging profiteering by the Respondent in respect of purchase of Flat No. 701 & 702, in the project “Shiv Bliss”, situated at L.B.S Marg, Bhandup (W) Mumbai- 400078. The Applicant No. 1 alleged that the Respondent had not passed on the benefit of ITC to her by way of commensurate reduction in the price.
On examining the various submissions, the Authority finds and directs as follows:
(i) The Respondent has submitted as recorded at paragraph 3 (c) (i) to (iv) and paragraph 8 (a) to (c) above they were eligible to CENVAT credit of Rs. 1,88,00,874/- from 1.04.2016 to 30.06.2017. However, they had wrongly and inadvertently informed the DGAP that they were ineligible for Rs. 63,39,788/- of such credit. However, on reconsideration, according to them, they were never denied such CENVAT credit of Rs. 63,39,788/- and that they were eligible for the same. It is their contention that, there can be no estoppel against law and that the DGAP should give them the benefit of entire amount CENVAT credit of Rs. 1,88,00,874/- in the calculations made by it while calculating the percentage of ITC to turnover available to them in the pre GST period from 1.04.2016 to 30.06.2017.
(ii) The Respondent has contended as recorded at para 8(g) above that, the DGAP has not included the area of three Units Nos. 302, 303 and 906, totalling 1490.48 sq. ft. for which 100% payment was received before 30.06.2017 in the Total Sold Area relevant to Turnover for Pre GST period, at Sr. no. 6, Item (F) of Table (A) of its Report while calculating the percentage of ITC to Turnover.
(iii) The Authority directs that, the DGAP shall verify the actual amount of CENVAT credit available to the Respondent, for the Project “Shiv Bliss”, from 1.04.2016 to 30.06.2017 as per their CENVAT Registers/records and Service Tax Returns and shall take into consideration such actual amount of credit which has been availed by the Respondent and allowed to be so availed by the relevant statutory authorities, as verified by the DGAP from the said records. Consequently, the DGAP shall recalculate the percentage of ITC to Turnover in the relevant Tables for the purpose of working out the profiteered amount, if any.
(iv) The DGAP shall verify from the records as to whether the area of three Units no.s 302, 303 and 906, totalling 1490.48 sq. ft. for which 100% payment is said to have been received before 30.06.2017 is included in the Total Sold Area relevant to Turnover for Pre GST period, at Sr. no. 6, Item (F) of Table (A) of its Report. The DGAP shall include any such area which has not been included/missed out while calculating the percentage of ITC to Turnover and consequently, the DGAP shall recalculate the percentage of ITC to Turnover in the relevant Tables for the purpose of working out the profiteered amount, if any.
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 reinvestigated by the DGAP based on the above directions of this Authority. 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.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. The Present Report dated 23.09.2021 had been received in National Anti-Profiteering Authority (NAA or Authority) from the Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP) after a detailed investigation under Rule 128 of the Central Goods & Service Tax (CGST) Rules, 2017, on the complaint of the Applicant No. 1 alleging profiteering by the Respondent in respect of purchase of Flat No. 701 & 702, in the project “Shiv Bliss”, situated at L.B.S Marg, Bhandup (W) Mumbai- 400078. The Applicant No. 1 alleged that the Respondent had not passed on the benefit of ITC to her by way of commensurate reduction in the price.
2. The DGAP vide his Report dated 23.09.2021 had inter-alia submitted the following points :-
a. The Maharashtra State Screening Committee on Anti-profiteering examined the said complaint and forwarded it with his recommendation to the Standing Committee on Anti-profiteering for further action, in terms of Rule 128 of the Rules.
b. The aforesaid reference was examined by the Standing Committee on Anti-profiteering in its meeting held on 26.05.2020. The minutes of meeting were received by the DGAP on 03.06.2020, whereby it was decided to forward the same to the DGAP, to conduct a detailed investigation in the matter.
c. On receipt of the reference from the Standing Committee on Anti-profiteering on 03.06.2020, a Notice under Rule 129 of the CGST Rules, 2017 was issued by the DGAP on 01.07.2020, calling upon 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. Further, in the said Notice dated 01.07.2020, the Respondent was given an opportunity to inspect the non-confidential evidences/information submitted by the Applicant No. 1, during the period 14.07.2020 to 15.07.2020. The Respondent did not avail of the said opportunity.
d. In response to the Notice dated 01.07.2020 and several reminder letters dated 23.07.2020, 17.08.2020, 02.09.2020, 01.10.2020, 06.07.2021 & 20.07.2021, the Respondent did not submit all the requisite documents on the due date. Hence, two Summonses dated 09.11.2020 & 09.02.2021 under Section 70 of the CGST Act, 2017 read with Rule 132 of the Rules, were issued to the Respondent to submit all the relevant documents.
e. In compliance to said summonses, the Respondent did not submit all the requisite documents and therefore letters dated 07.12.2020, 15.12.2020 and 09.02.2021 were sent to the jurisdictional office to collect all the relevant documents from the Respondent and forward the same to the DGAP. However, no reply/documents were received from the jurisdictional office. Thereafter, D.O. letter dated 22.02.2021 from the DGAP was sent to the Principal Chief Commissioner, CGST Mumbai Zone to direct the Commissioner, CGST, Thane to collect the requisite documents from the Respondent and forward the same to the DGAP. Vide e-mail dated 24.03.2021 requisite documents were received from jurisdictional office.
f. The period covered by the current investigation was from 01.07.2017 to 31.05.2020
g. The time limit to complete the investigation was 02.12.2020. However, due to prevalent pandemic of COVID-19 in the country, vide Notification No. 65/2020- Central Tax dated 01.9.2020 which was further amended vide Notification No. 91/2020 dated 14.12.2020, it was extended upto 31.03.2021. Further, the Hon’ble Supreme Court of India passed an Order dated 08.03.2021 in Suo Moto Writ Petition (Civil) No. 3/2020, wherein, it was stated that “in cases where the limitation would had expired during the period between 15.03.2020 till 15.03.2021, 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, was 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.
h. In response to the Notice dated 01.07.2020, the Respondent replied vide letters/emails dated 27.07.2020, 28.08.2020, 21.09.2020, 18.10.2020, 27.11.2020, 28.12.2020, 29.12.2020, 01.03.2021, 07.03.2021, 08.03.2021, 19.03.2021, 31.03.2021, 21.04.2021, 10.07.2021, 27.07.2021 and 21.09.2021. The Respondent submitted that the project “Shiv Bliss” had ground plus 20 floors and the construction was completed upto 20th floor, however the Occupancy Certificate was received only for 3rd floor to 17th floor. Further, the Respondent stated that he had total number of 174 units in the project, out of which 133 were sold as on 31.05.2020 and 41 were unsold.
i. Vide the aforementioned letters/e-mails, the Respondent submitted the following documents/information:
i. Brief profile of the Respondent.
ii. Copies of GSTR-1 and GSTR- 3B Returns for the period 01.07.2017 to 31.05.2020.
iii. Copies of VAT & ST-3 Returns for the period April, 2016 to June, 2017.
iv. Copy Sale Agreement/Contract issued to the Applicant No. 1.
v. Tax rates – pre-GST and post-GST.
vi. Copy of Balance Sheet (including all Annexures and profit/loss account) and Cost Audit Report for FY 201617, FY 2017-18 & 2018-19.
vii. Copy of Electronic Credit Ledger for the period 01.07.2017 to 31.05.2020.
viii. CENVAT/ITC Register for the period April, 2016 to June, 2017 and July, 2017 to May,2020.
ix. Details of VAT, Service Tax, ITC of VAT, CENVAT credit for the period April, 2016 to June, 2017 and output GST and ITC for the period July, 2017 to May,2020 for the project “Shiv Bliss”.
x. List of home buyers in the project “Shiv Bliss”.
xi. Status of project in terms of sold and unsold units as on 31.05.2020.
J. The Respondent submitted that all the details/ information/ submissions made by him were to be treated as confidential in terms of Rule 130 of the CGST Rules’2017, except the documents mentioned below: –
i. Demand letters & sale agreement issued to the Applicant No. 1.
ii. Details of applicable tax rates pre-GST & post GST.
iii. RERA project report.
iv. Status of the project.
v. Brief Profile of the Respondent.
k. Vide e-mail dated 06.07.2021, the Applicant No. 1 was given an opportunity to inspect the non-confidential evidences/reply furnished by the Respondent on 15.07.2021 or 16.07.2021. The Applicant No.1 availed the said opportunity on 16.07.2021 and inspected the non-confidential documents submitted by the Respondent.
l. The reference received from the Standing Committee on Anti-profiteering, various replies of the Respondent and the documents/evidences on record had been carefully scrutinised. The main issues for determination were:
i. Whether there was benefit of reduction in the rate of tax or ITC on the supply of Construction Service by the Respondent on implementation of GST w.e.f. 01.07.2017 and if so,
ii. Whether such benefit was passed on by the Respondent to the recipients, in terms of Section 171 of the CGST Act, 2017.
m. Another relevant point in this regard was para 5 of Schedule-III of the CGST Act, 2017 (Activities or Transactions which shall be treated neither a supply of goods nor a supply of services) which reads as “Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building”. Further, clause (b) of Paragraph 5 of Schedule II of the CGST Act, 2017 reads as “(b) construction of a complex, building, civil structure or a part thereof including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration had been received after issuance of completion certificate, where required, by the competent authority or after his first occupation, whichever was earlier”. Thus, the ITC pertaining to the residential units and commercial shops which was under construction but not sold was provisional ITC which might be required to be reversed by the Respondent if such units remain unsold at the time of issue of the Completion Certificate, in terms of Section 17(2) & Section 17(3) of the CGST Act, 2017, which read as under:
Section 17 (2) “Where the goods or services or both was used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempted supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as was attributable to the said taxable supplies including zero-rated supplies”.
Section 17 (3) “The value of exempted supply under subsection (2) shall be such as might be prescribed and shall include supplies on which the recipient was liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building”.
Therefore, the ITC pertaining to the unsold units might not fall within the ambit of this investigation and the Respondent was required to recalibrate the selling price of such units to be sold to the prospective buyers by considering the net benefit of additional ITC available to him post-GST.
n. As regards the allegation of profiteering, it was observed that prior to 01.07.2017, i.e., before the GST was introduced, the Respondent was eligible to avail credit of Service Tax paid on the input services (CENVAT credit of Central Excise Duty was not available) in respect of the units for the project “Shiv Bliss” sold by him. The Respondent was not eligible to avail ITC of VAT paid on the inputs/purchases as he had opted for Composition Scheme under VAT. Further, post-UST, the Respondent could avail ITC of GST paid on all the inputs and input services. From the data submitted by the Respondent covering the period 01.04.2016 to 31.05.2020, the details of the ITC availed by him, turnover from the Respondent’s project “Shiv Bliss” the ratios of Cenvat Credits/ITCs to turnovers, during the pre-GST (01.04.2016 to 30.06.2017) and post-GST (01.07.2017 to 31.05.2020) periods, has been furnished in table-`A.’ below:-
Table- ‘A’ (Amount in Rs.)
