Director General of Anti-Profiteering Vs JKG Construction Pvt. Ltd. (Competition Commission of India)
In the wake of an order by the National Anti-profiteering Authority (NAA), an investigation was launched into JKG Construction Pvt. Ltd.’s operations to identify any instances of profiteering beyond the ‘JKG Palm Court’ project. The investigation stemmed from a previous profiteering amount of Rs. 5,14,06,920/- that was confirmed by the NAA, leading to concerns that other projects could also be affected. However, the investigation concluded that JKG Construction Pvt. Ltd. had not undertaken any other project beyond ‘JKG Palm Court’. This conclusion was supported by data from the UP Real Estate Regulatory Authority (RERA) and the Commissioner of State Tax, Lucknow.
After a thorough investigation, the CCI has ruled out any further anti-profiteering activities by JKG Construction Pvt. Ltd. This verdict confirms that the company did not execute any other project aside from ‘JKG Palm Court’. As such, the allegations of profiteering in other projects have been dropped.
FULL TEXT OF THE ORDER OF COMPETITION COMMISSION OF INDIA
1. The present Report dated 13.02.2023, has been received from the Director General of Anti-Profiteering (DGAP) after an investigation as per the directions passed under Rule 133(5) of the Central Goods and Service Tax (CGST) Rules, 2017 vide Order No. 80/2022 dated 30.09.2022 by the National Anti-profiteering Authority (NAA) in the case of M/s JKG Construction Pvt. Ltd. (Respondent) in respect of the projects other than ‘JKG Palm Court’.
2. The DGAP vide his first Investigation Report dated 31.08.2021 had reported that the Respondent had profiteered an amount of Rs. 5,14,06,920/- while executing the ‘JKG Palm Court’ project which was required to be passed on to the flat buyers.
3. The NAA vide Order No. 80/2022 dated 30.09.2022 had confirmed the profiteered amount of Rs. 5,14,06.920/- as the benefit of ITC not passed on to the recipients by the Respondent during the period from 01.07.2017 to 31.10.2020 and ordered the Respondent to pass on the benefit.
4. Further, vide Para 18 of the aforesaid Order, the NAA directed the DGAP in terms of Rule 133(5) of the CGST Rules, 2017, to investigate profiteering in relation to projects other than project “JKG Palm Court”, being executed by the Respondent, if any, under the provisions of Section 171 of the CGST Act, 2017. The contents of para 18 are reproduced below:
“18. Since the Respondent has profiteered in the instant project, there is every likely hood that he has profiteered in other projects also under the GSTIN. The Authority has reasons to believe that the Respondent may have resorted to profiteering in the other projects also and hence, it directs the DGAP under Rule 133(5) to investigate all the other projects of the Respondent under the same GST registration which have not yet been investigated from the perspective of Section 171 of the CGST Act, 2017 and submit complete investigation report for all the projects under this single GST Registration”.
5. In pursuance of the above direction the DGAP vide his Report dated 13.02.2023 has inter-alia submitted the following:-
i) That a Notice under Rule 129 of the Central Goods and Services Tax Rules, 2017 was issued on 19.10.2022, calling upon the Respondent to reply as to whether he admitted that the benefit of input tax credit had not been passed on to the customers of the projects other than “JKG Palm Court”, by way of commensurate reduction in prices 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.
ii) The period covered by the current investigation was from 07.2017 to 30.09.2022.
iii) In response to the Notice dated 19.10.2022, the Respondent replied vide letter dated 02.11.2022 that he had executed only one housing Project JKG Palm Court and he was not executing any other project.
iv) In order to verify Respondent’s claim that he had not undertaken any project other than “JKG Palm Court”, the details of Respondent’s projects registered with UP Real Estate Regulatory Authority (RERA) were checked online by the DGAP and it was observed that the Respondent has taken RERA registration of 2 phases covering Towers A, B, C & D under the JKG Palm Court Both the phases had already been covered under the NAA’s Order No. 80/2022 dated 30.09.2022. Further, no project other than the JKG Palm Court project was registered with RERA. A list of the registrations in respect of the Respondent as seen from the UPRERA website is as follows:
