Sumit Mansingka Vs E-Homes Infrastructure Pvt. Ltd (Competition Commission of India)
Introduction: The recent order issued by the Competition Commission of India (CCI) in the case of Sumit Mansingka vs E-Homes Infrastructure Pvt. Ltd highlights the Commission’s proactive approach towards ensuring compliance and fair practices in the construction and real estate sector. The CCI has directed the Director General of Anti-profiteering (DGAP) to verify the passing of Input Tax Credit (ITC) in the project ‘The Jewels of Noida Phase-II’. This directive holds significant implications for the project’s developers, homebuyers, and the wider industry.
Analysis: The CCI’s order stems from a detailed investigation conducted by the DGAP under Rule 133(4) of the Central Goods and Service Tax (CGST) Rules, 2017. The investigation was initiated based on directions from the National Anti-profiteering Authority (NAA) regarding the projects “The Jewels of Noida Phase-I” and “The Jewels of Noida Phase-II”. The DGAP’s investigation focused on assessing whether the Input Tax Credit (ITC) benefits were duly passed on to homebuyers in these projects.
In the case of “The Jewels of Noida Phase-II,” the DGAP’s report reveals that the project had been registered under the Real Estate Regulatory Authority (RERA) during the pre-GST era. The developer, E-Homes Infrastructure Pvt. Ltd, had received the project’s original permit before the introduction of the Goods and Services Tax (GST). The DGAP also found evidence that the developer had booked flats and received consideration amounts from buyers before the GST was implemented. However, the claim of passing on the ITC benefit to 9 customers needed further verification, as the required details were not provided.
The CCI has acknowledged the DGAP’s findings but directed further investigation to ensure accuracy. The Commission’s order emphasizes the need for proper verification of the reversal of ITC made by the developer. It also underscores the importance of verifying the claimed passing of ITC benefits to specific homebuyers.
Conclusion: The Competition Commission of India’s directive to the DGAP for verification of ITC passing in the project ‘The Jewels of Noida Phase-II’ signifies the Commission’s dedication to promoting transparency and consumer protection in the construction and real estate sector. This order highlights the CCI’s role in ensuring that the benefits of GST, including ITC, are effectively passed on to homebuyers as intended by law. It also sets a precedent for accountability and compliance within the industry, ultimately contributing to a fair and competitive market environment. As the investigation progresses, the outcome will hold implications not only for the specific project but for the broader practices of developers and homebuyers in similar projects across the country.
FULL TEXT OF THE ORDER OF COMPETITION COMMISSION OF INDIA
1. The Director General of Anti-profiteering (DGAP) submitted an Investigation Report dated 15.03.2023 under Rule 133(4) of the CGST Rules, 2017 and Report dated 30.12.2022 under Rule 133(2A) of the above Rules before the Commission, after a detailed investigation as per the directions passed under Rule 133(4) of the Central Goods and Service Tax (CGST) Rules, 2017 vide the NAA’s I.O. No. 19/2022 dated 28.09.2022 in respect of Projects “The Jewels of Noida Phase-I” and “The Jewels of Noida Phase-II”.
2. Vide the above order the DGAP was directed to re-investigate the project ‘The Jewels of Noida Phase-I’ and submit his report under Rule 133(2A) of the CGST Rules, 2017 on the following issues:-
a. The Authority found that ITC of VAT as much as is allowed vide the said VAT Assessment Orders for the period from April-2016 to June-2017 shall be incorporated into the computation of profiteered amount by the DGAP subject to verification of the authenticity of the same. The DGAP shall ascertain the authenticity of the VAT Assessment Orders submitted by the Respondent and if verified from the State GST Commissioner/UP VAT Department, the same shall be considered while computing the profiteered amount and thus, the profiteered amount shall be recalculated.
b. The ITC that was reversed by the Respondent ought to be examined on merits and profiteering, if any, may be recalculated, if necessary, so that any reversal made on account of ineligible ITC on account of incorrect GSTIN details could be verified from DRC-03 challans.
3. In compliance to the above 10 No. 19/2022, the DGAP has submitted its Report dated 30.12.2022 under Rule 133(2A) of the above Rules and has stated that:-
a. In order to verify the authenticity of the VAT Assessment Orders for the period 2016-17 and 2017-18, the DGAP had sent letters dated 19.10.2022 and 03.11.2022 to the Commissioner, Commercial Tax, Lucknow, UP. In response. the Deputy Commissioner, Section-16, Ghaziabad vide letter dated 09.11.2022 has forwarded the authenticated VAT Assessment Orders for the above periods in respect of the Respondent.
b. As per the above VAT Assessment Orders, it has been observed that the eligible ITC for the financial year 2016-17 was Rs. 2,45,78,903/- and for the financial year 2017-18 (April-2017 to June-2017) it was Rs. 65,70,034/-. Thus, the total eligible ITC of VAT paid comes to Rs. 3,11,48,937/- and thus, the figures for eligible ITC of VAT are revised and the same have been furnished by the DGAP in Table-A below:-
