Syed Ali Hussaini Vs Vasavi and GP Infra LLP (Competition Commission of India)
Introduction: The Competition Commission of India (CCI) recently issued an order in the case of Syed Ali Hussaini vs Vasavi and GP Infra LLP. The order directs the Director General of Anti-Profiteering (DGAP) to investigate the claim made by ‘GP Infra’ regarding the passing of Input Tax Credit (ITC) benefit. The complaint alleges profiteering by the respondent in the sale of flats, specifically in the project “Vasavi GP Trends.”
Detailed Analysis: The report from DGAP reveals that the investigation period spans from July 1, 2017, to May 31, 2022. The Respondent was accused of not passing on the full benefit of ITC to homebuyers, leading to an increase in profits. The analysis includes a comparison of ITC percentages, turnover, and ratios during the pre-GST and post-GST periods.
Table-A showcases the Respondent’s eligibility for ITC before and after the GST introduction. It indicates a significant increase in ITC during the post-GST period, leading to a higher benefit. The DGAP’s findings include a detailed breakdown of CENVAT, input tax credit, turnover, and relevant ITC ratios.
Table-B further dissects the data, revealing an alleged profiteering amount of Rs. 14,81,25,853, inclusive of GST, during the post-GST period. The Respondent’s claim of passing on ITC benefits to homebuyers is scrutinized, with discrepancies in the number of buyers confirming or denying the receipt of such benefits.
The DGAP concludes that the Respondent has profiteered by Rs. 14,81,25,853, constituting 7.25% of the turnover. The Respondent’s assertion of passing on Rs. 1,38,19,503 in ITC benefits is challenged, with only nine out of 55 buyers confirming the receipt.
Conclusion: In response to the Respondent’s submissions, the CCI issues directives for further investigation. The key points include verifying the claimed ITC benefits passed on to homebuyers, especially in cases where buyers haven’t responded. The Commission instructs a re-examination of the sale-deeds and agreements to determine if post-GST buyers were charged lower rates than pre-GST buyers.
FULL TEXT OF THE ORDER OF COMPETITION COMMISSION OF INDIA
1. The present Report dated 24.02.2023 has been received from the Director General of Anti-Profiteering (DGAP) after detailed re-investigation under Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules, 2017. The brief facts of the present case are that the Applicant No. 1 & 2 had filed an application under Rule 128 of the CGST Rules, 2017 alleging profiteering by the Respondent in respect of purchase of Flat No. 510 in the project “Vasavi GP Trends”, situated at Nanakramguda, ORR Service Road, Gachibowli, Hyderabad & Flat no. 404, Vasavi GP Trends, Nanakramguda, Hyderabad, Telangana-500032 respectively. The Standing Committee on Anti-profiteering in its meeting held on 30.05.2022 & 12.01.2023 decided to forward the above complaints to the DGAP for further investigation under Rule 128 of the CGST Rules, 2017.
2. On receipt of the above reference from the Standing Committee, the DGAP issued notice dated 06.06.2022 calling upon the Respondent to reply as to whether he admitted that the benefit of input tax credit (ITC) had not been passed on to his customers 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 supporting documents. In response to the notice, the Respondent submitted the documents/information vide various letters and e-mails and on the basis of the submissions of the Respondent, the DGAP has submitted the following findings:-
a. The period of investigation is from 01.07.2017 to 31.05.2022.
b. As per the information submitted by the Respondent prior to 01.07.2017, i.e., before introduction of the GST, 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 of the project “Vasavi GP Trends” sold by him. The Respondent was not eligible to avail ITC of VAT paid on the inputs, as he was availing composition scheme. Further, in post-GST period, the Respondent was eligible to avail ITC of GST paid on all the inputs and input services. From the data submitted by the Respondent for the period from April, 2016 to May, 2022, the details of the input tax credit/VAT availed by him, his turnovers from the project “Vasavi GP Trends”, the ratios of input tax credits to turnovers, during the pre-GST (April, 2016 to June, 2017) and post-GST (July, 2017 to May, 2022) periods, has been furnished by the DGAP in Table-A below:-
Table-A
(Amount in Rs.)
