Shashank Thakar Vs Alton Buildtech India Pvt. Ltd. (NAA)
1. A Report dated 14.06.2019 was received from the Applicant No. 6 i.e. the Director General of Anti-Profiteering (DGAP) after detailed investigation under Rule 129 (6) of the Central Goods & Services Tax (CGST) Rules, 2017. The brief facts of the Report were that the Applicant No. 1 to 3 had filed applications before the Haryana State Screening Committee on Anti-profiteering and the Applicant No. 4 and 5 had filed applications before the Standing Committee on Anti-profiteering, under Rule 128 of the CGST Rules, 2017 and submitted that they had purchased flats in the Respondent’s project “Aangan” and alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to them by way of commensurate reduction in prices of the flats, in terms of Section 171 (1) of the CGST Act, 2017. The Haryana State Screening Committee on Anti-profiteering on prima facie having satisfied itself that the Respondent had not passed on the benefit of ITC had forwarded the applications of Applicant No. 1, 2 and 3 with its recommendation to the Standing Committee on Anti-profiteering for further action, in terms of Rule 128 (1) of the above Rules.
2. The aforesaid references were examined by the Standing Committee on Anti-profiteering, in its meetings held on 27.12.2018, 11.03.2019 and 11.04.2019 and it had forwarded all the 5 applications to the DGAP for detailed investigation under Rule 129 (1).
3. The DGAP on receipt of the applications and supporting documents from the Standing Committee on Anti-profiteering had issued Notice under Rule 129 (3) of the CGST Rules, 2017 on 15.01.2019 calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the above Applicants by way of commensurate reduction in prices charged from them 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. Vide the above mentioned notice dated 15.01.2019, the Respondent was also given opportunity to inspect the non-confidential evidence/information furnished by the above Applicants during the period from 21.01.2019 to 23.01.2019, which he had availed. Vide email dated 22.05.2019, the above Applicants were also given an opportunity to inspect the non-confidential documents/replies furnished by the Respondent on 24.05.2019, 27.05.2019 & 28.05.2019, which they did not avail of.
4. The DGAP has also reported that the period covered by his investigation was from 01.07.2017 to 31.12.2018 and the time limit to complete the investigation was extended up to 06.07.2019 by this Authority, vide its order dated 19.03.2019 in terms of Rule 129 (6) of the CGST Rules, 2017.
5. The DGAP has further reported that the Respondent had submitted his replies vide letters dated 29.01.2019, 08.02.2019, 21.02.2019, 07.03.2019, 14.03.2019 and 24.04.2019 vide which he had stated that there were 3 projects viz. Aangan Phase-1, Aagan Phase-II and Aagan Phase-III being executed by him, which were at different stages of construction, however, no Occupancy Certificate (00) had been received in respect of any of the phases of these projects. The Respondent had also clarified that the notice had been issued only with respect to the Aangan Phase-I project which was located in Sector 88A & 89A, Pataudi Road, Gurugram (Haryana) and the construction of the residential complex had nearly been completed. Out of the total number of 838 flats in the project, there had been 232 cancellations of the bookings till 31.03.2019, out of which 32 flats had remained unsold as on date. He had also submitted that out of the balance 200 cancelled flats, 117 flats were re-allotted to new buyers in the Service Tax as well as in the GST regime and 83 flats were re-allotted to new applicants on 12.06.2018 as the entire waitlist had already been exhausted at the time of planning for this draw. Booking for the Aangan Phase-II project located in Sector 88A & 89A, Pataudi Road, Gurugram (Haryana) was done in June 2018 i.e. in the GST regime but construction of the residential complex had not commenced till date and Aangan Phase-III project in Sector 99A Gopalpur, Gurugram (Haryana) had not yet been launched. He has further submitted that the Aangan Phase-I project was registered and approved under the “Affordable Housing Policy 2013” (AHP). The said Policy was notified under Section 9A of the Haryana Development and Regulation of Urban Areas Act, 1975 vide Notification No. PF-27/48921 dated 19.08.2013, issued by the Town and Country Planning Department, Government of Haryana to facilitate creation of additional affordable housing stock in the urban areas of the State. Annexure-A attached to the above Notification had laid down several parameters and specifications for the project to qualify under the above Policy. Paragraph 5 provided that the allotment rate for units approved at Gurgaon would be Rs. 4,000/- per sq. ft. carpet area plus an additional amount of Rs. 500/- per sq. ft. for the area of the balcony in the flat up to a maximum of 100 sq. ft. would be chargeable, exclusive of Service Tax/GST. Under the above Policy, the Respondent was barred from increasing the rate of sale for the units beyond the maximum cap of Rs. 4,000/- per sq. ft.
6. The Respondent had also stated before the DGAP that under the erstwhile taxation regime, he was registered with the VAT and the Service Tax Authorities. The VAT was leviable on the transfer of property in the goods involved in the construction activity by way of accretion. Since he had engaged contractors to undertake the entire work associated with the construction of the project, the said contractors were discharging the applicable VAT on the goods in respect of which property was transferred through accretion. He h d neither collected nor discharged VAT, assessment of the same had not been finalized and the ITC of the VAT had also not been availed of Prior to 01.03.2016, the construction service provided by him was subjected to Service Tax and accordingly he was discharging applicable Service Tax and was entitled to avail ITC till 01.03.2016. Therefore, the cost of input tax was not forming part of his cost in as much as the credit of the same was admissible and available to him. Subsequent to 01.03.2016, the construction of the project approved under the AHP was exempted from the levy of Service Tax in terms of Notification No. 25/2015-ST dated 20.06.2012 as amended vide Notification No. 9/2016-St dated 01.03.2016. This exemption was applicable to him and his contractors, which had resulted in a situation where the output tax was exempted but the input services were taxable leading to the tax paid on the input services becoming a cost in his hands. The Respondent further submitted that under the GST regime, the construction of complex intended for sale to a buyer, except when the entire consideration was received after the issuance of Completion Certificate (CC) by the Competent Authority, was a “service” in terms of Schedule it read with Section 7 of the CGST Act, 2017 and he was accordingly discharging applicable GST on the same. The effective rate of GST was 12% on the value of supply. With respect to construction of Phase-I, he had engaged multiple contractors to execute the construction work. He had clear understanding with each contractor that all the goods and services except Steel, required for the construction activity, were within his scope of supply and he had agreed to a contract price with the contractors exclusive of taxes. The Respondent has further stated that under the GST regime, since the construction service supplied by him was now taxable, he was eligible to avail ITC. Accordingly, with respect to Phase-I of his project, he was entitled to avail total ITC of Rs. 6,13,71,734/ under the GST regime which could be separated into the following broad categories:-
