Pramod Agarwal Vs Arihant Superstructures Limited (NAA)
The Authority finds that the Applicant no. 1 is an interested party and has complained regarding non passing on of benefit of ITC in relation to a specific Unit i.e. Flat no. 4-301 in Tower Benicia. This Authority holds that, the said Applicant no. 1 has locus standi in terms of the law and hence, the State Screening Committee and Standing Committee have taken due cognizance of the matter and the DGAP has investigated the case and submitted its Report in terms of the mandate of Section 171 of the CGST Act. 2017.
The Respondent has contended that provisions of Section 171 are not applicable for fresh contracts entered after 01st July 2017. In this regard the Authority finds that the Respondent did not submit any documentary evidence to substantiate that the prices offered to the customers booking flats post July, 2017 were after adjusting/giving benefit of ITC consequent to introduction of GST. During the course of investigation by the DGAP and also during confirmation of the sam from the homebuyers who booked their flats post GST. The above claim has not been established. Thus the contention of Respondent that the booking made after introduction of GST needs to be excluded from computation of profiteering is not sustainable
The Respondent has claimed that that he has indeed passed on the benefit of ITC to his customers. He has found fault with the methodology of verification adopted by the DGAP.The Authority finds that, 42 customers out of 50 customers to whom verification email were sent did not reply to the said emails. and in 30 cases out of 298, the name mentioned in the List of Home Buyers were not matching with the copies of invoices issued by the Respondent for the same units and in 36 out of 50 sample cases (where e-mail IDs were provided by the Respondent), the amount of benefit passed on as per copies of invoices was different from the amount as per List of Home Buyers The Respondent had submitted scanned copies of approx. 2000 invoices to the DGAP vide his various submissions to substantiate the claim of passing on the benefit to his customers which were checked by the DGAP but could not be verified in absence of Email IDs. The Respondent had submitted that in 23 out of 30 cases, the flats were cancelled by the original buyers and then re-allotted to new buyers. However, during the course of investigation, the Respondent submitted copies of invoices issued to the original buyers to substantiate the claim of passing on the benefit to present customers. Hence, it is clear to this Authority that the claim made by the Respondent is unverifiable and unsubstantiated. The Respondent has not submitted any reliable and sufficient information, evidence or documents to cause conclusive verification of their claim.
The Respondent is also liable to pay interest as applicable on the entire amount profiteered. i.e. Rs. 1,78,32,984. Hence the Respondent is directed to also pass on interest @18% to the homebuyers/shop buyers/customers, including Applicant No. 1 on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ payment. as per provisions of Rule 133 (3) (b) of the CGST Rules 2017
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. The present Report dated 26 11.2020 had been furnished by the Director General of Anti-Profiteering (DGAP), under Rule 129 (6) of the Central Goods & Services Tax (CGST) Rules, 2017. The brief facts of the case are that a reference was received from the Standing Committee on Anti-profiteering on 09.10.2019 to conduct a detailed investigation in respect of an application filed by the Applicant No. 1 under Rule 128 of the CGST Rules, 2017, alleging profiteering by the Respondent in respect of purchase of Flat No. BENECIA-4-301 in the Respondent’s project “Arihant Aanchar, situated at Jaisalmer Bye Pass Road, Near Dali Bai Circle, Jodhpur. Rajasthan. The Applicant No. 1 had alleged that the Respondent had not passed on the commensurate benefit of ITC to him by way of commensurate reduction in price against payments due to him
2. The DGAP has reported that the Applicant No. 1 also stated that the Respondent was charging 18% GST instead of 12% and taking full credit of Taxes. but did not pass on the benefit of the same to flat buyers under ‘Pradhanmantri Awas Yojna & Mukhyamantri Awas Yojna”. Further, the Applicant No. 1 submitted the following documents along with his application in APAF-1.-
a) E-mails of correspondence with Respondent requesting to pass on the benefit of ITC .
b) Copy of Invoices. Demand Letters and receipts.
c) Copies of e-mail dated 01.06 2017 sent to CM Rajasthan portal along with copy of call letter dated 30.05.2017 asking for an additional payment of Rs. 1,000/- on each one lakh rupees after implementation of CST.
d) Copy of reply dated 22.02.2018 given by State GST Rajasthan.
e) Press Releases dated 06.12.2017 & 12.12.2017 issued from office of Chief Commissioner of Central Tax & Customs, Visakhapatnam on “Clarification on Levy of GST on flats/residential complexes and buildings”
3. The DGAP has further reported that on receipt of the aforesaid reference from the Standing Committee on Anti-profiteering on 09.10.2019, a Notice under Rule 129 of the Rules was issued on 21.10.2019, calling upon the Respondent to reply as to whether he admitted that the benefit of VIC had not been passed on to the recipients by way of commensurate reduction in prices and if so, to suo molo determine the quantum thereof and indicate the same in his reply to the Notice as well as to furnish all documents in support of his reply. Further, the Respondent was afforded an opportunity to inspect the non-confidential evidences/information which formed the basis of the said Notice. during the period 30.10.2019 or 31.10.2019. Accordingly, authorised representative of the Respondent availed the opportunity by visiting the office of the DGAP on 31.10.2019 and inspected the non-confidential documents submitted by the Applicant No. 1.
4. It has also been stated by the DGAP that the period covered by the current investigation was from 01 07.2017 to 30.09.2019.
5. The DGAP has further reported that the statutory time limit to complete the investigation was 08.04 2020 which was extended up to 30 11.2020 by virtue of Notification No. 35/2020-Central Tax dated 03.04.2020, Notification No 55/2020-Central Tax dated 27.06.2020 and Notification No 65/2020-Central Tax dated 01.09.2020 issued by Central Government under Section 168A of the CGST Act, 2017 where it was provided that, “any time limit for completion or compliance of any action, by any authority, had been specified in, or prescribed or notified under section 171 of the said Act, which falls during the period from the 20th day of March, 2020 to the 29th day of November, 2020, and where completion or compliance of such action had not been made within such time, then, the time-limit for completion or compliance of such action, shall be extended up to the 30th day of November, 2020.”
6. The DGAP has further reported that in response to the Notice dated 21.10.2019 and various reminders, the Respondent replied vide letters/emails dated 31.10.2019, 05.11.2019, 14.11.2019, 20.02.2020, 27.02.2020, 18.05.2020, 21.05.2020, 08.06.2020, 22 09.2020, 08.10.2020, 09.10.2020, 12.10 2020, 24.10.2020, 02.11.2020, 12.11.2020 and 24.11.2020. The replies of the Respondent to the DGAP have been summed up as follows wherein he has stated:
(a) That the Respondent was a real estate company with a predominant focus on the affordable housing segment. It had dominant presence in high growth regions like Mumbai MMR (Badlapur, Shil Road, Taloja — Kharghar, Vashi, Navi Mumbai, Panvel, Karjat and Khopoli) and Jodhpur. The Respondent had a history of having delivered more than 8863 homes with about 7.5 mn Sq. ft of space constructed which came from roughly 50 projects. Currently Respondent had about 13,188 homes Linder construction with an area of 13.5 mn sq ft under development and there was 16 projects under construction The Respondent had completely integrated in-house capabilities of Land Acquisition & Procurement, Liaison, Design & Engineering, EPC and Marketing & Sales_ It further ensured tight control and quality considerations and the Respondent never compromised on additional features like tiles and fittings etc which were standardised across all projects. It was one of the reascns why customers prefered the Respondent as a builder as evinced by many awards that he had won to date.
(b) That the Project “Arihant Anchal” was stituated on leasehold land with description Khasra No. 667, 668, 670, 671, 673 to 677 Village Choka Jodhpur, with a total area of 99599 74 sq. mt. The said land had been allotted by Jodhpur Development Authority (JDA) to the Respondent on a 99 years lease for development of housing project. Further JDA had allotted this land to the Respondent for construction of affordable housing project. Vide agreement dated 10-01-2011. the total area of land was 133061 sq. nit out of which 33461 26 sq. nit of land was used to construct 1350 affordable housing, free of cost for JDA. Residual land of 99599 74 sq mt. was given on lease to the Respondent. Out of Total 1350 Affordable Housing Units for JDA, as of date, 950 flats had been handed over to the Government and rest 400 flats were under construction.
(c) That he was discharging liability in VAT regime under Composition scheme and hence was not eligible to claim any VAT ITC for the impugned project.
(d) The Respondent had following projects under the same GSTIN: 08AABCS1848L1Z2:-
Table-‘A’
(e) That the Complete project “Arihant Aanchal” consisted of total 2324 Units. The project was launched phase-wise as follows:-
i. Phase I : Consisted of 532 units (4 Towers-Adora, Benicia, Cairo & Della).
ii. Phase II : Consisted of 252 units (2 Towers-Edric & Jonas). In this regard, it was submitted that Phase-II of the Project was Closed/Shelved and amount was settled for 90% Customers and amount being refunded to balance customers. As soon as refund to all the customers was processed. thereafter RERA Registration for Phase II would be surrendered by the Respondent.
iii. Balance units of “Arihant Aanchal” Project were yet to be launched by the Respondent.
(f) That the impugned project “Arihant Aanchal Phase-I” consisted of 532 units only having standard size of 900 sq. ft. per unit (Carpet Area of 563.75 sq. ft. + Attached balcony of 44.42 sq. ft + Common area of 291.83 sq. ft.) Further. the Respondent had also informed that the CENVAT/ITC credit availed for the project “Aanchal Phase-I” pertains to 532 Units (developer share) only and therefore no benefit of CENVAT/ITC was required to be passed on to JDA in respect of the same.
7. Further the DGAP stated that vide the aforementioned letters/ e-mails, the Respondent submitted the following documents/information:
(a) Copies of GSTR-1 for the period July, 2017 to Sept. 2019.
(b) Copies of GSTR-3B for the period July, 2017 to Sept, 2019.
(c) Copies of ST-3 Returns for the period April, 2016 to June, 2017
(d) Copies of VAT Returns in form 7A, 8A and 10 for the period April, 2016 to June, 2017.
(e) Copy of Manual Tran-1 along with copy of Hon’ble High Court of Rajasthan’s Order w.r.t. Tran-1.
(f) Tax rates – pre-GST and post-GST.
(g) Copy of Audited Balance sheet for FY 2016-17. 201718 & 2018-19.
(h) Copy of demand letters/invoices issued to the Applicant No. 1.
(i) Copy of Electronic Credit Ledger for the period July, 2017 to Sept, 2019.
(j) CENVAT/ITC register for the period April, 2016 to Sep, 2019.
(k) Copy of MoU entered between the Respondent and the Jodhpur Development Authority (JDA).
(I) Status for the project “Arihant Aanchal” as on 30.09_2019 in terms of tower wise sold and Unsold units.
(m) Copy of Project Report submitted to RERA.
(n) Details of Service Tax and GST turnover, output tax liability payable and ITC availed for the project “Arihant Aanchal”.
(o) List of home buyers in the project ‘Arihant Aanchar reconciling with ST-3/GSGR-3B Returns.
(p) Copies of Invoices and Credit Notes vide which Respondent passed on the benefit of ITC
(q) A Note on ITC accounting process of the company along with sample journal voucher for ineligible ITC.
8. The DGAP has further submitted that in the Notice dated 21 10.2019, the Respondent was informed that if any information/documents were provided on confidential basis. in terms of Rule 130 of the Rules, a non-confidential summary of such information/documents was required to be furnished. Accordingly, the Respondent had classified all the information submitted by him as “CONFIDENTIAL”. Further, the Respondent had submitted a non-confidential summary of information/documents as per Rule 130 of CGST Rules 2017.
9. The DGAP has further stated that vide e-mail dated 04.11.2020, the Applicant No. 1 was also given an opportunity to inspect the non-confidential documents/ reply furnished by the Respondent on 10.11.2020 or 11 11.2020. However, the Applicant No. 1 did not avail of the said opportunity and vide letter dated 05.11.2020 expressed his inability to come and avail of the said opportunity to inspect the non-confidential information submitted by the Respondent. The Applicant No 1 vide e-mail dated 09.11.2020 submitted that the reply sent vide letter dated 05.11.2020 along with complete and detailed annexures including mathematical calculations as per actual data or status as on date about recovery of GST Tax and Flat Base Price by the Respondent was confidential reply. Therefore, the complete reply has not been reproduced here but in summarised manner. The Applicant No. 1 had submitted:-
a. That he had not received any Credit Note No. CN/19-20/46 dated 30.06.2019 amounting to Rs. 6,440/- issued by the Respondent and Applicant No 1 enclosed a copy of e-mail / letter and invoice from 11.02.2016 to 24.02.2020 including invoices dated 30.08.2017 & 03.10.2017 with Payment Schedule & Brochures and Advertisements which promised facilities with Layout Plan etc., which had been received by him up to date. Further, by issuing such Credit Note, the Respondent had reduced his Output GST Liability and on the other side was not passing on the same benefit of “tax reduction’ to the Flat Buyers.
b. That Applicant No. 1 also submitted sample copies of correspondence with the Respondent. from March, 2016 to February. 2019, where Applicant No 1 had requested several times to provide the details of reduction in the prices and pass on the benefit to him.
c. The Applicant No. 1 had submitted that the approx. profiteering per unit was Rs. 25,600/- and the project consisted of 2324 units so total profiteering was approx. 5.95 Crores
d. Applicant No. 1 had also submitted that the Respondent had collected the amount in Non-RERA bank accounts and was not transferring the proper receipts into the RERA Accounts.
10. The DGAP further reported that reference received from the Standing Committee on Anti-profiteering, various replies of the Respondent, Applicant No. 1 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 CCGST Act, 2017
11 The DGAP has also reported that the Respondent had submitted payment plan (part of Builder Buyer agreement). demand letters and payment receipts for the sale of flat no. 4-301 in tower BENICIA to the Applicant No. 1, measuring 900 Sq. ft. (super area), at total basic sale price of Rs. 16,00,000/- along with other charges of Rs. 2.00,000/. The details of payment schedule have been furnished in Table-‘B’ below.-
Table= B’ (Amount in Rs.)
