Kundan Kumar Sinha Vs ATS Township Pvt. Ltd. (NAA)
Applicant alleged profiteering by ATS Township Pvt. Ltd. in respect of purchase of a Flat No. 4032 in Tower-4 in the Respondent’s project ‘ATS Rhapsody’, situated at Plot No. GH12/1, Sector-1, Village Bisrakh, Greater Noida, Uttar Pradesh. The Applicant No. 1 alleged that the Respondent had not passed on the commensurate benefit of input tax credit (ITC) to him by way of commensurate reduction and charged GST @ 12 % on the amount due to him against payment.
In the instant case, there is no reduction of rate of tax during the relevant period and the only issue which is required to be decided by the Authority is as to whether Respondent is required to pass on the benefit of input tax credit. As mentioned in earlier paragraphs, the DGAP has carried out investigation in the subject matter and collected relevant information/evidences from the Respondent and after the analysis of the same the DGAP has come to a conclusion that the Respondent has gained benefit of ITC on the supply of Construction services after the implementation of GST w.e.f. 01.07.2017 and the Respondent was required to pass on such benefit to the buyers by way of commensurate reduction in prices in terms of Section 171 of the CGST Act, 2017 during the period 01.07.2017 to 31.05.2020.
In view of the above facts and findings discussed in the earlier paras at 34, 35 and 37, this Authority agrees with the methodology adopted by the DGAP in its Report to calculate the profiteered amount. This Authority has taken note of claim of the Respondent regarding transfer of benefit of Rs.15,48,92,888/- and also findings of the DGAP in Table D in para 22 supra, that an amount of Rs. 9,03,74,981/- was to be transferred out The Respondent has claimed to pass on excess benefit to some buyers at the expansion of other buyers as mentioned in the said Table D. The Respondent has not been able to provide any methodology whereby such amount of Rs.15,48,92,888/- was passed on whereas the DGAP has calculated amount of Rs. 9,03,74,981/- in scientific manners as mentioned in the Annexure-24 of said Report. Hence, this Authority determines that the Respondent has realized an additional amount of Rs. 9,03,74,981/- which includes both the profiteered amount @ 5.69% of the taxable amount (base price) and GST @ 12% on the said profiteered amount from the 395 buyers/recipients [including the amount of Rs.2,72,720/- (including GST @12%) from the Applicant No. 1] during the period from 01.07.2017 to 31.05.2020 which was required to be passed on such home buyers/customers/recipients of supply of his impugned project.
The details of eligible buyers to whom supply was made by the Respondent in his impugned Project and from whom additional amount on account of benefit of ITC had been realized by the Respondent during the aforesaid period along with details of such additional amount is given in Annexure-`A’ to this Order.
Since, all the home buyers of supply are identifiable as per the documents placed on record therefore, the Respondent is directed to pass on the above said profiteered amount along with the interest @ 18% per annum (from the dates from which the said profiteered amount was collected by him from each of them till the date such amount is passed on/returned/refunded) to above said buyers/recipients, if not already passed on/returned/refunded within a period of 3 months from the date of passing of this Order as per the details mentioned in An nexu re-`A’, failing which the said amounts shall be recovered as per the provisions of the CGST Act, 2017.
For the reasons mentioned hereinabove and in the given facts and circumstances and also stated position of law we find that the Respondent has denied the benefit of ITC to the buyers of his flats/shops/units in contravention of the provisions of Section 171 (1) of the CGST Act, 2017. The Authority holds that the Respondent has committed an offence by violating the provisions of Section 171 (1) and therefore, he is liable for imposition of penalty under the provisions of Section 171 (3A) of the above Act. As the said provision which has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019, the Respondent is liable to penalty for the amount profiteered by him from 1.01.2020 onwards. Accordingly, notice be issued to the Respondent for such purpose.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
The instant Report dated 24.02.2021, has been furnished to National Anti-Profiteering Authority (this Authority) by the Applicant No. 2 i.e. Director General of Anti-Profiteering (DGAP) under Rule 129(6) of the Central Goods and Services Tax Rules, 2017. The brief facts of the present case, are that a reference was received by the DGAP from the Standing Committee on Anti-profiteering on 03.06.2020 to conduct a detailed investigation in respect of an application filed under Rule 128 of the Central Goods and Services Tax Rules, 2017, alleging profiteering by the Respondent in respect of purchase of a Flat No. 4032 in Tower-4 in the Respondent’s project “ATS Rhapsody”, situated at Plot No. GH12/1, Sector-1, Village Bisrakh, Greater Noida, Uttar Pradesh. The Applicant No. 1 alleged that the Respondent had not passed on the commensurate benefit of input tax credit (ITC) to him by way of commensurate reduction and charged GST @ 12 % on the amount due to him against payment. He submitted that the price of above said flat was Rs. 1,03,93,300/- (Inclusive of GST @ 12%) as per “Agreement to Sale”. As he had paid 3 installments with old rate of tax however, he was claiming for the benefit of reduction in tax w.e.f. 01.04.2019 which was not given on current demand notice dated 08.11.2019. Further he submitted copy of Tax invoice dated 08.11.2019 along with his application.
2. On receipt of the aforesaid reference from the Standing Committee on Anti-profiteering, a Notice under Rule 129 of the CGST Rules 2017, was issued on 26.06.2020 by the DGAP, 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 recipients by way of commensurate reduction in price and if so, to suo moto 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.
3. The Respondent was afforded an opportunity by the DGAP to inspect the non-confidential evidences/information during the period 16.07.2020 to 17.07.2020 however, the Respondent through his authorized representative, had availed of the said opportunity on 11.12.2020 and collected the non-confidential documents submitted by the Applicant No. 1.
4. The Applicant No. 1 vide e-mail dated 15.02.2021, was afforded an opportunity to inspect the non-confidential documents/reply furnished by the Respondent on 18.02.2021 or 19.02.2021 however, he had availed the opportunity of inspection of documents by visiting the DGAP’s office on 18.02.2021 and collected the non-confidential documents submitted by the Respondent.
5. The DGAP has further stated that the period covered by the current investigation was from 01.07.2017 to 31.05.2020.
6. The statutory time limit to complete the present investigation was 02.12.2020 which was extended up to 31.03.2021 by virtue of Notification No. 35/2020-Central Tax dated 03.04.2020 as amended vide Notification No. 55/2020-Central Tax dated 27.06.2020, Notification No. 65/2020-Central Tax dated 01.09.2020 and Notification No. 91/2020-Central Tax dated 14.12.2020 issued under Section 168A of the CGST Act, 2017 where, “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 30th day of March, 2021, 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 31st day of March, 2021”.
7. In response to the Notice dated 26.06.2020 and various reminders and Summons, the Respondent has submitted his replies vide letters/e-mails dated 06.01.2020, 17.08.2020, 31.08.2020, 21.09.2020, 26.10.2020, 05.11.2020, 26.11.2020, 17.12.2020, 27.12.2020, 06.01.2021, 1 6.0 1 .2021, 02.02.2021, 16.02.2021 and 17.02.2021, which have been summed up by the DGAP as under:-
(a) He was engaged in the construction of residential projects at various locations. He had commenced his impugned project “ATS Rhapsody” at Noida in the month of December, 2016 was still under construction. Occupancy Certificate for the aforesaid project has not received.
(b) He had opted old scheme for discharging GST @ 12% (after 1/3rd abatement towards Land) in accordance with the Notification
(c) He claimed to have been passed on the benefit of ITC through basic selling price at the time of booking and on tax invoices to certain buyers.
8. The Respondent vide aforementioned letters/e-mails, has furnished the following documents/information:-
a. Copies of GSTR- l & 3B Returns for the period July, 2017 to May, 2020.
b. Copies of GSTR-9 & 9C Returns for FY 2017-18 and 2018-19.
c. Copies of ST-3 and VAT Returns for the period April, 2016 to June, 2017.
d. Copy of Trans-1.
e. Tax rates – pre-GST and post-GST.
f. Copy of Audited Balance Sheet for FY 201,6-17, 2017-18 & 2018- 19.
g. Copies of Sale agreement/Contract, all Demand Letters issued to the Applicant No. 1.
h. Copy of Electronic Credit Ledger for the period July, 2017 to May, 2020.
i. Declaration in Annexure-IV to the Notification No. 3/2019-CT (Rate) dated 29.03.20219.
j. CENVAT/ ITC register for the period April, 2016 to May, 2020.
k. Details of VAT, Service Tax and GST turnover, output tax liability payable and ITC availed by the Respondent.
l. Copy of Land Allotment Agreement dated 06.09.2016
m. Copy of Project Report submitted to RERA.
n. List of home buyers in the project “ATS Rhapsody” along with details of benefit passed on.
0. Copies of all documentary evidences vide which benefit passed on to the customers.
9. The documents/information submitted by the Respondent has been kept confidential in terms of Rule 130 of the CGST Rules, 2017, except which one pertaining to the Applicant No. 1 and summary chart of tax rates being paid by the Respondent.
10. The reference received from the Standing Committee on Anti-profiteering, various replies of the Respondent and the documents/evidences on record had been carefully scrutinized by the DGAP. 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 CGST Act, 2017.
11. The Respondent vide e-mail dated 21.09.2020, furnished copies of demand letters, payment receipts and sale agreement of Flat No. 4032, Tower-4, measuring 2400 sq.ft. at total base price of Rs. 92,79,732/-(including two car parking), pertaining to the Applicant No. 1. The schedule of payment has been tabulated below in Table-`A’:-
Table-`A’
(Amount in Rs.)
