Smt. Shubhra Vipin Gajbhiye Vs Pyramid Arcades Pvt. Ltd (National Anti-Profiteering Authority)
It is established from the perusal of the above facts that the Respondent has benefited from the additional ITC to the extent of 4.52% of the turnover during the period from July, 2017 to December, 2018 and hence the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has not passed on the above benefit to his customers and has profiteered an amount of Rs. 51,12,928/- inclusive of GST @ 12% on the base profiteered amount of Rs. 45,65,114/-. Further, the Respondent has realized an additional amount of Rs. 1,33,503/- from the Applicant No. 1 which includes both the profiteered amount @ 4.52% of the taxable amount (base price) and 12% GST on the said profiteered amount. He has further realized an additional amount of Rs. 49,79,425/- which includes both the profiteered amount @ 4.52% of the taxable amount (base price) and 12% GST on the said profiteered amount from the 99 other flat buyers other than the Applicant No. 1 as mentioned in Annexure-14 of the Report dated 28.06.2019. These buyers are identifiable as per the documents placed on record and therefore, the Respondent is directed to pass on this amount of Rs. 49,79,425/- and Rs. 1,33,503/- to the other flat buyers and the Applicant No. 1 respectively along with the interest @ 18% per annum from the dates from which the above amount was collected by him from them till the payment is made, within a period of 3 months from the date of passing of this order as per the details mentioned in Annexure- 14 attached with the Report dated 28.06.2019.
In view of the above facts this Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him as has been detailed above. Since the present investigation is only up to 31.12.2018 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondent. As the Respondent has claimed that the OC has been received by him in June, 2019 therefore, the DGAP is directed to carry out further investigation as per the provisions of Rule 133 (4) of the above Rules and compute the final amount of benefit of ITC which is required to be passed on and submit his Report within a period of 3 months of this Order.
Since, the DGAP has carried out the present investigation till 31.12.2018 only, any further benefit of additional ITC which might accrue to the Respondent, shall also be passed on by him to the eligible buyers. The concerned Commissioner CGST/SGST shall ensure that the above benefit is passed on by the Respondent to his recipients as per the provisions of Section 171 of the CGST Act, 2017. In case if the above benefit is not passed on in future the Applicant No. 1 or any other buyer shall be at liberty to approach the Maharashtra State Screening Committee to launch fresh proceedings against the Respondent as per the provisions of Section 171 of the CGST Act, 2017.
It is also evident from the above narration of facts that the Respondent has denied benefit of ITC to the buyers of the flats and the shops being constructed by him in his Project ‘Pyramid City 5’ in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act and therefore, he is apparently liable for imposition of penalty under the provisions of the above Section. Accordingly, a Show Cause Notice be issued to him directing him to explain as to why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him. Accordingly, the Notice dated 01.05.2019 vide which it was proposed to impose penalty under Section 29 and 122-127 of the above Act read with Rule 21 and 133 of the CGST Rules, 2017 is withdrawn to that extent.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING APPELLATE AUTHORITY
1. The present Report dated 28.06.2019 has been received from the Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP) after detailed investigation under Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules, 2017. The brief facts of the case are that vide his application dated 04.09.2018 filed before the Standing Committee on Anti-profiteering under Rule 128 (1) of the CGST Rules, 2017, the Applicant No. 1 had alleged profiteering by the Respondent in respect of purchase of Flats No. 6 in Respondent’s project “Pyramid City 5” situated at Beas, Nagpur. The above Applicant had also alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) availed by him by way of commensurate reduction in the price of the above flats. The aforesaid reference was considered by the Standing Committee on Anti-profiteering, in its meetings held on 13th December, 2018, wherein it was decided to forward the same to the DGAP to conduct detailed investigation in to the complaint according to Rule 129 (1) of the CGST Rules, 2017.
2. The Applicant No. 1 submitted a copy of her communication with the Respondent regarding passing on of the benefit of input tax credit along with her application.
3. On receipt of the recommendation from the Standing Committee on Anti-profiteering, the DGAP found that the Applicant No. 1 had booked a flat in the Respondent’s project “Pyramid City -5”, in the pre-GST era and had paid the booking amount of 50,000, vide Cheque dated 28.03.2017 and the first demand letter/invoice was raised by the Respondent in the post-GST era. Thus, the DGAP issued Notice dated 16.01.2019 under Rule 129 (3) of the above Rules, asking the Respondent to intimate as to whether he admitted that the benefit of ITC had not been passed on by him to the Applicant No. 1 by way of commensurate reduction in the price of the flat and in case it was so, to suo-moto compute the quantum of the same and mention it in his reply to the Notice and furnish the same along with the supporting documents. The Respondent was given opportunity to inspect the non-confidential evidence/information furnished by the Applicant No. 1 during the period between 21.01.2019 to 23.01.2019 in accordance with Rule 129 (5) of the above Rules but the Respondent did not avail of the said opportunity. Vide e-mail dated 17.06.2019, the Applicant No. 1 was also given opportunity to inspect the non-confidential documents/reply submitted by the Respondent on 24.06.2019 or 25.06.2019. However, the Applicant No. 1 did not avail of the said opportunity.
4. The DGAP has covered the period from 01.07.2017 to 31.12.2018 in his investigation Report dated 28.06.2019. The DGAP, vide his letter dated 14.03.2019, has requested to extend the time limit to complete the investigation before this Authority. The Authority, vide its order dated 19.03.2019 has extended the time limit for three months in terms of Rule 129 (6) of the above Rules.
5. In his Report dated 28.06.2019, the DGAP has reported that the Respondent had submitted his replies along with the required information and supporting documents to the DGAP vide his letters/emails dated 11.02.2019, 20.02.2019, 21.02.2019, 02.05.2019, 06.06.2019, 07.06.2019 and 20.06.2019. The submissions of the Respondent made before the DGAP are as under:-
a) At the time of commencement of GST, approximately 80% to 85% of the project had already been completed and thus the quantum of input tax credit available to him in the Post-GST period could not be much.
b) The Respondent, vide his letter dated 07.06.2019, had provided a copy of the advertisement published in the local newspapers on 11.03.2017, wherein in anticipation of the scheduled implementation of GST i.e. on 01.04.2017, he had announced reduction in prices due to GST input tax credit availability. However, GST was implemented w.e.f. 01.07.2017 instead of the scheduled date. The Respondent had contended that anticipating additional benefits of input tax credit under GST, he had proactively publicized his intention to pass on such additional benefit by way of reduction in prices.
c) The Respondent had submitted a comparative chart showing the units sold post-GST and the nearest comparable unit sold in the pre-GST period, to show that due to GST implementation, prices had been reduced by him.
d) The Respondent had submitted that the Applicant No.1 had made a payment of X50,000 only on 28.03.2017, as initial booking amount, but she did not register her agreement after paying such initial booking amount in the pre-GST period. Upon registration of the Agreement to sale on 29.08.2017 in the Post-GST period, demand was raised on the Applicant No. 1 on 02.09.2017, after deducting the initial booking amount paid earlier and the Respondent had no choice but to charge 12% GST on the said amount.
e) The Respondent, vide his letter dated 07.06.2019, had also contended that he had already reduced the price by more than the amount of additional input tax credit in the GST era, either by way of reduction in prices or by offering various discounts on other charges to be collected from his recipients. In support of this contention the Respondent had also submitted sample copies of sale deeds for the units sold in the GST era at reduced prices as compared to similar units sold in the pre-GST era.
f) The Respondent had also submitted a copy of his Agreement with the Applicant No. 1, entered into on 29.08.2017, after GST implementation, wherein it was provided that the agreed upon price of 26,85,000/- would be exclusive of taxes.
g) The Respondent had also submitted a copy of e-mail to the Applicant No. 1 on 14.01.2018 to the DGAP, wherein the Applicant No. 1 was informed that as the project was in the last stage, physical possession of the flat would be handed over in the month of March, 2018. A detailed statement of payments made by the Applicant No. 1 and outstanding amount due at time of possession was also furnished by the Respondent. The Respondent had also submitted a copy of his demand letter dated 17.03.2018, requesting the Applicant No. 1 to submit the balance amount and the particulars of payments made by him. The Respondent had also submitted the details of the payment plan agreed upon with the Applicant No. 1 at the time of registering the agreement of sale in respect of flat no. A-606, on 29.08.2017, which were furnished by the DGAP as given in table-1A’ below:-
Table-A’ (Amount in Rs.)
