Deepak Kumar Barnwal Vs Manas Vihar Sahakari Awas Samiti Ltd. (NAA)
Benefit of ITC to be passed by the Respondent to his buyers or the profiteered amount, during the period from 01.07.2017 to 31.03.2019, is determined as Rs. 35,98,596/- which includes 18% GST on the base profiteered amount of Rs. 30,49,658/- as has been detailed in Annexure-12 of the DGAP’s Report dated 30.08.2019, as per Rule 133 (1) of the CGST Rules, 2017. The profiteered amount in respect of the Applicant No. 1 is determined as Rs. 19,953/- which also includes GST @18%. 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 customers/buyers commensurate with the benefit of ITC received by him as has been detailed above. The above amount of Rs. 35,98,596/- which includes 18% GST on the base profiteered amount of Rs. 30,49,658/- has been profiteered by the Respondent from the Applicant No. 1 and the other recipients/buyers which is required to be refunded to the Applicant No. 1 and the other recipients/buyers as per the Annexure-12 of the DGAP’s Report dated 30.08.2019 alongwith interest @18% from the date from when the above amount was collected by him from them till the date of payment as per the provisions of Rule 133 (3) (b) of the above Rules. The present investigation is only up to 31.03.2019 therefore, any additional benefit of ITC which shall accrue subsequently shall also be passed on to the recipients/buyers by the Respondent. In case this additional benefit is not passed on to the Applicant No. 1 and the other recipients/buyers, they shall be at liberty to approach the State Screening Committee Uttar Pradesh for initiating fresh proceedings under Section 171 of the above Act against the Respondent. The concerned CGST or SGST Commissioner shall take necessary action to ensure that the benefit of additional ITC is passed on to the eligible recipients/buyers in future. The profiteered amount along with applicable interest shall be paid by the Respondent within a period of 3 months from the date of this order, failing which the same shall be recovered by the concerned Commissioner CGST/SGST as per the provisions of the CGST/SGST Act, 2017, under the supervision of the DGAP.
This Authority as per Rule 136 of the CGST Rules 2017 directs the jurisdictional Commissioner of CGST/SGST Uttar Pradesh to monitor this order under the supervision of the DGAP by ensuring that the amount profiteered by the Respondent as ordered by this Authority is passed on to all the eligible customers/buyers. A report in compliance of this order shall be submitted to this Authority by the concerned Commissioner CGST /SGST within a period of 4 months from the date of receipt of this.
It is also evident from the above narration of facts that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his Project `Mayur Residency Extension’ in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus apparently committed an offence under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section. Accordingly, a 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.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING APPELLATE AUTHORITY
1. The present Report dated 30.08.2019 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 present case are that the Applicant No. 1 had filed application dated 05.09.2018 (Annexure-1) before the Standing Committee on Anti-profiteering stating that the Respondent had resorted to profiteering in respect of supply of construction service related to the purchase of a house under the Pradhan Mantri Aawas Yojna (PMAY) in the Respondent’s project “Mayur Residency Extension”. He had also alleged that the Respondent had charged GST @ 18% on the construction service/ works contract service and had not passed on the benefit of input Tax Credit (ITC) to him by way of commensurate reduction in the price of the house after implementation of the GST w.e.f. 01.07.2017, in terms of Section 171 of the CGST Act, 2017. The said application was examined by the Standing Committee on Anti-profiteering in its meeting held on 11.03.2019 and upon being prima facie satisfied that the Respondent had contravened the provision of Section 171 (1) of the CGST Act, 2017, it had forwarded the same with its recommendation to the DGAP for a detailed investigation. The aforesaid recommendation was received by the DGAP on 27.03.2019 (Annexure-2).
2. The DGAP in his Report dated 30.08.2019 has stated that the Applicant No. 1 had submitted copies of the written communication held by him with the Respondent and copies of the demand letters alongwith his application.
3. Thereafter, the DGAP on receipt of the reference from the Standing Committee on Anti Profiteering, had issued a notice to the Respondent on 09.04.2019 (Annexure-3) under Rule 129 (3) of the above Rules, calling upon the Respondent to reply 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 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 the supporting documents. The Respondent was also given an opportunity to inspect the non-confidential evidence/information furnished by the Applicant No. 1 during the period from 15.04.2019 to 17.04.2019. However, the Respondent did not avail of the said opportunity. Further, vide his e-mail dated 07.08.2019 (Annexure-4) the DGAP had also given an opportunity to the Applicant No. 1 to inspect the non-confidential evidence/reply furnished by the Respondent, on 13 08.2019 or 14.08.2019, however, he also did not avail of the said opportunity.
4. The DGAP in his above Report has stated that the period covered by the current investigation was from 01.07.2017 to 31.03.2019. The time limit to complete the investigation was extended upto 26.09.2019 by this Authority vide its Order dated 19.06.2019 (Annexure-5) in terms of Rule 129 (6) of the CGST Rules, 2017.
5. The DGAP has also stated that in response to the notice dated 04.2019, the Respondent has submitted replies vide letters/emails dated 23.04.2019 (Annexure-6), 02.05.2019 (Annexure-7), 25.05.2019 (Annexure-8), 26.07.2019 (Annexure-9) and 14.08.2019 (Annexure-10) and has stated that:-
a. The Applicant No. 1 had purchased freehold Plot No. 212 in his project “Mayur Residency Extension”. On the Applicant’s request, the Respondent had extended the construction service on the above freehold land. The Applicant No. 1 had already claimed GST exemption on the land value and he was charging GST @ 18% only on the construction service supplied to the Applicant No. 1.
b. The Applicant No. 1 had taken housing loan under the PMAY but the house was not constructed under the PMAY. Therefore, the service fell under the construction service (works contract service), on which the applicable rate of GST was 18%.
c. He was regularly increasing his basic rate of construction service till 2016 and he had reduced his rate from Rs. 17,521/-per Sq. mt. to Rs. 16,820/- per Sq. mt., during the year 2017 which was 4% of the basic price of construction service and he was calculating the final impact of proportionate ITC.
6. The DGAP in his Report has further stated that vide the aforesaid letters/e-mails, the Respondent had submitted the following documents/information:-
a. Copies of GSTR-1 and GSTR-3B Returns for the period from July, 2017 to March, 2019.
b. Service Tax and VAT Returns for the period from April, 2016 to June, 2017.
c. Copies of TRAN-1 Returns for the transitional credit availed by the Respondent.
d. Copies of VAT & ST-3 Returns for the period from April, 2016 to June, 2017.
e. Electronic Credit Ledger for the period from July, 2017 to March, 2019.
f. Tax rates, pre-GST and post-GST.
g. Copies of Balance Sheets for the FY 2016-17 & 2017-18.
h. Payment plan of the Applicant No. 1 alongwith agreement and demand letters.
i. Details of turnover and ITC in respect of the project “Mayur Residency Extension”.
j. List of home buyers in the project “Mayur Residency Extension”.
7. The DGAP has further stated that the Respondent had requested to treat all the data submitted by him as confidential, in terms of Rule 130 of the CGST Rules, 2017.
8. The DGAP in his Report has further stated that the application, various replies of the Respondent and the documents/evidence on record has been carefully examined and the main issues to be examined were (a) whether there was any benefit of reduction in the rate of tax or ITC on the supply of the construction service by the Respondent after implementation of the GST w.e.f. 01.07.2017 and if so (b) Whether the Respondent had passed on such benefits to the recipients by way of commensurate reduction in prices, in terms of Section 171 (1) of the CGST Act, 2017?
9. The DGAP has also mentioned that the Respondent has not charged GST on the amount charged towards cost of the freehold plot and has only charged GST @ 18% on the construction service/works contract service supplied to the Applicant No. 1.
10. The DGAP in his Report has also stated that notwithstanding the contention of the Respondent that the accurate amount of ITC benefit would be passed on to the recipients once the project was fully complete but profiteering, if any, had to be arrived at a given point of time, in terms of Rule 129 (6) of the above Rules. Therefore, the ITC available to the Respondent and the amount received by him from the Applicant No. 1 and other recipients till 31.03.2019, may need to be taken into account for computing the profiteered amount.
11. The DGAP in his Report has further stated that prior to 01.07.2017 i.e. in the pre-GST era, the Respondent was not availing CENVAT credit of Service Tax paid on the input services and Central Excise Duty as well as ITC of VAT paid on the inputs. However, post-GST, the Respondent could avail ITC of GST paid on all the inputs and the input services. From the data submitted by the Respondent, the details of the ITC availed by the Respondent, his turnover from the project “Mayur Residency Extension”, the ratio of ITC to the turnover during the pre-GST period from April, 2016 to June, 2017 and the post-GST period from July, 2017 to March, 2019, has been furnished by the DGAP in the Table-‘A’ below:-
Table-A
(Amount in Rs.)
