Mr. Gopinath Dombla Vs M/s Navkar Associates (National Anti-Profiteering Authority)
It is clear from the plain reading of Section 171(1) mentioned above that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP’s Report that there has been no reduction in the rate of tax in the post GST period; hence the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. On this issue it has been revealed from the DGAP’s Report that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 0.14% and during the post-GST period (July-2017 to December-2018), it was 4.08%. This confirms that, post-GST. the Respondent has been benefited from additional ITC to the tune of 3.94% (4.08%414%) of his turnover and the same was required to be passed on to the Applicant and the other flat buyers. The DGAP has calculated the amount of ITC benefit to be passed on to all the flat buyers as Rs.5,83,593/- which was availed by the Respondent vide Table- C Supra on the basis of the information supplied by the Respondent, which the Respondent has not challenged and hence the amount of profiteering computed by the DGAP is hereby accepted as correct. Therefore, we take the view that the provisions of Section 171(1) of the CGST Act, 2017 have been contravened in the present case as the Respondent had been benefited from additional ITC in the post-GST regime.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING APPELLATE AUTHORITY
1. The present Report dated 07.06.2019 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 present case are that the Maharashtra State Screening Committee on Anti-Profiteering had forwarded an application dated 17.04.2018 filed by the Applicant No. 1 to the Standing Committee on Anti-Profiteering under Rule 128 of the CGST Rules, 2017 on 16.08.2018. The Applicant No. 1 had stated in his application that the Respondent had resorted to profiteering in respect of supply of construction services related to purchase of an apartment in the project “Navkar Darshan” ofFlat No. 201, Navkar Darshan, Shridhar Nagar, Chinchwad, Pune-411033 The Applicant No. 1 also alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) by way of commensurate reduction in the price of the apartment purchased by him, on implementation of GST w.e.f. 01.07.2017.The aforesaid application was examined by Maharashtra State Screening Committee in its meeting and upon being prima fade satisfied that the Respondent had contravened the provision of Section 171 of the CGST Act, 2017 forwarded the same with its recommendation to the Standing Committee on Anti-Profiteering for further action in terms of Rule 128 of the CGST Rules, 20174 on 16.08.2018. The said application was examined by the Standing Committee on Anti-Profiteering in its meeting held on 08.10.2018 and it had referred the application to the DGAP for investigation under Rule 129(1) of the CGST Rules, 2017 to determine whether the benefits of reduction in the rate of tax or ITC had been passed on by the Respondent to his recipients.
2. Thereafter. the DGAP issued a notice to the Respondent on 14.01.2019 under Rule 129 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 to the Applicant No 1 by way of commensurate reduction in prices 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. The Respondent was also given an opportunity to inspect the non-confidential evidences/information furnished by the above Applicant during the period 21.01 2019 to 23.01.2019. However. the Respondent did not avail of the said opportunity. The Applicant No. 1 was also given an opportunity to inspect the non-confidential evidences/reply furnished by the Respondent on 03.06.2019 or 04.06.2019. However, the Applicant No.1 also did not avail of the said opportunity. The DGAP had carried out investigation in this case for the period from 01.07.2017 to 31.08.2018.
3. The DGAP has further stated that the Respondent had submitted replies vide letters/e-mails dated 25.01.2019, 26.03.2019. 27.03.2019, 09.05 2019 and 03.06.2019 and had also submitted the following documents:-
(a) Copies of GSTR-1 Returns for the period July, 2017 to
(b) Copies of GSTR-38 Returns for the period July, 2017 to December, 2018.
(c) Copies of Tran-1 Returns for transitional credit availed by the Noticee.
(d) Copies of VAT & ST-3 Returns for the period April, 2016 to June, 2017.
(e) Electronic Credit Ledger for the period July, 2017 to December, 2018.
(f) Tax rates, pre-GST and post-GST.
(g) Copy of Balance Sheet for Pe 2016-17 & 2017-18.
(h) Completion certificate dated 02.02.2018 in respect of the project “Navkar Darshan’.
(i) Details of turnover and input tax credit in respect of the project “Navkar Darshan”.
(j) List of home buyers in the project “Navkar Darshan’.
4. The DGAP in his report has stated that the main issues for determination in this case were as to whether there was benefit of reduction in the rate of tax or the 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, whether such benefit had been passed on by the Respondent to the recipients, in terms of Section 171 of the CGST Act, 2017.
5. The DGAP has further stated that the Respondent obtained the completion certificate of the project “Navkar Darshan” issued by the competent authority on 02.02.2018 and the ITC pertaining to the unsold flats as on 02.02.2018, was required to be reversed by the Respondent. The computation of the proportionate ITC pertaining to the unsold area which was required to be reversed by the Respondent is furnished in
Table-A below:-
Table – ‘A’
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