Case Law Details
Gautam Semwal Vs Revital Reality Pvt. Ltd. (National Anti-Profiteering Authority)
NAA observed that the reversal of the ITC has been effected by the Respondent even before occupancy certification/ completion certificate was issued by the competent authority. The above voluntary reversal of the credit has been effected by the Respondent only in August 2019, i.e. much after the expiry of the period of investigation of the DGAP i.e. from 01.07.2017 to 31.12.2018. Further, Rule 42 of the CGST Rules, 2017 lays down the mode of computation of mandatory reversal of the unutilized input tax credits in respect of unsold flats/shops of a real estate project at the time of receipt of completion Certificate (CC)/ occupancy certificate (OC) or on the date of first occupancy, whichever is earlier. This is the only method prescribed for reversal of ITC under the CGST Rules and the same requires that such reversal is effected only after the date on which completion/ occupancy certificate has been issued or from the date of first occupancy, whichever is earlier. In this case, however, the Respondent has affected reversal much before the above dates and hence the said reversal by the respondent has to be viewed as an act that was carried out with the mala-fide intent of denying the passage of benefit of ITC to his customers/ homebuyers. It is also a fact that at the time of reversal a number of units were yet to be sold and occupancy certificate has not yet been received which implies that this act of reversal was not only premature on the part of the Respondent but apparently also an afterthought aimed at avoiding the passing on of the benefit of ITC to his customers/ homebuyers. It would also be relevant to add here that the profiteered amount has been calculated by DGAP only in respect of the sold units on which the GST is being charged by the Respondent from his customers in proportion to the ITC available on such units and therefore, in case the ITC would be required to be reversed in the case of the unsold flats/shops in future the same can be easily done by the Respondent from the balance available ITC. Therefore also the above argument of the Respondent cannot be accepted.
The Respondent vide his submissions dated 17.09.2019 has also submitted the details of the profiteered amount claimed to have been passed on by him to all his customers along with sample copies of Journal Vouchers issued to the customers. Perusal of the CD enclosed by the Respondent with his above submissions shows that he has claimed to have passed on ITC benefit of Rs. 3,30,91,398/- to his buyers. He has also furnished copies of 26 Journal Vouches issued on 06.08.2019 to claim that he has passed on the benefit of ITC. However, perusal of these vouchers shows that they have been issued on the same date which makes their genuineness doubtful. The Respondent has neither produced the acknowledgement receipts from the recipients nor he has furnished the tax invoices to prove that he has passed on the above amount as benefit of ITC. The Respondent has also not furnished the above details to the DGAP during the course of the investigation. Hence, there is hardly any doubt that the above record has been prepared by the Respondent subsequently to mislead the present proceedings. Therefore, the above claim of the Respondent of his having passed on the benefit of ITC to the eligible buyers cannot be accepted as no reliable and irrebutable evidence has been furnished by the Respondent to prove his above claim.
Based on the above facts the profiteered amount is determined as Rs. 3,32,61,809/- in terms of Rule 133 (1) of the CGST Rules, 2017, during the period from 01.07.2017 to 31.12.2018. This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 also orders that the Respondent shall reduce the prices to be realized from the buyers of the flats/shops commensurate with the benefit of ITC received by him as has been detailed above. The above amount of Rs. 3,32,61,809/- which includes 12% GST on the base profiteered amount of Rs. 3,04,01,093/- has been profiteered by the Respondent from the Applicant No. 1 to 8 and other flat buyers which is required to be refunded to the above Applicant No. 1 to 8 and the other flat buyers as per the Annexure-20 of the DGAP Report dated 02.07.2019 alongwith interest @18% from the date from when the above amount was profiteered by him 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 31.12.2018 and any additional benefit of ITC which shall accrue subsequently shall also be passed on to the buyers by the Respondent. In case this additional benefit is not passed on to the Applicant No. 1 to 8 or any other buyer they shall be at liberty to approach the State Screening Committee Haryana 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 house 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 Commissioners of CGST/SGST Haryana 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 buyers. A report in compliance of this order shall be submitted to this Authority by the Commissioners 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 `Supertech Basera’ 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.
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