Case Law Details
Director General of Anti-Profiteering Vs Maheshwari Infratech Pvt Ltd (Competition Commission of India)
Competition Commission of India (CCI) has concluded the anti-profiteering proceedings against Maheshwari Infratech Pvt Ltd, a construction company. After conducting an investigation based on a direction from the National Anti-profiteering Authority (NAA), the CCI found that no other projects were executed by the company except the project “U-Faria,” which was already subject to profiteering determination by the NAA.
Analysis: The CCI’s decision comes after the NAA’s order dated 30.09.2022, in which the DGAP had previously reported that Maheshwari Infratech Pvt Ltd had profiteered an amount of Rs. 24,14,761/- in the “U-Faria” project. However, the NAA later determined the profiteered amount as Rs. 24,78,383/- and ordered the company to pass on the benefit.
Following the NAA’s order, the DGAP was directed under Rule 133(5) of the CGST Rules, 2017, to investigate whether the company had profiteered in any other projects executed under the same GST registration number. However, the DGAP’s investigation, as well as the verification of projects from the UP Real Estate Regulatory Authority (RERA) website and the response from the State Tax Commissioner, revealed that no other projects were undertaken by Maheshwari Infratech Pvt Ltd except for “U-Faria.”
Conclusion: Based on the findings of the DGAP and the verification from the UP RERA website and State Tax Commissioner, the CCI dropped the anti-profiteering proceedings against Maheshwari Infratech Pvt Ltd for other projects. The company was found to have executed only the “U-Faria” project, and the provisions of Section 171 of the CGST Act, 2017, which require passing on the benefit of input tax credit to recipients, were not applicable in this case.
FULL TEXT OF THE ORDER OF COMPETITION COMMISSION OF INDIA
1. The present Report dated 15.02 2023. has been received from the Director General of Anti-Profiteering (DGAP) after an investigation as per the directions passed under Rule 133(5) of the Central Goods and Service Tax Rules (CGST), 2017 vide Order No. 79/2022 dated 30.09.2022 by the National Anti-profiteering Authority (NM) on the investigation report dated 29.10.2020 of the DGAP in the case of Mis Maheshwari Infratech Pvt Ltd (Respondent) in respect of the projects other than the `U-Faria..
2. The DGAP vide his Investigation Report dated 29.10.2020 had reported that the Respondent had profiteered an amount of Rs. 24,14,761/- (excluding the benefit received by the shop buyers) while executing the ‘U-Faria’ project which was required to be passed on to the shop buyers.
3. The NAA vide Order No. 79/2022 dated 30.09.2022 had determined the profiteered amount as Rs. 24.78,383/- and not as Rs. 24,14,761/- during the period from 01 07 2017 to 31.03.2019 on the ground that the Respondent had not passed on benefit of Rs. 63,622/- as was reported by the DGAP and ordered the Respondent to pass on the benefit.
4. Further, vide Para 19 of the aforesaid Order, the NM directed the DGAP in terms of Rule 133(5) of the CGST Rules, 2017. to investigate profiteering in relation to projects other than project ‘U-Faria’. being executed by the if any, under the provisions of Section ‘171 of the CGST Act, 2017. The contents of Para 19 are reproduced below.
“19. Further since the Respondent has profiteered in the instant project, there is every likelihood that he has profiteered in other projects executed under the same GST1N. The Authority has reasons to believe that the Respondent may have resorted to profiteering in the other projects also and hence, it directs the DGAP under Rule 133(5) to investigate all the other projects of the Respondent under the same GST registration which have not yet been investigated from the perspective of Section 171 of the CGST Act, 2017 and submit complete investigation report for all the Projects under this single GST Registration.”.
5. In pursuance of the above direction the DGAP vide his Report dated 13.02.2023 has inter-alia submitted the following.-
i. That a Notice under Rule 129 of the Central Goods and Services Tax Rules, 2017 was issued on 19.10.2022, 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 customers of projects other than -U-Faria”, by way of commensurate reduction in price and if so, to suo moto determine the quantum thereof and indicate the same in their reply to the Notice as well as furnish all the supporting documents.
ii. The period covered by the current investigation is from 01.07.2017 to 09.2022.
iii. In response to the Notice dated 19.10.2022, the Respondent replied vide email letter dated 03 11.2022 that he had executed only one housing Project U- Faria and he was not executing any other project.
iv. In order to verify Respondent’s claim that he had not undertaken any project other than “U-Faria”, the details of Respondent’s projects registered with UP Real Estate Regulatory Authority (RERA) were checked online from the UP RERA website and it was observed that the Respondent has executed only U-Faria project with RERA registration No, UPRERAPRJ3924 which has already been covered under the NAA’s Order No. 79/2022 dated 30.09.2022.
vii. Further DGAP sent a letter vide F. No. 22011/API/43/2022/2456 dated 09.11.2022 to the Commissioner of State Tax, Lucknow for ascertaining whether Respondent has executed any projects other than project “UFaria” In response, the Joint Commissioner (Anti-profiteering) State Tax, Lucknow intimated vide letter dated 06.02.2023 that the Respondent was not executing any project other than the project ‘`UFaria”.
viii. The DGAP concluded by stating that the Respondent has not undertaken any other construction project except pr oject “U-Faria” which has already been investigated by DGAP and profiteering determined vide NAA Order 79/2022 dated 30 09 2022. Therefore, Section 171(1) of the Central Goods and Services Tax Act, 2017 requiring that any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices”, is not applicable in the present case.
6. The Commission has carefully considered the Report of the DGAP and the other material placed on record and finds that the DGAP, in pursuance to the Order No. 79/2022 dated 30.09.2022, has investigated the matter pertaining to the other projects executed by the Respondent in terms of Section 171 of the CGST Act, 2017 and the Rules made there under so as to determine whether there has been any profiteering by the Respondent and found that no other project has been executed by the Respondent except the project “U-Faria”, Profiteering in respect of which has already been determined by the NAA vide its order dated 30.09.2022
7. The above fact has also been corroborated from the website of the UP RERA as well as the reply of the Commissioner State Tax UP as per the report of the DGAP.
8. In view of above facts. the Commission finds that the provisions of Section 171 of the CGST Act, 2017 are not attracted in the case of the other projects of the Respondent and therefore, the proceedings are accordingly dropped against the Respondent.
9. A copy of this order be sent to the Respondent and the DGAP free of cost. File of the case be consigned after completion.
