Smt. Sunita Malhotra & Sh. Vijay Malhotra Vs Godrej Project Development Pvt. Ltd. (NAA)
The instant Report dated 26.08.2020, received on 31.08.2020 has been furnished by the Applicant No. 2 i.e. Director General of Anti-Profiteering (DGAP) under Rule 129(6) of the Central Goods and Services Tax (CGST) Rules, 2017 pursuant to the Interim Order No. 16/2019 dated 28.11.2019 of the National Anti-Profiteering Authority (NAA or the Authority) in respect of earlier Report of DGAP dated 26.06.2019. The Authority vide said Interim Order had directed the DGAP to reinvestigate the matter under Rule 133 (4) of the CGST Rules 2017 on the following grounds/issues:-
(i) During the hearings, the Respondent No. 01 informed that the landowner, Respondent No. 02 had 35% share in the project and that he was not aware whether the land-owner had passed on the ITC benefit to his customers or not. It was also clear that one of the Respondents i.e. Respondent No. 01, had availed the entire ITC and hence was required to pass on the commensurate benefits thereof to his recipients. It was not clear to what extent benefit would arise, therefore the computation of the benefit of ITC for the project was required to be re-examined by taking into consideration the Development Agreement dated 05.09.2011 between the Respondent No. 2 and the Respondent No. 1
(ii) The Respondent No. 01 had submitted that there was a difference In ITC figures taken by the DGAP and figures in GSTR-3B Returns in as much as the DGAP had considered eligible ITC for the period July 2017 to August 2018 as Rs.9,99,82,384/- whereas the available ITC was only Rs. 7,90,53,619/- as per the GSTR-38 Returns. The said figures of ITC were also required to be verified by the WAP,
(iii) The Respondent No. 01 had submitted that the Report is based on incorrect assumption that ITC for the period April 2016 to June 2017 pertains to 11 Towers whereas ITC for the period July 2017 to August 2018 pertained exclusively to two Towers i.e. Tower A and Tower L. These submissions of the Respondent No. 01, might also be looked into, and
(iv) The details of reversal of credit in respect of those Towers/Units where Occupancy Certificate had been received might also be revisited.
The brief facts of the present case, are that an application dated 25.01.2018 was filed under Rule 128 of the Central Goods and Services Tax (COST) Rules, 2017 before the Haryana State Screening Committee on Anti-profiteering by the Applicant No. 1 alleging that the Respondent No. 1 has not passed on the benefit of ITC by way of commensurate reduction in price on flat No. L-204 purchased by him in the Respondent No. 1’s project “Godrej Summit” situated at Gurugram, Haryana.
2. The said complaint was examined by the Haryana State Level Screening Committed in its meeting held on 20.06.2018 and on being satisfied, the same was forwarded to the Standing Committee on Anti Profiteering on 27.06.2018, for further action in terms of Rule 128 of the CGST Rules 2017.
3. Further, the above complaint was examined by the Standing Committee on Anti Profiteering in its meetings held on 07.08.2018 & 08.08.2018 and after due consideration it was forwarded to the DGAP for detailed investigation under Rule 129 (1) of the CGST Rules, 2017.
4. On receipt of the said reference from the Standing Committee on 30.08.2019, the DGAP had investigated the matter and submitted his investigation Report dated 27.02.2019 to the Authority. The said report dated 27.02.2019 was considered by the Authority in its meeting held on 05.03.2019 and granted several hearings to the Applicant No. 1 and Respondent No. 1, which were held on 27.03.2019, 11.04.2019, 30.04.2019, 20.05.2019, 29.05.2019 and 13.06.2019. During these hearings and later, the Respondent No. 1 had furnished his submissions dated 27.03.2019, 11.04.2019, 30.04.2019, 20.05.2019, 29.05.2019, 13.06.2019 and 05.07.2019 which were forwarded to the DGAP for clarifications under Rule 133(2A) of the CGST Rules 2017. The DGAP had submitted his Reports dated 30.04.2019, 03.06.2019 and 19.11.2019 to the Authority clarifying the aforesaid submissions of Respondent No. 1.
5. The Authority after carefully examining the DGAP’s Report dated 27.02.2019, submissions of the Respondent No. 1 and documents/information placed on record, had remanded the matter back to the DGAP under the provisions of Rule 133 (4) of the CGST Rules 2017, vide Interim Order No. 16/2019 dated 28.11.2019 directing him to further investigate the case on the issues mentioned in paragraph-1.
6. Accordingly the DGAP has submitted instant Report dated 26.08.2020, wherein the DGAP has inter alia stated that:-
(a). After receiving reference from the Authority, M/s. Magic Info Solutions Pvt. Ltd. (Landowners) was impleaded as Respondent No. 2 and letters were issued to the Respondent No. 1 and Respondent No. 2 on 11.12.2019, calling upon them to submit the information/ documents required to re-investigate the matter.
(b). The Authority vide its order dated 26.08.2020 had approved to revise the period covered by the current investigation i.e. from 01.07.2017 to 30.11.2019. He also reported that the time limit of 03 months to submit his report had been extended from 28.02.2020 to 28.05.2020 by the Authority vide Order dated 04.03.2020 which further stood extended upto 31.08.2020 by virtue of Notification No. 35/2020-Central Tax dated 03.04.2020 and Notification No. 55/2020-Central Tax dated 27.06.2020.
(c). In response to above said letters dated 11.12.2019 and subsequent reminders and Summons, the Respondent No. 1 had submitted his replies vide letters/e-mails dated 23.12.2019, 02.01.2020, 13.01.2020, 12.02.2020, 30.05.2020, 10.06.2020 and 17.06.2020.
(d). Vide the above said replies the Respondent No. 1, has stated that:-
(i) He was a Special Purpose Vehicle which was engaged primarily in the construction of the project “Godrej Summit” located in the State of Haryana. For the said project, the Respondent No. 1 had entered into Development Agreement with the Respondent No. 2 under Area Sharing Model, The Respondent No. 1 submitted that they were undertaking a single project “Godrej Summit”, the details of which are furnished in Table-`A’ below:
(ii) The Occupancy Certificates (herein after referred to as “OC”) for Towers other than A and L were received in pre-GST regime. The same would be outside the scope of investigation for Anti-profiteering. Further, he stated that the DGAP had restricted his original investigation for Towers A & L only in his Investigation report dated 27.02.2019. The details of Tower A and Tower L are furnished in Table- ’13’ as follows:
(iii) His share of units booked under Tower A and Tower L in various periods is mentioned in table-t’ below:
(iv) The details of turnover in pre-GST period and GST period in table-‘D’ below: Table-‘D’
(v) The details of CENVAT credit/ input tax credit pertaining to Tower A and Tower L in pre-GST period and GST period is given in table-T’ below:
(vi) He has already passed on the benefit of increased input tax credit to his customer and thus, there was no profiteering. In this regards he further submitted that:-
(a) The essence of anti-profiteering provision is to ensure that the companies, with the introduction of GST, pass on the benefit of reduced output tax rates and increased input tax credits to the customers by way of a commensurate reduction in prices. Section 171(1) of the CGST Act dealing with anti-profiteering provides 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.
(b) It could be seen that provision of anti-profiteering requires the registered person to pass on the benefit available on following grounds:
