DG Anti Profiteering Vs Kanwar Enterprises Pvt. Ltd. (GSTAT)
The present proceedings arise from an investigation report dated 25.10.2024 submitted by the Director General of Anti-Profiteering (DGAP) under Section 171 of the Central Goods and Services Tax Act, 2017 read with Rule 129 of the CGST Rules. The investigation was initiated based on a complaint referred by the Standing Committee on Anti-Profiteering upon an application filed by the Executive Director (Vigilance), NTPC, alleging profiteering by the Respondent in relation to construction services supplied for the “Ash Dyke Stage-II A NTPC Tanda Thermal Power Project” in Uttar Pradesh. It was alleged that the Respondent had not passed on the benefit of input tax credit (ITC) under GST and the benefit arising from the reduced tax burden under GST compared to the pre-GST VAT and Service Tax regime.
The investigation covered the period from 01.07.2017 to 31.10.2023. Following the introduction of GST, VAT and Service Tax were subsumed. The contract between the parties was amended after the Respondent offered a rebate to NTPC to account for pre-GST tax liabilities and ITC impact. Initially, pre-GST taxes were calculated by applying VAT at 5% on 60% of the contract value and Service Tax at 14.5% on 40%, resulting in a rebate of ₹11.01 crore, certified by a Chartered Accountant. However, upon examination prompted by a CVC query, it was observed that VAT at 5% was applicable on the full contract value, leading to a total pre-GST tax incidence of 10.8% and a revised pre-GST tax liability of ₹13.55 crore. This revealed a short rebate of ₹2.54 crore recoverable from the Respondent.
