Sudhir Kumar Jain Vs DLF Limited (Competition Commission of India)
Introduction: The Competition Commission of India (CCI) recently addressed the GST implications on Preferential Location Charges (PLC) in the Sudhir Kumar Jain Vs DLF Limited case. The report, dated 01.03.2021, received from the Director General of Anti-Profiteering (DGAP), highlights the investigation into allegations of profiteering by DLF Limited in the sale of a specific flat. This detailed analysis delves into the findings and subsequent decisions made by the CCI.
Detailed Analysis: The Applicant No. 1 had filed a complaint, alleging profiteering by DLF Limited in the sale of Flat No. J-062, Tower-J, 6th Floor in the project “The Sky Court.” The DGAP’s report, dated 31.08.2020, outlined key details, including the investigation period from 01.07.2017 to 31.07.2019 and the reconciliation of Input Tax Credit (ITC) with turnover.
The DGAP concluded that post-GST implementation, DLF Limited did not benefit from additional ITC. The investigation also considered the issuance of the Occupancy Certificate, determining that no profiteering could be established in the case of Applicant No. 1.
However, the matter was referred back for reinvestigation by the NAA, citing discrepancies related to the investigation period and ITC calculations. The subsequent report, dated 01.03.2021, reaffirmed the correctness of the initial findings, emphasizing the importance of considering ITC for the entire post-GST period.
The CCI meeting on 04.03.2021 allowed both parties to submit consolidated written submissions. The Respondent opted not to contest the DGAP’s report, while the Applicant No. 1 raised concerns about GST charged on ready-to-move-in flats.
A hearing on 21.09.2023 provided an opportunity for the Respondent to explain the GST charged on Preferential Location Charges (PLC). The Respondent clarified and submitted a Chartered Accountant’s Certificate indicating the GST was levied at 18% on PLC.
Conclusion: The CCI, after careful consideration of the reports, submissions, and evidence, concluded that the case did not fall under the Anti-Profiteering provisions of Section 171 of the CGST Act, 2017. The Respondent had neither benefited from additional ITC nor was there a tax rate reduction post-GST. Consequently, the application requesting action against the Respondent for charging GST on PLC was dismissed.
FULL TEXT OF THE ORDER OF COMPETITION COMMISSION OF INDIA
1. The present Report dated 01.03.2021 has been received from the Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP) after detailed reinvestigation under Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules, 2017 pursuant to Interim Order No 38/2020 dated 11.12.2020 passed by the erstwhile National Anti-Profiteering Authority (NAA) in respect of the investigation report of DGAP dated 31.08.2020.
2. The brief facts of the present case are that the Applicant No. 1 had filed an application under Rule 128 of the CGST Rules, 2017 alleging profiteering by the Respondent in respect of purchase of Flat No. J-062, Tower-J, 6th Floor in the Respondent’s project “The Sky Court”, in the DLF Garden City, Sector-86, Gurugram. The DGAP has investigated the case and submitted its Report dated 31.08.2020 vide which it has been inter-alia reported that:-
a. The period of investigation is from 01.07.2017 to 31.07.2019.
b. That as per the information submitted by the Respondent for the period from April, 2016 to July, 2019, the details of ITC availed by him and his turnover from the project “The Sky Court” during the pre-GST (April, 2016 to June, 2017) and post-GST (July, 2017 to July, 2019) periods, duly reconciled with their ST-3 and GSTR-3B Returns and Credit Registers, the ratios of ITCs to turnovers for both the above periods have been furnished by the DGAP in Table-A. below:-
Table-A’
(Amount in Rs.)
