Sh. Rajender Meena Vs Logix Infrastructure Pvt. Ltd (National Anti-Profiteering Authority)
We take note of the fact that Respondent vide his submissions dated 05.06.2020 has accepted his liability of passing on the benefit of additional ITC as per the report of the DGAP and has also submitted that he had passed on the benefit of Rs. 13,32,278/- to his customers/flat buyers by way of credit notes and by way of reducing the instalments to be paid by his homebuyers against the demands pending from them and the proof of the same has also been submitted before the DGAP. This claim of the Respondent has been accepted as verified by the DGAP vide his supplementary report dated 20.07.2020. We observe that the DGAP has verified the detail of the ITC passed on by the Respondent to his homebuyers/ recipients (355 home buyers) from the ledger account, Credit Notes (20) and Annexure-17 of the DGAP’s report.
We also observe that the Applicant No. 1 & 2 have stated that they had booked their flats with the builder on 31.10.2013 and as per the builder buyer agreement, the flats were to be delivered by 31.10.2015. The Respondent raised the final invoices on 19.01.2020 after receipt of the Completion Certificate from NOIDA in January 2017 but one year after receiving the Completion Certificate and by that time GST had been implemented thus resulting in extra financial burden to them which was Rs. 3,00,000/- approx. In this regard, it is pertinent to mention that as per the provisions of Section 171 of the CGST Act, 2017 read with Rule 127 and 133 of the CGST Rule 2017, this Authority has only been mandated to ensure that bot benefits of tax rate reduction and ITC are passed on to the customers. Therefore, this Authority has no mandate to look into the matter whether the Respondent has wrongly charged GST from the Applicants. The Applicants may take up the matter with the jurisdictional CGST/ SGST officers.
It is also apparent to us from the above Reports that in respect of the `Blossom County’ project the CENVAT credit/ITC as a percentage of the total turnover which was available to the Respondent during the pre-GST period was 0.71% and during the post-GST period this ratio was 0.85% as per the Table-C mentioned above. Therefore, the Respondent has benefited from the additional ITC to the tune of 10.25% (10.25% – 0%) of the total turnover in respect of the above Phase which he was required to pass on to the flat buyers of the above Phase. It has also found that the Respondent has not reduced the basic price of his flats by 0.14% in case of the above Project due to additional benefit of ITC resulting in contravention of the provisions of Section 171 of the CGST Act, 2017. It is also evident that the amount of benefit of ITC which has not been passed on by the Respondent or the profiteered amount came to Rs. 13,32,278/- which included 12% GST on the basic profiteered amount. This amount also included the profiteered amount of Rs. 3,880/- and Rs. 3,929/-including 12% GST in respect of the Applicant No. 1 and 2. The details of all the buyers who have purchased flats from the Respondent along with their unit numbers and the profiteered amount in respect of each buyer have been provided vide Annexure-17 attached with the Report of the DGAP, who are required to be passed on the above amount as the benefit of ITC.
Based on the above findings this Authority hereby determines the profiteered amount as Rs. 13,32,278/- as per the provisions of Section 171 (1) read with Rule 133 (1) of the above Rules which includes GST @ 12% on the base profiteered amount of Rs. 11,89,534/-. The profiteered amount in respect of the Applicant No. 1 & 2 is held to be Rs. 3,880/- and Rs. 3,929/- respectively. The Respondent has claimed that he had passed on the benefit to his homebuyers and the above claim of the Respondent has been verified by the DGAP vide his supplementary report dated 20.07.2020. The DGAP has reported that the Respondent had submitted the ledger account in respect of 355 home buyers and credit notes (20) on a sample basis wherein the details of the benefit of ITC passed on to the recipients (355 home buyers) have been mentioned and that the details of the ITC passed on to the recipients (355 home buyers) have been verified from the ledger account and the credit notes against Annexure-17 of the report of the DGAP dated 03.04.2019, and the same were found to be in order. However, the Applicant No. 1 & 2 have not submitted acknowledgement of having received the benefit. Therefore, the concerned jurisdictional Commissioner is directed to ensure that the amount profiteered by the Respondent is passed on to the above Applicants.
Further, it is also revealed from the submissions of the Respondent that he has not passed on interest @18% to his recipients/flat buyers on the profiteered amount, which shall be paid by the Respondent to his recipients/flat buyers from the date of receipt of the additional price till the amount is paid to each buyer, as he has used this amount in his business, as per the provisions of Section 171 (1) of the CGST Act, 2017 read with Rule 133 (3) (b) of the CGST Rules, 2017. Accordingly, the DGAP is directed to ensure that the interest is paid to the eligible home buyers and submit report confirming payment of the interest. In case the interest is not paid the same shall be recovered by the concerned CGST/SGST Commissioner and paid to the eligible buyers.
Given the above facts, this Authority under Rule 133 (3) (a) of the CGST Rules, 2017 read with Sub-Section 171 (1) further orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him as has been detailed above.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. A Report dated 03.04.2019 was received from the Applicant No. 3 i.e. the Director-General of Anti-Profiteering (DGAP) after a detailed investigation under Rule 129 (6) of the Central Goods & Services Tax (CGST) Rules, 2017. The brief facts of the Report were that Applicant No. 1 had filed application before the Uttar Pradesh State Screening Committee on Anti-profiteering under Rule 128 of the CGST Rules, 2017 and alleged that the Respondent had not passed on the benefit of the input tax credit by way of commensurate reduction in price to the Applicant in respect of the purchase of flat No. 804, in Tower J in the Respondent project “Logix Blossom County”, Sector-137, Noida-Greater Noida Expressway, Uttar Pradesh. The Uttar Pradesh State Screening Committee on prima facie having satisfied itself that the Respondent had not passed on the benefit of ITC had forwarded the application of Applicant No. 1 with its recommendation to the Standing Committee on Anti-profiteering for further action, in terms of Rule 128 (1) of the above Rule, which was examined by the Standing Committee on Anti-profiteering in its meeting held on 06.09.2018 whereby it was decided to forward the same to the DGAP to conduct a detailed investigation in the matter.
2. Another application filed by the Applicant No. 2 against the Respondent was also forwarded by the Standing Committee on Anti-profiteering, vide minutes of its meetings held on 13.12.2018 to the DGAP for detailed investigation.
3. After completing the investigation, the DGAP has submitted his report under Rule 129 (6) of CGST Rules, 2017 on 04.04.2018 pertaining to the period w.e.f. 01.07.2017 to 31.09.2018.
4. The DGAP in his report has stated that a notice under Rule 129 of the CGST Rules, 2017 was issued on 15.10.2018, calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the above Applicants by way of commensurate reduction in prices and if so, to suo-moto determine the quantum thereof and indicate the same in his reply to the notice along with all supporting documents. The Respondent was also allowed to inspect the non-confidential evidence/information furnished by the above Applicants which was availed by him. The Applicants were also allowed to inspect the non-confidential documents/reply furnished by the Respondent on 01.04.2019.
5. The DGAP has reported that the submissions made by the Respondent before him are summed up as follows:
a. The Respondent submitted that his project “Blossom County” was undertaken in four phases covering 17 towers out of which Phase I (tower D,E,F,G &H) and Phase II (Towers I,J,O,P) and Q) were completed and completion certificates were received from the NOIDA in May 2015 and January 2017, respectively, i.e. in the pre-GST period. However, possession of the units in Phase I & II was offered only in January 2018, and accordingly, final demands for the units in these towers were raised, and GST was charged at the applicable rate. Further, the Respondent has applied for the completion certificate in respect of towers J1 and N and the rest of the towers are still under construction for which Completion Certificate has not been applied for.
b. As both the Applicants had booked units in tower J (which was constructed in Phase II), the possession of their flats was offered in January 2018, post receipt of Completion Certificate for tower J.
c. The Respondent submitted that the benefit of accumulated CENVAT credit (input tax credit) could not have been transferred to the units in respect of which the Completion Certificates had been issued before the introduction of GST, since the accumulated balance of CENVAT credit, as of 30.06.2017, was the CENVAT credit on the input services procured in respect of the units that were under construction as on 30.06.2017. The same view would apply to the input tax credit of GST earned post-GST implementation w.e.f. 01.07.2017, as this pertained to the inputs and input services used for the under-construction units.
d. The Respondent also submitted that he had not taken any credit of VAT in the pre-GST regime.
e. A total number of 2381 units spread across 17 towers on an area of 35,63,342 sq. ft., were being constructed in the Project `Blossom County’, out of which Completion Certificates had been received for a total of 1454 units spread across 10 towers on an area of 20,90,333 sq. ft. The remaining 927 units in 7 towers, covering total area of 14,73,009 sq. ft., were still under construction.
6. The DGAP in his Report has further stated that the Respondent had claimed that the benefit of accumulated CENVAT credit (input tax credit) could not have been transferred to the units in respect of which the Completion Certificates had been issued before the introduction of GST, since the accumulated balance of CENVAT credit, as on 30.06.2017, was the CENVAT credit on the input services procured in respect of the units that were still under construction as on 30.06.2017 and the same applied to the input tax credit of GST earned post-GST implementation w.e.f. 01.07.2017, as it pertained only to the inputs and input services used for the under-construction units. The DGAP had also stated that the Respondent had submitted that he had not taken any credit of VAT in the pre-GST regime.
7. The DGAP, on verification and completion of his investigation, also submitted that the Respondent has submitted a copy of the agreement dated 27.11.2013, to build/construct and payment plan for the sale of flat no. 804, 8th Floor, Tower-J, to the Applicant, in the project Blossom County’, measuring 1145 square feet, at the basic sale prices of 53,81,498/- plus applicable taxes. The details of the payment plan, as per the agreement, have been furnished by the DGAP in Table-A below:-
Table-A
(Amount in)
