Case Law Details
Sh. Ajay Saini Vs Lucknow Development Authority (NAA)
Briefly stated, the Applicant had alleged that Lucknow Development Authority had not passed on the benefit of ITC to him by way of commensurate reduction in the price on purchase of a Flat No. F-3/401 in the Respondent’s project ‘Kritika & Swati Apartment’ situated at Chak, Gajaria, Lucknow on introduction of GST w.e.f. 01.07.2017, in terms of Section 171 of the CGST Act, 2017.
NAA has carefully considered the Reports filed by the DGAP, all the submissions and the documents placed on record, and the contentions raised by the Respondent vide his written submissions. It is clear from the plain reading of Section 171(1) that it deals with two situations: – one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP’s Report that there has been no reduction in the rate of tax in the post-GST period; hence the only issue to be examined is whether there was any net benefit of ITC with the introduction of GST. It is observed from the DGAP’s report that there was no sale of flats in pre-GST regime. However, the Authority finds that Respondent had invited applications for the allotment of flats in his new housing scheme 2016 named as “LDA Swati Apartment”. Besides, this scheme, the Respondent was also offering flats in “Kritika Apartment”. In the scheme, flats were available for registration from 15.07.2016 to 16.08.2016 which was offered by the Respondent. The Respondent had finally announced the lottery draw on 15.06.2017 for the project “Kritika & Swati Apartment”. From the above discussion, it was clear that the base price of the flats was already fixed before the introduction of GST at the time of advertisement only and hence the benefit of additional ITC accrued to the Respondent post-GST could not have been factored in base prices determined prior to introduction of GST. The Respondent has not produced any evidence or document to prove that the prospective buyers were aware of the fact that the benefit of the ITC arising out of implementation of GST is already factored in the price or cost of the flat, bookings of which were made during the pre-GST period. The first allotment made by the Respondent in the said project was on 04.07.2017. Though the flats were available for registration from 15.07.2016 to 16.08.2016. It has been claimed by the Respondent that they did not have the actual cost of the flat before the GST implementation and that the actual cost of the flats were available only after the GST implementation and that the allotment letters to the buyers were issued subsequent to the GST implementation, as such, they are not covered within the ambit of provisions of section 171 of the CGST, Act 2017. Further, it is observed from the report of the DGAP that the Respondent had received Rs. 898.28 lacs of ITC for the project “Kritika & Swati Apartment” after introduction of GST. The Respondent, on his own, has taken cognizance of Anti-Profiteering provision of Section 171 of the CGST Act, 2017 and suo moto calculated the amount to be passed on as benefit of addition of ITC to all homebuyers.
The Respondent have claimed to calculate and pass on benefit of ITC amounting to Rs. 7,09,81,848.82/- (Rs. 4,67,80,041.64/- for Swati Apartment and Rs. 2,42,01,807.18/- for Kritika Apartment) upto 30.09.2020 by adjusting the final demand of the home buyers after giving the rebate of ITC and charged the GST @12% on the balance amount. Therefore, the Respondent was required to pass on additional benefit of ITC of Rs. 37,50,052.03/-(Rs. 7,47,31,900.84 – Rs. 7,09,81,848.82) plus 12 % GST for the period 01.07.2017 to 30.09.2020.
However, the Authority finds that the Annexures attached to the DGAP’s report does not contain any details/homebuyers wise list to whom the remaining profiteering amount of Rs. 37,50,052.03/- plus 12% GST is to be passed on.
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