Ashok Kumar Singh Vs Lifeways Infrastate Pvt. Ltd. (NAA)
RERA Act, 2016 makes it mandatory for a real estate developer/promoter to maintain separate bank accounts for each of his projects registered separately under the RERA Act, 2016. In the case of the Respondent, the above provision implies that he was required to maintain four separate escrow/bank accounts in respect of the four towers/blocks of the project “Celebrity Gardens”, however the DGAP’s Report has no mention of this aspect. It has a bearing on the instant proceedings since the DGAP’s Report dated 23.03.2020 only covers one of the four blocks i.e. Block `K’. As the Respondent had obtained four separate RERA registrations for his four blocks/towers, he should have maintained separate escrow/bank accounts. In case the Respondent has not complied with the above-mentioned provision of the RERA Act, 2016, then the entire project “Celebrity Gardens” comprising all its blocks/towers, should be considered as a single project for the computation of profiteering, given that the Respondent has been maintaining a common ITC register/ITC ledger for all the blocks of his said project and has been filing common GST Returns for all the blocks/towers of the said project “Celebrity Gardens”. Hence, the compliance of the Respondent with the above-referred provisions of the RERA Act, 2016, becomes paramount and need to be examined. In view of this, there arises the need to revisit the investigation to ascertain if the Respondent has passed on the benefit of ITC to the homebuyers of the other 3 towers/blocks of the impugned project by a commensurate reduction in the prices of the residential units supplied by him in terms of Section 171 of the CGST Act, 2017.
Further, we also find that there is a significant variation in the figures adopted by the DGAP in Table-`B’ in his Report dated 23.03.2020 vis-a-vis the figures mentioned in the statutory tax returns filed by the Respondent, i.e. the figures of ITC and turnover for the period from 01.04.2016 to 30.06.2017 and the post-GST period from 01.07.2017 to 30.09.2019
Given the variations in the figures of Turnovers and ITCs, we find the need for an investigation into this aspect to ensure that the Respondent has passed on the benefit of ITC.
Hence, in terms of the provisions of Section 171(2) of the CGST Act and for the reasons detailed in Para 17 and Para 18 of this Order, the DGAP is directed to further investigate the present case under Rule 133 (4) of the CGST Rules, 2017 to ensure that the Respondent has passed on the benefit of ITC by way of a commensurate reduction in the prices in respect of the residential units supplied by him. Hence, without dwelling upon any other aspect of the case and without going into any contentions of the Respondent and the Applicants, this Authority, under the powers conferred on it vide Rule 133(4) of the CGST Rules read with Section 171 of the CGST Act 2017, directs the DGAP to reinvestigate this case and recompute the quantum of profiteering based on above findings.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. The Report dated 23.03.2020, has been received on 16.04.2020 from Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP) after a detailed investigation under Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules, 2017. The brief facts of the case are that an application was filed by Applicant No. 1 before the Standing Committee on Anti-profiteering, under Rule 128 of the CGST Rules, 2017 alleging that the Respondent had not passed on the benefit of input tax credit (ITC) to him by way of commensurate reduction in the price of the Flat No. K-904 purchased from the Respondent in the project “Celebrity Garden Block-K”, situated at Raja Ram Kumar Plaza-75, Hazratganj, Lucknow-226001 on the introduction of GST w.e.f. 01.07.2017, in terms of Section 171 of the CGST Act, 2017. The Standing Committee on Anti-profiteering examined the above application in its meeting held on 13.09.2019 and forwarded the same to the DGAP to conduct a detailed investigation in the matter.
2. Subsequently, the DGAP issued a notice of Investigation under Rule 129 of the CGST Rules on 23.10.2019 calling upon the Respondent to submit his reply whether he admitted that the benefit of ITC had not been passed on to Applicant No. 1 by way of commensurate reduction in price. The Respondent was also asked to suo moto determine the quantum thereof and indicate the same in his reply as well as furnish all supporting documents. Further, the Respondent was also allowed to inspect the non-confidential evidence/information furnished by Applicant No.1 during the period 30.10.2019 to 31.10.2019 which was not availed of by him. Further, Applicant No. 1 vide e-mail dated 24.02.2020 was also allowed to inspect the non-confidential documents/reply furnished by the Respondent on 02.03.2020 or 03.03.2020, which the Applicant had not availed of. The DGAP has intimated that the period of the current investigation was from 01.07.2017 to 30.09.2019.
3. The DGAP has reported that the Respondent in response to the above Notice dated 23.10.2019, had submitted his replies vide letters and e-mails dated 12.11.2019, 13.11.2019, 02.12.2019, 24.12.2019, 16.01.2020, 17.02.2020, and 24.02.2020 wherein he had submitted the following documents/information: –
a) Copies of GSTR-1 Returns for the period from July 2017 to September 2019.
b) Copies of GSTR-3B Returns for the period from July 2017 to September 2019.
c) Copies of VAT Returns (including all annexures) & ST-3 Returns for the period from April 2016 to June 2017.
d) Copies of all demand letters issued and sale agreement made with Applicant No. 1.
e) Copy of Balance Sheet for F.Y. 2016-17, 2017-18 & 201819.
f) Copy of Electronic Credit Ledger for the period from 01.07.2017 to 31.09.2019.
g) Details of VAT, Service Tax, Credit of VAT, CENVAT Credit for the period from April 2016 to June 2017 for the project “Celebrity Garden Block-K”.
h) List of homebuyers in the project “Celebrity Garden Block-K” along with details of the benefit passed on to each of them.
i) Progress Report submitted to RERA till September 2019.
4. The DGAP has stated that he has examined the above application, the replies of the Respondent and the documents/evidence on record. The main issues for determination were whether there was the benefit of reduction in the rate of tax or ITC on the supply of construction service after the implementation of GST w.e.f. 01.07.2017 and if so, whether such benefit had been passed on by the Respondent to his recipients by way of commensurate reduction in prices, in terms of Section 171 of the CGST Act, 2017.
5. The DGAP has informed that the Respondent had submitted a copy of the RERA Registration Certificate of his Project “Celebrity Garden Block-K” and the payment schedule for the purchase of flats. The Respondent, vide e-mail dated 02.12.2019 had submitted copies of demand letters issued to Applicant No. 1. The Respondent had also furnished the details of the schedule of payment in three categories of the payment plan as is given in Table-A below:-
Table-A’
(i) Down Payment Plan
