Case Law Details
Aruna Popat Vs Shalwak Infrabulls (NAA)
We have carefully considered all the submissions filed by the Applicants, the Respondent, and the other material placed on record and find that the Applicant No. 1, vide her complaint, had alleged that the Respondent was not passing on the benefit of ITC to her on purchase of the flat, which she had purchased in the “Shalwak Elite” Project being executed by the Respondent in Nagpur, Maharashtra, even though he was availing ITC on the purchase of the inputs at the higher rates of GST which had resulted in the benefit of additional ITC to him and was also charging GST from her ©12%. The compla was examined by the Standing Committee in its meeting and as forwarded to the DGAP for investigation under Rule 129 (1) of the above Rules. The DGAP vide his Report dated 23.03.2020 had found that the Respondent had profiteered an amount of Rs. 19,286/- by not passing on the ITC benefit to Applicant No. 1. The DGAP has further stated that the Respondent had claimed to have passed on the ITC benefit of Rs. 40,000/- to the above Applicant. This Authority had issued Notice dated 05.05.2020 to the Respondent to appear before the Authority for hearing. During the course of the hearing, the Respondent has claimed that he had already passed on the benefit of Rs. 40,000/- to the above Applicant. The DGAP in its Report dated 23.03.2020 has also stated that he has duly verified the claim made by the Respondent.
It is clear from the perusal of the above Reports that the DGAP has computed the ratio of CENVAT to the turnover for the pre GST period and compared it with the ratio of ITC to the turnover for the post GST period and then computed the percentage of the benefit of additional ITC which the Respondent is required to pass on to the flat buyers. The above ratios have been computed by the DGAP based on the Service Tax and GST Returns filed by the Respondent during both the above periods and the ITC Registers maintained for the above periods by him and hence, the ratios calculated by the DGAP are based on the factual record submitted by the Respondent and therefore, they can be relied upon while computing the profiteered amount. The Respondent has also not raised any objection against the methodology employed where the benefit of ITC is required to be passed on. Therefore, the above methodology is appropriate, logical, reasonable, and in consonance with the provisions of Section 171 of the CGST Act, 2017.
However, the Respondent vide his letter dated 20.10.2020 has submitted before the Authority that till date he had not collected any GST amount from the landowners. Further, he has stated that he has neither executed the Deed of Agreement till date nor given possession of flats to the landowners and as per his calculation he was liable to pass on the Input Tax Credit amounting to Rs.10,976/- and he would pass on the remaining amount of ITC benefit to the landowners by way of Short demanding the amount receivable from the Land Owner.
Whereas, it is pertinent to mention here that the Respondent has specifically admitted the profiteering in respect of landowner’s flats however, the DGAP had restricted his investigation to the home buyers only and failed to investigate the profiteering in the case of flats allocated to landowners.
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