Case Law Details
Dr. Rahul Bamal Vs SVP Builders India Pvt. Ltd. (NAA)
The brief facts of the case was that an application was filed before the Standing Committee on Anti-profiteering under Rule 128 of the CGST Rules. 2017, by the Applicant no. 1, wherein it had been alleged that the Respondent had not passed on the benefit of ITC to the Applicant No. 1 by way of commensurate reduction in the price of the Unit No. 13-3-304 purchased from the Respondent in the Respondent’s project ‘Gulmohar Garden Phase-II’, situated at Raj Nagar Extension. Ghaziabad, on introduction of GST w.e.f. 01.07.2017, in terms of Section 171 of the CGST Act, 2017.
The Respondent vide his various submissions before the Authority has also contended that the DGAP has not incorporated the ITC of VAT in the pre-GST period for the computation of profiteering which ought to have been done. He has further submitted before this Authority that the said ITC of VAT for the period from April 2016 to June 2017 has been allowed to him by the concerned statutory Authority, in support of which he has submitted VAT Assessment Orders for the period from April. 2016 to June, 2017 Consequently, this Authority without going into merit of other issues finds that the Assessment Orders for the period from April 2016 to June 2017 issued by the VAT Authorities in respect of the Respondent have never been placed before the DGAP during the course of the investigation and hence the same have not been incorporated in the computation of profiteered amount.
In view of the above, the Authority in terms of Rule 133 of the CGST Rules, 2017 directs the DGAP to ascertain the authenticity of the VAT Assessment Orders submitted by the Respondent for the period from April 2016 to June 2017 and if verified from the State GST Commissioner/ Uttar Pradesh VAT Department. the DGAP shall incorporate the amounts, as allowed by the concerned statutory Authority on assessment, in the computation of profiteered amount by including the same as ITC in the pre GST period and recalculate the profiteered amount and submit his Report to this Authority.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. The present Report dated 30.09.2020 had been received by National Anti-Profiteering Authority (NAA) from the Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP) alter detailed investigation under Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules. 2017. The brief facts of the case was that an application was filed before the Standing Committee on Anti-profiteering under Rule 128 of the CGST Rules. 2017, by the Applicant no. 1, wherein it had been alleged that the Respondent had not passed on the benefit of ITC to the Applicant No. 1 by way of commensurate reduction in the price of the Unit No. 13-3-304 purchased from the Respondent in the Respondent’s project “Gulmohar Garden Phase-II”, situated at Raj Nagar Extension. Ghaziabad, on introduction of GST w.e.f. 01.07.2017, in terms of Section 171 of the CGST Act, 2017. The aforesaid application was examined by the Standing Committee on Anti-Profiteering and upon being satisfied the same had been forwarded to the DGAP under Rule 129 (I) of COST Rules 2017 to conduct a detailed investigation in the matter
2. The said Application was investigated by the DGAP and requisite documents were collected by them (DGAP) from the Respondent and after scrutiny, on conclusion of investigation, the Report dated 30.09.2020 has been forwarded by the DGAP to NAA. It has been inter-alia reported by the DGAP that the Respondent was not eligible to avail ITC of VAT paid on the inputs, as he was not collecting VAT from his customers and discharging his output tax liability on deemed 10% value addition on purchase value in cash and there is no direct relation of turnover reported in VAT returns with the amount collected From the flat buyers. therefore, the credit of VA paid on the purchase of inputs was not considered in the calculation of ITC ratio to Taxable Turnover ratio for the period prior to June, 2017. The DGAP further reported that the ITC as a percentage of the Turnover that was available to the Respondent during the prc-GST period (April, 2016 to June, 2017) was 0.99% whereas during the post-GS1′ period (July, 2017 to Mar, 2019), the said percentage was 6.06% and therefore the Respondent appeared to have benefited from additional ITC to the tune of 5.07% 16.06% (-) 0.99%1 of the turnover. Therefore, the Respondent had benefited by an additional amount of ITC of Rs. 3,52,82,679/- which included GST @12% on the base amount.
3. The above Report was considered by this Authority in his meeting held on 05.10.2020 and it was decided to direct Respondent and Applicant to submit the consolidated reply/written submission by 22.10.2020 and submit specific request for hearing if required. Accordingly the Respondent was issued a Notice dated 07.10.2020 to explain why the above Report of the DGAP should not be accepted and his liability for profiteering should not be determined under Section 171 of the COST Act, 2017 and directed the Respondent to submit his reply by 22.10.2020 to the allegations levelled in the above report if any.
4. The Respondent vide his letter dated 07.12.2020 had filed his written submissions, inter-alia stating:
I. The Respondent claimed that the DGAP vide para 23 of his Report, had stated that out of the total 859 units booked till 31.03.2019 the DGAP had excluded 48 customers who had not paid any consideration during the period April, 2016 to March. 2019 and 17 customers who paid the consideration in the pre-GS period but had not paid any consideration during the post GST period admitting that if ITC in respect of these 65 (48117) units were considered to calculate profiteering in respect of 794 flats where payments had been received after GST, the ITC as a percentage of turnover might be erroneous. However, from the actual calculations made by the DGAP, it is evident that he had not excluded the 17 units for which some consideration was paid in the pre-GST period but no consideration was paid in the post GST period. The amount of alleged profiteering thus needed to be reworked out by the DGAP by rectifying the above factual error as this error had led to an over calculation of Rs. 4,06.285/-.
II. Double jeopardy being caused to the respondent by the DGAP on account of non-consideration of the submission of the respondent to exclude the amount of ITC of Rs. 1,26.70.2451- to be reversed to the government in terms of Notification no. 03-2019—CT (Rate) dated 29.03.2019 for arriving at fit availment for the post GST period.
III. That the DGAP had erred in not including the value of ire on account of Value Added Tax under the Pie GST regime and restricting only to CENVAT amount under Service Tax, merely on the basis that the output VAT was paid on the value of total purchases plus 10%
5. The proceedings in the matter could not be completed by the Authority due to lack of required quorum of Members in the Authority during the period 29.04.2021 till 23.02.2022, and that the minimum quorum was restored only w.e.f. 24.02.2022 and hence the matter was taken up for proceedings vide Order dated 24.02.2022 and hearing in the matter through Video Conferencing was scheduled to be held on 06.04.2022.
6. Further, the next hearing in the case was granted on 09.05.2022. During the personal hearing the Respondent has re-iterated his arguments based on his earlier written submissions.
7. Further, the Respondent enclosed his submissions along with certain documents that included copies of Assessment Orders/Appellate Order for financial years 2016-17 and 2017-18 issued by the Uttar Pradesh VAT Department and a recalculation sheet of profiteered amount from his submissions relating to the issue of ITC of VAT in the Pre-GST period and other submissions.
8. The Authority has carefully considered the Report furnished by the DGAP, the submissions made by the Respondent and the other material placed on record.
9. ‘The Respondent has claimed that he has reversed ITC of Rs. 7,00,865/-(reflected in GSTR-3B of May 2019) and ITC of Rs. 1,19.69,380/- had been paid back to the Government through voluntary payment in cash through Form DRC-03 in three instalments. Therefore, out of the total ITC available during the post GST period, an amount of Rs. 1.26.70,245/- (7,00,865+1,19,69,380) was reversed in terms of Notification No. 3/2019-CT(Rate) dated 29.03.2019 he has also submitted the copy of challans for the same before this authority. Hence. they have contended that, such amounts should be deducted from the ITC calculations in the GST regime. The Authority finds that the methodology adopted by the DGAP arc based on a comparison of the ITC taken by the Respondent between April 2016 to June 2017 and from July, 2017 to March, 2019. This refers to the actual credits taken in these two periods and do not pertain to any ITC lying in the credit of the accounts of the Respondent as on 31.03.2016 or 30.06.2017. The methodology as adopted by the DGAP and accepted by this Authority aims to determine the benefit of ITC as a percentage of turnover i.e. amounts received from recipients of supply during the two periods under consideration. Hence, the credit. if any. available to the Respondent is not apportionable as ITC received with respect to turnover for the period from 1.07.2017 onwards alone. Such credit, if any, would stand reflected in the accounts or the Respondent as credits earned in the pre GST regime (and also prior to 1.04.2016) and lying unutilized and carried forth in the GST regime after 1.07. 2017 as the impugned Project started in the Pre USE regime and continued in the GST regime. The Authority finds that the reversals of’ ITC, if any, made by the Respondent on account of opting for the Scheme under Notification no. 3/2019 (CT) (Rate) w.e.f. 1.04.2019 are not from ITC taken during the period 1.07.2017 to 31.3.2019 alone, but, from the common pool of ITC lying in their books of accounts and attributable to both periods i.e. period prior to 1.07.2017 (pre GST carried forward) as well as from 1.07.2017. Hence, the reversals of ITC Rs. 1,26,70.249 (7,00,865+1,19,69,380) claimed to have been made by the Respondent, if actually made, do not pertain to reversals of earned from 1.07.2017 onwards only, but, also include ITC earned prior to 1.07.2017 also. Hence, the Authority does not find any merit in this submission of the Respondent.
10. The Respondent vide his various submissions before the Authority has also contended that the DGAP has not incorporated the ITC of VAT in the pre-GST period for the computation of profiteering which ought to have been done. He has further submitted before this Authority that the said ITC of VAT for the period from April 2016 to June 2017 has been allowed to him by the concerned statutory Authority, in support of which he has submitted VAT Assessment Orders for the period from April. 2016 to June, 2017 Consequently, this Authority without going into merit of other issues finds that the Assessment Orders for the period from April 2016 to June 2017 issued by the VAT Authorities in respect of the Respondent have never been placed before the DGAP during the course of the investigation and hence the same have not been incorporated in the computation of profiteered amount.
11. In view of the above, the Authority in terms of Rule 133 of the CGST Rules, 2017 directs the DGAP to ascertain the authenticity of the VAT Assessment Orders submitted by the Respondent for the period from April 2016 to June 2017 and if verified from the State GST Commissioner/ Uttar Pradesh VAT Department. the DGAP shall incorporate the amounts, as allowed by the concerned statutory Authority on assessment, in the computation of profiteered amount by including the same as ITC in the pre GST period and recalculate the profiteered amount and submit his Report to this Authority.
12. Further, the Supreme Court, vide its Order dated 23.03.2020, while taking sue mote cognizance or the situation arising on account of covid-19 pandemic. has extended the period of limitation prescribed under general law of limitation or any other special laws (both Central and State) including those prescribed under Rule 133 of the CGST Rules, 2017, as is clear from the said Order which states as follows:-
“A period of limitation in all such proceedings, Irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.d 15th March 2020 till further order/s to be passed by this Court in present proceedings.”
Further, the 1 Hon’ble Supreme Court, vide its subsequent Order dated 10.01.2022 has extended the period(s) of limitation till 28.02.2022 and the relevant portion of the said Order is as fol lows:-
“The Order dated 23.03.2020 is restored and in continuation of the subsequent Orders dated 08.012021, 27.04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general of special laws in respect of all judicial or quasi-judicial proceedings.”
Accordingly this Order having been passed today falls within the limitation prescribed under Rule 133 of the CGST Rules, 2017.
13. A copy of this order be supplied to the Applicant No. 1 and the Respondent. File of the case be consigned after completion.
