Saurabh Kumar Vs Pareena Infrastructure Pvt. Ltd. (NAA)
1. The present Report dated 25.03.2020 has been received from the 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 vide his application filed before the Standing Committee on Anti-profiteering under Rule 128 (1) of the CGST Rules, 2017, Applicant No. 1 had alleged profiteering by the Respondent in respect of the purchase of Flat in his “Laxmi Apartments” project located in Gurugram, Haryana. The above Applicant had also alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) availed by him by way of commensurate reduction in the price of the above flat after implementation of GST w.e.f. 01.07.2017. The aforesaid application was considered by the Standing Committee on Anti-profiteering, in its meeting held on 15.05.2019, wherein it was decided to forward the same to the DGAP to conduct a detailed investigation into the complaint according to Rule 129 (1) of the CGST Rules, 2017.
2. On receipt of the recommendation from the Standing Committee on Anti-profiteering, the DGAP had issued Notice dated 09.07.2019 under Rule 129 (3) of the above Rules, asking the Respondent to intimate as to whether he admitted that the benefit of ITC had not been passed on to the above Applicant by way of commensurate reduction in the price of the flat and in case it was so, to suo-moto compute the quantum of the same and mention it in his reply to the Notice along with the supporting documents. The Respondent was allowed to inspect the non-confidential evidence/information furnished by Applicant No. 1 during the period between 17.07.2019 to 19.07.2019 following Rule 129 (5) of the above Rules but the Respondent did not avail of the said opportunity. Vide e-mail dated 24.12.2019, Applicant No. 1 was also allowed to inspect the non-confidential documents/reply submitted by the Respondent on 26.12.2019. However, the Applicant did not avail of the said opportunity.
3. The DGAP has covered the period from 01.07.2017 to 30.06.2019 during the current investigation. The time limit to complete the investigation was extended up to 26.03.2020 by this Authority, vide letter dated 27.12.2019, in terms of Rule 129(6) of the Central Goods and Services Tax Rules, 2017.
4. The DGAP has further stated that the Respondent had ‘ubmitted replies vide his letters/emails dated 23.07.2019, 05.08.2019, 11.09.2019, 12.09.2019, 19.09.2019, 24.09.2019, 14.10.2019, 27.11.2019, 10.12.2019, 18.03.2020. The Respondent, vide his above-mentioned submissions, had furnished the following documents before the DGAP:
(a) Copies of GSTR-1 returns for the period from July 2017 to June 2019.
(b) Copies of GSTR-3B returns for the period from July 2017 to June 2019.
(c) Copies of all demand letters issued in the name of the Applicant.
(d) Tax rates- pre-GST and post-GST.
(e) Sample copies of bills/invoices, TRAN-1.
(f) CENVAT Credit Register for F.Y. 2016-17.
(g) Audit Report for F.Y. 2017-18.
(h) ST-3 Returns for the period April-16 to June-17, VAT Assessment 2014-15.
(i) Copy of Balance Sheet for FY 2016-17& FY 2017-18.
(j) Copy of Electronic Credit Ledger for the period 01.07.2017 to 31.112017.
(k) Details of projects undertaken by the company.
(l) Input tax credit register for the period from July 2017 to June 2019. (m)Details of turnover and input tax credit for the project “Laxmi Apartment”.
(m) List of homebuyers in the project “Laxmi Apartment”
(n) Copy of Project Report of RERA.
(o) Reconciliation of turnover reported in GSTR-3B with the list of home buyers.
(q) Details of sold / unsold flats.
5. The Respondent had further submitted the following submissions before the DGAP:
a) That the project was his first construction project which was under the Affordable Housing Scheme under Haryana Affordable Housing Policy, 2013, for which he had obtained license, sanction plan, Pollution NOC, etc. from respective departments.
b) That VAT and Service Tax were not admissible to him since the project was an affordable housing project under the Haryana Affordable Housing Policy, 2013; that thus he did not charge the same from his customers; that he had submitted the ledger account and copies of bills against the purchase of inputs on which VAT credit was availed.
c) That audit of his project had been conducted by the GST officers for the period up to June 2017 and that he had submitted the copy of Internal Audit Report (IAR) No. 181201819 dated 20.07.2018 to the DGAP.
d) That he had passed on Rs. 1,59,35,584/- as the benefit of ITC to his customers; that the benefit amounting to Rs 1,59,35,584/-had been calculated @ 3%; that in support of his claim he had submitted copies of the demand-cum-tax invoices issued by him to his homebuyers, wherein the amount of benefit passed on to his customers has been shown as ‘discount given customers as the benefit of ITC’.
6. The DGAP has reported that scrutiny of the case records has revealed that the main issue for determination in the instant case was as to whether there has been a reduction in the rate of tax or benefit of ITC on the supply of construction service by the Respondent after implementation of the GST w.e.f. 01.07.2017 and in case it was so, whether the Respondent had passed on the above benefits to the home buyers as per the provisions of Section 171 of the CGST Act, 2017 or not.
7. The DGAP has further reported that the Respondent, vide his letter dated 27.11.2019, submitted a copy of the Apartment Buyer’s Agreement of his project “Laxmi Apartment” along with the payment schedule for the purchase of flats at the basic sale price of Rs. 4000/-per square feet for the carpet area of the flat and Rs. 500/- per square feet for the balcony area. Further, the Respondent, vide his letter dated 24.09.2019, submitted copies of the demand letters issued by him to Applicant No. 1. The details of amount of installments and the taxes paid by Applicant No. 1 to the Respondent were furnished by the DGAP as is given in Table-‘A’ below:-
Table-A’
(Amount in Rs)
