Ajay Sood Vs Eldeco County Ltd. (NAA)
Authority finds that the benefit of additional Input Tax Credit of 1.24 % of the turnover has accrued to the Respondent for the project Eldeco County. This benefit was required to be passed on to the recipients. Thus, Section 171 of the CGST, 2017 has been contravened by the Respondent, in as much as the additional benefit of ITC @I.24 % of the base price received by the Respondent during the period 01.07.2017 to 31.03.2019, was required to be passed on to the recipients. These recipients are identifiable as per the documents provided by the Respondent, giving the names and addresses along with Unit no. allotted to such recipients. The Respondent claimed that he had already passed on a substantial amount of GST ITC per the requirements of Section 171 of the CGST Act, 2017 to the homebuyers/customers. The Respondent had submitted that he had passed on the benefit of Rs. 3,48,979/- to 11 homebuyers/customers. The details of such homebuyers/customers and the amount of the benefit to be passed on is enclosed in the Annexure-A to this order.
From the above discussions, the Authority determines that the Respondent has profiteered an amount of Rs. 3,48,979/-. Therefore, given the above facts, the Authority under Rule 133(3)(a) of the CGST Rules orders that the Respondent shall reduce the price to be realized from the buyers of the flats/customers commensurate with the benefit of ITC received by him. The details of the recipients and benefit which is required to be passed on to each recipient/homebuyer/customer alongwith the details of the unit are contained in the Annexure-`A’ to this order. The Authority directs that such profiteered amount as determined shall be passed on/returned by the Respondent to the recipients of supply, if not already passed on, alongwith interest @18% (as prescribed under Rule 133(3)(b) of the CGST Rules, 2017 from the date such amount was profiteered by the Respondent up till the date such amount is passed on/returned to the respective recipient of supply) within a period of three months of the date of receipt of this Order, if not already passed on.
The concerned jurisdictional CGST/SGST Commissioner is also directed to ensure compliance of this Order. It may be ensured that the benefit of ITC as determined by the Authority as per the Annexure ‘A’ of this Order be passed on along with interest @18%, as prescribed, to each homebuyer/customer, if not already passed on. In this regard an advertisement may also be published in a minimum of two local Newspapers/vernacular press in Hindi/English/local language with the details i.e. M/s Eldeco County Limited and amount of profiteering Its. 3,48,979/- so that the homebuyers/customers can claim the benefit of ITC which has not been passed on to them. Homebuyers/customers may also be informed that the detailed NAA Order is available on Authority’s website naa.gov.in. Contact details of concerned Jurisdictional Commissioner CGST/SGST for compliance of this Authority’s order may also be advertised through the said advertisement.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. The present Report dated 31.03.2021 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 present case are that the Standing Committee on Anti-Profiteering, received an application under Rule 128 of the CGST Rules, 2017, filed by the Applicant No. 1 before the Authority, alleging profiteering in respect of construction service supplied by the Respondent. The Applicant No. 1 alleged that the Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in the price of a Villa No. J-03 (TOPAZ Module-B) purchased by him from the Respondent in his Project “Eldeco County”‘, situated at Rajghar. Jhansi on introduction of GST w.e.f. 01.07.2017, in terms of Section 171 of the CGST Act, 2017.
2. The DGAP in its Report dated 31.3.2021, inter-alia stated that:-
i. The aforesaid application was initially examined by the Uttar Pradesh State Screening Committee and was forwarded to the Standing Committee on Anti-Profiteering for further action. The said application was again examined by Standing Committee on Anti-profiteering, in his meeting, the minutes of which were received by the DGAP on 15.10.2020, whereby it was decided to forward the same to the DGAP to conduct a detailed investigation in the matter. Accordingly, investigation was initiated to collect evidence necessary to determine whether the benefit of ITC had been passed on by the Respondent to his customers in respect of construction service supplied by the Respondent.
ii. On receipt of the reference from the Standing Committee on Anti-profiteering, a notice under Rule 129 of the Rules was issued by the DGAP on 05.11.2020, calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to his customers by way of commensurate reduction in price and if so, to suo-moto determine the quantum thereof and indicate the same in his reply to the Notice as well as furnish all supporting documents. Vide the said notice; the Respondent was also given an opportunity to inspect the non-confidential evidences/information furnished by the Applicant No. I during the period 12.11.2020 to 13.11.2020. However, the Respondent did not avail of this opportunity.
iii. The period covered by the current investigation was from 01.07.2017 to 30.09.2020.
iv. The time limit to complete the investigation was 14.04.2021.
v. In response to the notice dated 05.11.2020, the Respondent submitted his reply vide letters and e-mails dated 13.11.2020, 19.11.2020, 21.12.2020. 15.01.2021, 01.02.2021 12.02.2021 26.02.2021, 02.03.2021 and 25.03.2021. Vide the aforementioned letters, the Respondent submitted the following documents/ information:
a. Brief Profile of the Respondent.
b. Copies of GSTR- I returns for the period July, 2017 to September, 2020.
c. Copies of GSTR-3B returns for the period July, 2017 to September, 2020.
d. Copies of GSTR-9 returns for the FY 201 7 -18.
e. Tran-1 and Tran-2 for the period July, 2017 to December,
2017.
f. Electronic Credit Ledger for the period July, 2017 to September, 2020.
g. Copies of VAT returns (including all annexures) & ST-3 returns for the period April, 2016 to June, 2017.
h. Copies of all demand letters issued and sale agreement made with the Applicant.
i. Details of VAT. Service Tax, ITC of VAT, Cenvat credit for the period April, 2016 to June,2017 and output GST and ITC of GST for the period July, 2017 to September,2020.
j. Details of applicable tax rates, Pre-GST & Post-GST.
k. Balance sheet for the FY 2016-17,2017-18,2018-19 & 2019-20.
l. Status of the project “Eldeco County” as on 30.09.2020 in terms of tower-wise sold and unsold units along with copies of Occupancy Certificates.
m. Cenvat/lnput Tax Credit Register for the FY 2016-17, 2017-18, & 2018-19.
n. List of home buyers in the project “Eldeco County” along-with details of benefit passed on.
o. Completion Certificate of the project.
p. Architect Certificate of specific units completed before GST regime.
q. Allotment card for the customers.
vi. The important submissions of the Respondent has been summarised below:-
a. Comparison of ratio of ITC to Turnover for pre-GST period and post-GST period was not the correct mechanism for calculation of profiteering amount.
b. Benefit passed by the Respondent should be added in turnover computation.
c. Land value should have to be excluded for calculation of profiteering amount
d. The Report could not go beyond the application submitted by the Applicant on 29.04.2019
e. In the absence of prescribed method of calculation of profiteering in the act or the rules or the procedure, the proceedings were arbitrary and liable to be set aside.
f. The complaint filed by the Applicant No. 1 was not valid since the Applicant No. 1 was not the active customer of the Respondent at the time of filing the complaint.
g. The unit of Applicant No. 1 was cancelled on 15.04.2019 due to non- payment of milestone payment by the Applicant No. 1 even after repeated reminders. A copy of cancellation letter was communication to the Applicant No. 1. Accordingly, the complaint filed by the Applicant No. 1 was not valid and the entire investigation should be dropped on this ground itself.
h. Without prejudice to the above, it was submitted that Respondent had booked the unit of the Applicant No. 1 after considering the benefit of ITC which was duly mentioned in the Allotment Card.
i. in respect of 2 villas, the Respondent stated that the prices had been agreed considering the benefit of ITC as duly mentioned in the Allotment Card and in respect of 3 villas the Respondent had passed on the benefit of ITC of Rs. 3,04,830/,
j. The Respondent stated that he had opted for new scheme issued vide Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019. In terms of this Notification the Respondent was required to pay Tax/GST Q 5% without taking/availing the benefit of Input Tax Credit.
k. The details of Units booked in different periods along with corresponding area. were as Wows: –
