Umesh Kumar Shukla Vs. Pan Realtors Pvt. Ltd. (NAA)
We have considered the Report furnished by the DGAP, the submissions made by the Respondent and the other material placed on record. On examining the various submissions, the observations of this Authority are as follows:-
a. Upon perusal of Table-B, it is observed that while calculating the profiteered amount, the DGAP has considered ‘Balance Base price to be raised as on 30.03.2017 from Pre-GST Customers’ plus ‘Agreement Value of Bookings made during 01.07.2017 to 17.01.2018’ as the Total Turnover of the Respondent in the post-GST period. However, as per the persribed methodology adopted in similar cases, the Total Turnover post-GST should have been calculated on the basis of the Demand Raised to the homebuyers in that period and should have been considered from the Home-buyers list.
b. Further, upon perusal of Table-B of the Report of the DGAP, this Authority observes that during the post-GST period, the DGAP while calculating the Relevant ITC has not provided the figures of Total Saleable Built-up Area and Total Sold Built-up Area relevant to turnover as per Home Buyers List and the entries are left blank. The DGAP has taken the Relevant ITC equal to the NET ITC pertaining to Sold Units. Hence, we observe that the net quantum of Relevant ITC should have been calculated based on the figures of Total Saleable Built-up Area and Total Sold Built-up Area relevant to turnover as per Home Buyers
c. The period considered in Column (5) of the Table-B is only uptil 17.01.2018 and not for the entire period of investigation i.e. uptil 31.08.2019. Hence, this fact needs further clarification.
d. Upon perusal of Point No. 5 of Table-B of the Report, it is observed that in the pre-GST period, the Respondent has reversed CENVAT Credit amounting to Rs. 34,74,972/- for the unsold Units. However, the Respondent has received Occupation Certificate of the project on 17.01.2018. Therefore, there arises a question that how CENVAT Credit for unsold units could be reversed before the receipt of the Occupancy Certificate. Hence, this fact is needed to be re-verified whether the reversal of above CENVAT Credit was for Unsold Units or not?
e. Further, in Table-B of the Report, the DGAP has considered the Total Saleable Built-up Area (including Land Owners’ share) as 28,12,513 sq. ft. However, upon perusal of the Point No. 8(a) of the Report, it is observed that the Respondent has stated that the Total Construction Area is 30,62,098 sq. ft. Hence, this fact needs further clarification.
Therefore, without going into the merits of the case and the other submissions made by the Respondent and the Applicants at this stage, we find this case to be a case that merits to be reinvestigated by the DGAP based on the above observations of this Authority. Thus, we direct the DGAP to reinvestigate the matter strictly in terms of the contents of Para 23(a) to 23(e) above, as per the provisions of Rule 133(4) of the CGST Rules 2017.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. The present Report dated 31.01.2020 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 dated 14.02.2019 filed before the Standing Committee on Anti-profiteering under Rule 128 (1) of the CGST Rules, 2017, the Applicant No. 1 had alleged profiteering by the Respondent in respect of the purchase of a 3 BHK Flat in his “PAN Oasis” project located in Sector-70, Noida. 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 flats.
2. The aforesaid application was forwarded by the Standing Committee on Anti-profiteering to the DGAP to conduct a detailed investigation into the allegation made in the complaint according to Rule 129 (1) of the CGST Rules, 2017.
3. On receipt of the recommendation from the Standing Committee on Anti-profiteering, the DGAP had issued a Notice dated 10.05.2019 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 Applicants by way of commensurate reduction in the price of the flats 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 15.05.2019 to 17.05.2019 in accordance with Rule 129 (5) of the above Rules and the Respondent availed of the said opportunity by inspecting and collecting the non-confidential documents of the Applicant on 21.05.2019. Vide e-mail dated 18.10.2019, the above Applicants were also allowed to inspect the non-confidential documents/reply submitted by the Respondent on 23.10.2019 or 24.10.2019. However, the above Applicant did not avail of the said opportunity.
4. The DGAP has covered the period from 01.07.2017 to 31.03.2019 during the current investigation. The time limit to complete the investigation was extended upto 01.02.2020 by this Authority, vide its order dated 31.10.2019 in terms of Rule 129 (6) of the above Rules.
5. The DGAP has further stated that the Respondent did not furnish the complete and the relevant documents required for investigation. Hence, a Summons under Section 70 of the Central Goods and Services Tax Act, 2017 read with Rule 132 of the Rules, was issued on 23.10.2019 to Sh. Amit Chawla, Senior Manager of M/s. Pan Realtors Pvt. Ltd., asking him to appear at the office of the DGAP on 31.10.2019. and produce the relevant documents. In response to the Summons, the Respondent appeared on 31.10.2019 and submitted the requisite documents.
6. The DGAP has further stated that the Respondent had submitted replies vide his letters/emails dated 21.05.2019, 04.06.2019, 25.06.2019, 01.07.2019, 05.07.2019, 17.10.2019, 23.10.2019, 31.10.2019 and 09.01.2020. The submissions of the Respondent were summed up by the DGAP as has been mentioned below:-
a) That the project “Pan Oasis” consists of 2051 residential units, 32 commercial shops having total constructed area of 30,62,098 sq. ft. The Respondent had been offering possession to his home buyers even prior to 01.07.2017 and has received the Occupancy Certificate (hereinafter referred to as ‘OC’) on 17.01.2018 which meant that all the substantial purchases relating to steel, cement etc. were being made prior to the implementation of GST and therefore he was not in a position to claim any input tax credit on such purchases as same in erstwhile Service Tax regime.
b) That he has procured very meagre amount of material items on which input tax credit was not available earlier. Moreover, whatever ITC could be availed on purchase after GST implementation had been reversed in respect of unsold units till the date of obtaining OC. Further, he has not availed any ITC after March 2019. In view of the above, it was submitted that he has not gained any kind of extra benefit in terms of input tax credit due to implementation of GST which could be further passed on to the home buyers.
7. The Respondent had also submitted the following documents/information to the DGAP vide his above-mentioned letters/e-mails during the course of the investigation:-
(a) Copies of GSTR-1 Returns for the period July, 2017 to March, 2019.
(b) Copies of GSTR-3B Returns for the period July, 2017 to March, 2019.
(c) Copies of VAT & ST-3 returns for the period April, 2016 to June, 2017.
(d) Copy of system generated GSTR-9 for the period July, 2017 to March, 2018.
(e) Screenshot of Trans-1.
(f) Copies of Sale agreement/contract along with all demand letters and receipts issued to the Applicant.
(g) Tax rates – pre-GST and post-GST.
(h) Copy of audited Balance sheet for FY 2016-17 & 2017-18.
(i) Copy of Electronic Credit Ledger for the period July, 2017 to March, 2019.
(j) CENVAT/ Input Tax Credit register for the period April 2016 to March 2019.
(k) Copy of OC dated 17.01.2018 along with computation of CENVAT/ ITC reversal for unsold units on receipt of OC.
(l) Details of turnover, output tax liability, GST payable and input tax credit availed for the project “Pan Oasis”.
(m) List of home buyers in the project “Pan Oasis”.
(n) Copy of Service Tax Audit Report no. 154/2019 dated 18.12.2019.
8. The DGAP has also stated that all the documents placed on record were carefully examined by him and he had found that the main issues for determination were whether there was 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.
9. The DGAP has further stated that the Respondent, vide letter dated 01.07.2019, submitted a copy of Flat Buyer agreement dated 20.03.2010, demand letters and payment receipts for the sale of flat no. 1003, 10th Floor, Tower-E to the Applicant, measuring 1446 square feet (Increased from 1,385 square feet), at total basic sale price of Rs. 43,54,604/- (Rs. 2,925/- basic sale price per square feet and Rs. 25,000 for electric connection, Rs. 3,500/- for Gas Pipeline, Rs. 15,000 for water & sewerage connection and Rs. 81,554/- for maintenance etc.). The details of amounts and taxes paid by the Applicant to the Respondent were furnished by the DGAP as given in Table-A’ below:-
Table-A
(Amount in Rs.)
