Case Law Details
Shri Deepak Kumar Khurana Vs M/s Sattva Developers Pvt Ltd. (National Anti-Profiteering Authority)
The Respondent has himself admitted that there has been benefit of ITC derived and the benefit has been passed on by him to all his customers with whom agreements were entered on or before 30.06.2017. According to him the benefit has been computed at Rs. 9/-per sq. ft. and based on this calculation he has passed on benefit of Rs. 22,83,426/- to 221 flat buyers. To arrive at this derived benefit the Respondent has provided worksheet (annexure-1 to his reply) showing that the pending work orders with his sub-contractors were renegotiated and were reduced by Rs. 49,85,249/- which works out to Rs. 9/- per sq. ft. However no documents have been submitted to establish the credentials of the worksheet filed by him. Moreover a project includes common area and the facilities provided in the common area are also eligible for the benefit of the ITC. Other factors such as CST benefit have also not been taken into account for arriving at this calculation. Therefore the right methodology would be to take into account the ITC ratio to the turnover and accordingly arrive at the benefit of ITC to be derived by the Respondent. The DGAP has correctly analysed the ITC ratio as 2.66% and applying this ratio to the payments made on or after 01.07.2017 the profiteered amount is determined as Rs. 99,20,246/-. This amount includes profiteered amount of Rs. 18,563/- to be paid to the Applicant No.1 and Rs. 80,37,392/- to all the other 231 buyers. The Respondent has also to pass on the benefit of profiteered amount of Rs. 18,64,290/-to the land owner who will in turn pass on the benefit to his buyers.
In view of the above facts this Authority under Rule 133 (3) (a) of the CGST Rules. 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him as has been detailed above. The Authority hereby determines the profiteered amount as Rs. 99,20,246/- and directs the Respondent to pass on the benefit of Rs. 18,563/- to the above Applicant, Rs. 80,37,392/- to the 231 buyers as given in the Annexure-16 of the DGAP report and Rs. 18.64.290/- to the land owner, along with interest @18% per annum to these 232 flat buyers from the dates from which the above amount was collected by him from the buyers till the payment is made.
It is also evident from the above narration of facts that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his Project ‘Laurel Heights’ in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus realized more price from them than what he was entitled to collect and has also compelled them to pay more GST on the additional realisation than what they were required to pay by issuing incorrect tax invoices and hence he has committed an offence under section 122 (1) (i) of the CGST Act, 2017 and therefore. he is liable for imposition of penalty under the provisions of the above Section. Accordingly, a Show Cause Notice be issued to him directing him to explain as to why the penalty prescribed under Section 122 of the above Act read with Rule 133 (3) (d) of the CGST Rules. 2017 should not be imposed on him. Since a specefice allegation of issuing incorrect invoices has been levelled against the Respondent he would have sufficient opportunity to state his defence on the above charge.
The Authority as per Rule 136 of the CGST Rules 2017 directs the Commissioners of CGST/SGST Karnataka to monitor this order under the supervision of the DGAP by ensuring that the amount profiteered by the Respondent as ordered by the Authority is passed on to all the eligible buyers. A report in compliance of this order shall be submitted to this Authority by the Commissioners CGST/SGST Karnataka through the DGAP within a period of 4 months from the date of receipt of this order.
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