Manish Saini Vs Ramaprastha Promoter & Developer Pvt. Ltd. (NAA)
It is clear from the plain reading of Section 171(1) mentioned above that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP’s Report that there has been no reduction in the rate of tax in the post GST period; hence the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. On this issue it has been revealed from the DGAP’s Report that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 1.72% and during the post-GST period (July-2017 to December-2018), it was 2.64%. This confirms that, post-GST, the Respondent has been benefited from additional ITC to the tune of 0.92% (2.64%1.72%) of his turnover and the same was required to be passed on to the Applicant No. 1 and the other flat buyers. The DGAP has calculated the amount of ITC benefit to be passed on to all the flat buyers as Rs. 35,28,744/- on the basis of the information supplied by the Respondent, which the Respondent had himself admitted and hence the amount of profiteering computed by the DGAP is hereby accepted as correct.
In view of the discussions in para 33 above, it is clear that the Respondent has profiteered by an amount of Rs. 35,28,744/-(Annex-17) during the period of investigation i.e. 01.07.2017 to 31.12.2018. The above amount of Rs. 35,28,744/- (including 12% GST) that has been profiteered by the Respondent from his home buyers, including Applicant No. 1, shall be refunded by him, along with interest @18% thereon, from the date when the above amount was profiteered by him till the date of such payment, in line with the provisions of Rule 133 (3) (b) of the GCST Rules 2017.
We also take note of the fact that the Respondent has admitted to having profiteered by the above amount before this Authority vide his submissions dated 03.07.2019. Further, we observe that vide his submissions dated 20.08.2019, he has submitted sample credit notes and cheques as evidence to establish his claim of having passed on the benefit, amounting to Rs. 35,28,744/- along with interest thereon amounting to Rs. 7,32,220/- to 397 home buyers of ‘Edge Tower’. Accordingly, this Authority takes on record the said claim of the respondent, but the said payments need to be verified.
Thus the DGAP is directed to verify the above passing on of the ITC benefit and submit report within a period of 03 months from the passing of this order.
Further, this Authority orders that the Respondent shall reduce the price per unit/ flat to be realized from the other home buyers by an amount commensurate with the benefit of ITC, as provided under Rule 133 (3) (a) of the CGST Rules, 2017.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING APPELLATE AUTHORITY
The Present Report dated 14.06.2019, received on 17.06.2019 by this Authority, has been furnished by the Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP), under Rule 129 (6) of the Central Goods & Services Tax (CGST) Rules, 2017. The brief facts of the present case are that a complaint dated 26.09.2018 was filed before the Haryana State Screening Committee on Anti-Profiteering by the Applicant No. 1 alleging profiteering by the Respondent in respect of purchase of Flat No. K1603 in the Respondent’s project “Edge Towers”, Ramprastha City, Sec-37-D, Gurugram, Haryana. The above Applicant had alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in the price. This Complaint was examined by the Haryana State Screening Committee and upon being prima facie satisfied that the Respondent had contravened the provisions of Section 171 of the CGST Act, 2017, forwarded the said application with its recommendation to the Standing Committee on Anti-profiteering for further action, in terms of Rule 128 of the CGST Rules, 2017 on 30.10.2019.
2. The above Complaint was examined by the Standing Committee on Anti-profiteering in its meeting held on 13.12.2018 and vide its minutes was forward to the DGAP for detailed investigation under Rule 129 (1) of the CGST Rules, 2017 on 07.01.2019.
3. The DGAP in his Report has stated that the Applicant submitted the following documents along with his application:
(a) Duly filled in Form APAF-1.
(b) Copies of the demand letters.
(c) ID proof (Aadhar Card).
4. The DGAP on receipt of the said reference from the Standing Committee on Anti-profiteering, issued a notice under Rule 129 of the 14.01.2019, calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the Applicant No. 1 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 above mentioned notice, the Respondent was also given an opportunity to inspect the non-confidential evidences/information submitted by the Applicant No. 1 from 21.01.2019 to 23.01.2019, which the Respondent availed of on 23.01.2019. The Applicant No. 1 vide e-mail dated 08.05.2019 was also given an opportunity to inspect the non-confidential documents/reply furnished by the Respondent on 15.05.2019 or 16.05.2019, which was not availed of by him.
5. The DGAP further stated that the period covered by the current investigation is from 01.07.2017 to 31.12.2018 and this Authority vide its Order No. F. No.22011/NAA/19/2018 dated 19.03.2019, had extended the time limit to complete the investigation upto 06.07.2019, in terms of Rules 129(6) of the CGST Rules.
6. The DGAP further stated that the Respondent, in response to the notice dated 14.01.2019, the Respondent has submitted replies vide letters/e-mails dated 04.02.2019, 20.02.2019, 22.02.2019, 01.03.2019, 13.03.2019, 18.03.2019, 19.03.2019, 27.05.2019 and 31.05.2019. Vide the aforementioned letters, the Respondent submitted the following documents/information:-
(a) Copies of GSTR-1 Returns for the period July, 2017 to December. 2018.
(b) Copies of GSTR-3B Returns for the period July, 2017 to December, 2018.
(c) Copies of Tran-1 Returns for transitional credit availed by the Respondent.
(d) Copies of VAT & ST-3 Returns for the period April, 2016 to June, 2017.
(e) Electronic Credit Ledger for the period July, 2017 to December, 2018.
(f) Tax rates, pre-GST and post-GST.
(g) Copies of Balance Sheets for FY 2016-17 & 2017-18.
(h) Details of turnover and input tax credit in respect of the project “Edge Towers”.
(i) List of home buyers in the project “Edge Towers”.
In terms of Rule 130 of the CGST Rules, 2017, the Respondent had also submitted that his ITC register and home buyer’s list were to be treated as confidential.
7. The DGAP has also stated that the subject application, the various replies of the Respondent and the documents/evidences on record had been carefully examined. The main issues for determination were whether there was reduction in the rate of tax or benefit of ITC on the supply of construction service by the Respondent after implementation of GST w.e.f. 01.07.2017 and if whether the Respondent had passed on such benefit to the recipients, in terms of Section 171 of the CGST Act, 2017.
8. The DGAP has further stated that the Respondent had submitted copy of the sale agreement dated 20.08.2010, for the sale of Flat No. K-1603 to the above Applicant in his project “Edge Towers”, measuring 1340 square feet, at the basic sale price of Rs. 2683/- per square feet. The details of amounts and taxes paid by the Applicant No. 1 to the Respondent, has been furnished by the DGAP in Table-A’ below:-
Table- ‘A’
(Amount in Rs.)
