Pawan Kumar Gupta Vs Perfect Buildwell Pvt. Ltd. (NAA)
It is established from the perusal of the above facts that the Respondent has benefited from the additional ITC to the extent of 6.55% of the turnover during the period from 01 07.2017 to 31.03.2019 amounting Rs. 4.74,88,840/- It has been verified by the DGAP that the Respondent has already passed on benefit amounting to Rs. 1,88,56,387/- to 772 homebuyers. Hence, the Authority finds that. the profiteered amount required to be returned/passed on by the Respondent is Rs. 2.86.32474 inclusive of GST @ 12%/ 8% on the base price) as is evident from the above Report dated 28 08 2020. Hence. the Authority holds that the provisions of Section 171(1) of the CGAT Act, 2017 have been contravened by the Respondent.
The Respondent has realized an additional amount of Rs 34,418/- each from Applicant no. 1, 2 & 3, Rs.36.120/- from the Applicant no. 4. Rs.27,510/- each from Applicant no. 5, 7, 8, 9, 10, 11, 12,15. Rs.36,120/-from the Applicant no. 6, Rs.48.029/- from the Applicant no. 13, Rs.70.068/-from the Applicant no. 14. and Rs.71,868/-from the Applicant no. 16 and an additional amount of Rs. 2,80,46.934/- from 772 flat buyers other than the above Applicants. The details of the amount of benefit of ITC passed on, the benefit to be passed on and the details of the buyers have been mentioned by the DGAP in Table-B and Annexure-13 of his Report dated 28 08 2020. These buyers are identifiable as per the documents placed on record. Therefore, the Respondent is directed to pass on an amount of Rs. Rs.34.418/- each to Applicant No. 1, 2 & 3, Rs.36,120/- to the Applicant No. 4, Rs.27 510/- each to Applicant No. 5, 7, 8, 9, 10, 11, 12,15, Rs.36.120/-to the Applicant No 6, Rs 48,029/- to the Applicant No. 13, Rs.70.068/- to the Applicant No 14, and Rs.71,868/- to the Applicant No. 16 and Rs 2 80.46,934/- to the other 772 home buyers respectively along with the interest @ 18% per annum from the dates from which the above profiteered amount was collected by him from them till the payment is made as prescribed under Rule 133(3)(b) of the CGST Rules, 2017 The Authority directs the Respondent to comply with this Order within a period of three months from the date of receipt of this order failing which the said amount shall be recovered in terms of the CGST Act. 2017
The details of the amounts to be passed on home buyer wise are as mentioned in Annexure-13 attached with the Report dated 28.08.2020 which have been annexed as Annexure ‘A’ to this Order, including 772 buyers, to whom benefit of Rs 1,88,56,367/- has been claimed to passed on
Accordingly. 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 of the above Project commensurate with the benefit of ITC received by him as detailed above
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
The Instant Report dated 28 08.2020 received on 31 08.2020 has been furnished by Applicant No 17 i.e Director General of Anti-Profiteering (DGAP) under Rule 129(6) of the Central Goods and Services Tax Rules, 2017. The brief facts of the present case, are that a reference was received on 30.08.2018 by the DGAP from the Standing Committee on Anti-profiteering to conduct a detailed investigation under Rule 129 of the Rules 2017, based on two applications dated 17 07 2018 and 12.05.2018 filed by Applicant No 1 and Applicant No 2 respectively in respect of the purchase of flats in the Respondent’s project “Zara Aavaas- (hereinafter referred to as the Project’) located at Gurugram Haryana forwarded by the Haryana State Screening Committee on Anti-profiteering, under Rule 128 of the Rules 2017, wherein it prima facie observed that Section 171 of the Central Goods and Services Tax Act, 2017 had been contravened.
2. The DGAP had issued a Notice dated 12 09.2018 under Rule 129 of the CGST Rules 2017. calling upon the Respondent to reply as to whether he admitted that the benefit of input tax credit had not been passed on to the Applicant No. 1 and Applicant No 2 by way of commensurate reduction in prices and if so to SIK) root° determine the quantum thereof and indicate the same in his reply to the Notice as well as furnish all supporting documents.
3. Later on, 14 (fourteen) more applications filed by Sh. Rohit Choudhary (application dated 18.07.2018), Sh. Narendra Pal Singh (application dated 21.10.2018), Sh. Gaurav Kumar Singla (application dated 20.09.2018), Ms. Neelu Jain (application dated 20.09.2018), Sh. Arvind Mahto (application dated 20.09.2018), Sh. Sidharth Shanker Rai (application dated 21.09.2018), Sh. Deepak Murthy (application dated 21.09.2018), Sh. Pradeep Rawat (application dated 22.09.2018), Ms. Sonal Kansal (application dated 29.09.2018), Sh. Rahul Sharma (application dated 03.10.2018). Ms. Priyanka Tuteja (application dated 03.10.2018), Sh. Rajeev Kumar (application dated 04.10.2018), Ms. Lata Rani (application dated 07 10,2018). and Ms. Supriya Nandi (application dated 12.11.2018) were forwarded subsequently by the Standing Committee on Anti-Profiteering against the Respondent, to DGAP and the above 14 Applicants were also made co-applicants in the investigation being carried out by the DGAP.
4. Upon receipt of the reference from the Standing Committee, the DGAP has conducted a detailed investigation into the matter and submitted his Investigation Report dated 27,02.2019 to this Authority.
5. This Authority, considering the above said Report in its meeting held on 05.03.2019, had issued the Notice dated 06.03.2019 to the Respondent enclosing the aforesaid Report, directing him to explain why the aforesaid Report of the DGAP should not be accepted and his liability for profiteering should not be determined under section 171 of the CGST Act 2017.
6. Accordingly, the Respondent vide his letters dated 25.03.2019, 10.04.2019, 16.05.2019, 17.05.2019, 05.07.2019, and 25.07.2019 as well as the Applicant No. 1 vide letter dated 29.03.2019 had furnished their replies to the aforesaid Report of the DGAP.
7. This Authority after careful examination of the DGAP’s Reports, the submissions/replies of the Respondent and the Applicants, and also all other documents placed on record, had observed that: the Respondent had executed a Project i.e. Zara Aavaas” under the Haryana Affordable Housing Policy-2013 which had commenced during the financial year 2015-16 The Respondent had constructed 818 flats in the said Project out of which 806 were booked in the pre-GST period and no new bookings were made in the post-GST period Demands were raised on 806 home buyers during the pre-GST period as well as the post-GST period. Therefore. the DGAP has claimed that the computation of profiteering was for only those flats where demands have been raised or payments have been received in the post-GST period. It was further claimed that if the ITC in respect of the unsold flats or the flats in respect of which no consideration has been received in the post-GST period, was taken into account to calculate profiteering in respect of the flats where payments were received in the post-GST period, the ITC as a percentage of turnover would be distorted and erroneous, therefore. the profiteering in respect of the remaining 12 units should be calculated when the consideration was received in the post-GST period, by taking into account the proportionate ITC in respect of these 12 units It was also noted that since the construction service was being provided by the Respondent under affordable housing. which was exempted from the Service Tax in terms of Notification No 2512012 ST dated 20.06.2012 as amended vide Notification No 09/2016 ST dated 01.03,2016, the Respondent was not eligible to avail Cenvat Credit on Service Tax and Central Excise Duty paid on input services, inputs. and capital goods. Moreover. as the Respondent was paying VAT @ 1% under the Haryana VAT composition Scheme. hence he was not eligible for availing of Credit of VAT paid on inputs, whereas. in the post-GST period, the Respondent was eligible to avail of Input Tax Credit (ITC) on GST paid on inputs, capital goods and input services including those paid by sub contractors Consequently, the Respondent had benefited from additional ITC @ 7 13% of the turnover during the period from 01 07.2017 to 31.08.2018 (i e the investigation period), which amounted to the tune of Rs. 3,80,38,835/- including GST (@ 12%/8%) on the base amount of Rs. 3.45,90.507/- which was required to be passed on to eligible home buyers in light of section 171 of the CGST Act 2017 I
8. After going through the Report dated 27.02.2019. the Authority noted that the Report of the DGAP was not complete and needed to be revisited to rectify certain mistakes in the computation including the amount of the benefit to be passed on to Applicants No 1 to 16 Accordingly, this Authority ordered DGAP to reinvestigate the matter vide its Interim Order No. 17/2019 dated 02.12.2019 in terms of Rule 133 (4) of the CGST Rules. 2017 and to re-compute the profiteering for the entire period up to the date of issue of the Completion/ Occupancy Certificate or till 31.03.2019 in case the Completion/ Occupancy Certificate was yet to be issued
9. Consequent to the above, the DGAP re-investigated the matter and submitted his Report dated 28 08 2020, wherein he has reported that:-
a) as per directions of this Authority contained in the Interim Order. vide DGAP letter dated 18 12.2019, asked the Respondent for the details required to extend the period of investigation up to issue of Occupancy Certificate. if issued else up to 31.03 2019.
b) upon the directions of this Authority as the investigation report was to be submitted within 3 months, the DGAP has reported that the time limit to complete the investigation was extended up to 02,04.2020 by this Authority vide order dated 04.03 2020 and given the spread of pandemic Covid-19 across India, the Central Government, had issued Notification No. 35/2020 dated 03.04.2020, whereby the time limit for completion or compliance of any action, which fell during the period from 20Thay of March 2020 to the 29”’clay of June 2020 and where completion or compliance of such action has not been made within such time, then the time limit for completion or compliance of such action, was extended up to the 30th day of June 2020 including for furnishing of any report under the provisions of the Central Goods and Service Tax Act, 2017. Subsequently, given the Notification 55/2020 Central Tax dated 27.06.2020, the time limit stood extended till 31 08.2020
c) the period covered by the current investigation is from 01,07 2017 to 31.03.2019.
d) in response to his above-said letter dated 18 12.2019, the Respondent has furnished his replies vide letters/e-mails dated 15.01.2020. 04.02.2020, 06.02.2020, 26.02.2020, 02.03.2020, and 03 03 2020 wherein he has provided the following documents/ information:
i. List of home-buyers
ii. Month-wise details of Demand Raised.
iii. Reconciliation of demands with GST returns.
iv. Copies of GSTR from July 2017 to November 2019.
v. Summary of ITC availed which was not available earlier
vi. Details of tax paid on purchases of Cement, Steel, and other items in pre-GST and post-GST period.
vii. Details of Contractor and taxes paid to them in pre-GST and post-GST period
viii. Details of GST benefits passed on to the Home-buyers through Credit Notes
ix. Copies of invoices of Cement. Steel, and Contractors in pre-GST and post-GST periods.
10. The issues raised by Respondent were summed up by the DGAP as given below –
(a) The Respondent received O.C. for the project on 04.12.2019
(b) The Respondent opted for the 1% GST scheme as provided vide Notification No. 03/2019 Central Tax (Rate) dated 29.03.2019 and he has taken the Input Tax Credit up to January 2019 only and in the month of February and March 2019 has not availed any ITC
(c) The Respondent was involved in the development of Affordable Housing projects In Haryana and had opted for Composition Scheme of 1% VAT in Haryana for his project. As regards Service Tax, with effect from 0103.2016, construction of affordable housing was exempted from Service Tax and the rate of Service Tax was reduced to NIL from earlier 4.5% in the Pre-GST period. In the post-GST period. the rate of tax (GST) was increased to 12%, thus, there was no reduction in the Rate of Tax. and hence no benefit accrued to him. Further, any change in the rate of Tax was to be borne by the customer only He stated that tax on input goods used for construction was also increased when GST was introduced and has provided a summary of comparative tax rates on items as below:-
