Smt. Honey Macker Vs M/s Pivotal Infrastructure Pvt Ltd. (National Anti-Profiteering Authority)
Applicants, the Respondent and the other material placed on record and find that the Applicant No. 1 vide her complaint dated 03.08.2018 had alleged that the Respondent was not passing on the benefit of ITC to her in spite of the fact that he was availing ITC on the purchase of the inputs at the higher rates of GST which had resulted in benefit of additional ITC to him and was also charging GST from her @12%. This complaint was examined by the Standing Committee in its meeting held on 15.05.2019 and was forwarded to the DGAP for investigation, who vide his Report dated 27.12.2019 has found that the ITC as a percentage of the total turnover which was available to the Respondent during the pre-GST period was 11.72% and during the post-GST period this ratio was 1.13% as per the Table-B mentioned above and therefore, the Respondent has benefited from the additional ITC to the tune of 10.59% (11.72% – 1.13%) of the total turnover which he was required to pass on to the flat buyers of this project. The DGAP has also found that the Respondent has not reduced the basic prices of his flats/shops by 10.59% due to additional benefit of ITC and by charging GST at the increased rate of 12% on the pre-GST basic prices, he has contravened the provisions of Section 171 of the CGST Act, 2017. The DGAP has further submitted that the amount of benefit of ITC which has not been passed on by the Respondent or the profiteered amount came to Rs. 4,83,04,692/- which included 12% or 8% GST on the basic profiteered amount. The DGAP has also intimated that this amount of profiteering also included the profiteered amount of Rs. 57,488/- including 12% or 8% GST in respect of the Applicant No. 1. He has also supplied the details of all the buyers who have purchased flats/shops from the Respondent along with their unit numbers and the profiteered amount vide Annexures 14, 15 and 16 attached with the Report.
It is also revealed from the record that the Respondent has not raised any objection against the methodology adopted by the DGAP while arriving at the quantum of profiteered amount. The above methodology has also been approved by this Authority in respect of all the cases in which the benefit of ITC is required to be passed on in the real estate Accordingly, the above methodology is held to be appropriate, justifiable, reasonable and in consonance with the provisions of Section 171 of the CGST Act, 2017 and hence, the same can be relied upon while determining the amount of profiteering.
It is established from the perusal of Table-C supra that on the basis of the CENVAT/input tax credit availability pre and post-GST and the details of the amount collected by the Respondent from the Applicant 1 and the other home/shop buyers during the period from 01.07.2017 to 24.01.2018, the amount of benefit of input tax credit that needed to be passed on by the Respondent to the recipients came to Rs. 2,29,52,071/- for the residential flats, which includes 12% GST on the base profiteered amount of Rs. 2,04,92,921/-. Further, the amount of benefit of input tax credit that needed to be passed on by the Respondent to the home buyers during the period from 25.01.2018 30.06.2019, came to Rs. 2,21,32,354/- which includes 8% GST on base profiteered amount of Rs. 2,04,92,921/-. In respect o? the commercial shops sold by the Respondent during the period from 01.07.2017 to 30.06.2019, the benefit of input tax credit that was required to be passed on by the Respondent to these buyers of the commercial shops amounts to Rs. 32,20,266/- which includes 12% GST on the base profiteered amount of Rs. 28,75,237/-. Therefore, the total benefit of input tax credit for the period from 01.07.2017 to 30.06.2019 in respect of both residential flats and the commercial shops is determined as Rs. 4,83,04,691/- which includes GST (@ 12% or 8%) on the base profiteered amount of Rs. 4,38,61,079/- in terms of Rule 133 (1) of the CGST Rules, 2017. The home and commercial shop buyer’s names and unit no. wise break-up of this amount has been given by the DGAP in Annexure-13 of the Report dated 27.12.2019. The profiteered amount is determined as Rs. 57,4881-inclusive of the GST as per Annexure-13 in respect of the Applicant No. 1.
It is also evident from the Report of the DGAP that the Respondent had claimed that he has passed on benefit of Rs. 1,85,25,586/- to the home/shop buyers against the profiteered amount of Rs. 4,83,04, 692/-. Details of the category-wise input tax credit benefit required to be passed on and the benefit claimed to have been passed on by the Respondent have been given by the DGAP in Table-‘D’ supra. The DGAP has specifically admitted in his Report that for verification of the benefit already passed on by the Respondent he had summoned the credit notes and the payment ledger of the home buyers mentioned at Sr. No. 1 to 50, 201 to 250, 401 to 450 and 601 to 650 of the home buyers list which have been duly verified by him with the details submitted by the Respondent and found to be correct. In view of the above statement of the DGAP the Respondent is directed to return the ITC benefit of Rs. 33,731/- including the GST to the Applicant No. 1, Rs. 2,74,75,785/- including the GST to the 844 other flat buyers as per the details given in Annexure-14 and Rs. 22,82,618/- including the GST to the 39 commercial shop buyers mentioned in Annexure-16 as per the provisions of Rule 133 (3) (c) of the above Rules along with the interest @ 18% to be charged from the date when the above amounts were collected by the Respondent from the flat/shop buyers as all these buyers are identifiable as per the details furnished by the Respondent. However, the Respondent shall not adjust the excess amount which he has passed on to the 3 residential buyers as has been mentioned in Annexure-15 of the Report against the ITC benefit which is due to the buyers mentioned in Anexure-14 or 16 of the Report.
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/shops commensurate with the benefit of ITC received by him as has been detailed above. Since the present investigation is only up to 30.06.2019 the DGAP is directed to further investigate the quantum of ITC benefit under Rule 133 (4) of the above Rules which the Respondent is required to pass on to the home/shop buyers w.e.f. 01.07.2019 till 30.06.2020 or till the Completion Certificate is obtained by the Respondent whichever is earlier as the project is still under execution and submit his report per the provisions of Rule 129 (6) of the above Rules.
It is also evident from the above narration of the facts that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his above project in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus resorted to profiteering. Hence, he has committed an offence under Section 171 (3A) of the CGST Act, 2017 and therefore, he is apparently 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 why the penalty prescribed under Section 171(3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. The present Report dated 27.12.2019 has been received from the Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP) after detailed investigation under Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules, 2017. The brief facts of the case are that vide her application dated 03.08.2018 filed before the Standing Committee on Anti-profiteering under Rule 128 of the CGST Rules, 2017, the Applicant No. 1 had alleged profiteering by the Respondent in respect of purchase of Flat in the “Devaan” project of the Respondent situated at Sector-84, Gurgaon- 122001. 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 flat. The aforesaid reference was considered by the Standing Committee on Anti-profiteering, in its meeting held on 15th May, 2019, wherein it was decided to forward the same to the DGAP to conduct detailed investigation in to the complaint according to Rule 129 (1) of the CGST Rules, 2017.
2. On receipt of the recommendation from the Standing Committee on Anti-profiteering, the DGAP had issued Notice dated 08.07.2019 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 Applicant by way of commensurate reduction in the price of the flat 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 given opportunity to inspect the non-confidential evidence/information furnished by the Applicant No. 1 during the period between 15.07.2019 to 17.07.2019 in accordance with Rule 129 (5) of the above Rules but the Respondent did not avail of the said opportunity. Vide e-mail dated 27.11.2019, the above Applicant was also given opportunity to inspect the non- confidential documents/reply submitted by the Respondent on 02.12.2019 or 03.12.2019. However, the above Applicant did not avail of the said opportunity.
3. The DGAP has covered the period from 01.07.2017 to 30.06.2019 during the current investigation.
4. The DGAP has stated that the Respondent had submitted replies vide his letters/emails dated 19.07.2019, 25.07.2019, 24.08.2019, 11.10.2019, 14.10.2019, 16.10.2019 and 21.11.2019. The submissions of the Respondent were summed up by the DGAP as in mentioned in the subsequent Paras.
5. The Respondent had stated before the DGAP that the allegation of non-passing of GST benefit to the Applicant No. 1 had was void ab initio because he had informed the above Applicant over telephone and through e-mail regarding passing on the benefit of GST input tax credit and he had already passed on GST benefit of Rs. 23,5751-inclusive of GST to the above Applicant in the month of March-2019. The Respondent had further submitted that he had already passed on ITC benefit to all the eligible home buyers.
6. 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 from July, 2017 to June, 2019.
(b) Copies of GSTR-3B Returns for the period from July, 2017 to June, 2019.
(c) Copies of VAT Returns (including all annexures) & ST-3 Returns for the period from April, 2016 to June, 2017.
(d) Copies of all demand letters issued and sale agreement made with the Applicant.
(e) Copies of Balance Sheets for FY 2016-17 and 2017-18
(f) Copy of Electronic Credit Ledger for the period from 01.07.2017 to 30.06.2019.
(g) CENVAT/Input Tax Credit register for the FY 2016-17 and 2017-18 and 2018-19.
(h) Details of VAT, Service Tax, ITC of VAT, CENVAT Credit for the period from April, 2016 to June, 2017, for the project “Devaan”.
(i) List of home buyers in the project “Devaan” alongwith details of benefit passed on.
(j) Copy of Haryana RERA Registration Certificate of the Project “Devaan”.
(k) Copy of Tran-1.
7. The DGAP has also submitted 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 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.
8. The DGAP has further stated that the Respondent vide his letter dated 07.2019 had submitted that he had informed the Applicant No. 1 over telephone and through e-mail regarding passing on the benefit of GST input tax credit and he had already passed on GST benefit of Rs. 23,575/- (inclusive of GST) to the Applicant No. 1 in the month of March-2019. The Respondent had further submitted that he had passed on the ITC benefit to all the eligible home buyers.
9. The Respondent had submitted a copy of RERA Registration Certificate of his Project “Devaan” and the payment schedule for the purchase of flats at the basic sale price of Rs. 4,000/- per square feet for the carpet area and Rs. 500/-per square feet for balcony area. The Respondent, vide letter dated 19.07.2019 and subsequent e-mails, had submitted copies of demand letters issued to the above Applicant. The details of amounts and taxes paid by the Applicant to the Respondent were furnished by the DGAP as is given in Table-A below:-
Table-‘A’
(Amount in Rs.)
