Shri Kapil Dev Sharma Vs Director General of Anti-Profiteering (NAA)
The DGAP has further reported that Section 171 of the CGST Act, 2017 came into play in the event where there was a reduction in the rate of tax or there was an increase in the benefit of ITC. In the present case, since the project itself was launched after implementation of GST w.e.f. 01.07.2017, there was no pre-GST tax rate or ITC availability that could be compared with the post GST tax rate and ITC, to determine whether there was any benefit that was required to be passed on by way of reduced price.
Further, the DGAP has concluded that in view of the aforementioned findings, it appeared that Section 171(1) of the CGST Act, 2017 has not been contravened by the Respondent in the present case.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING APPELLATE AUTHORITY
1. The present Report dated 06.12.2019 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 present case are that the Applicant No. 1 had filed an application dated 20.02.2019 (Annexure-1) stating that the Respondent had resorted to profiteering in respect of the supply of construction services related to the purchase of Flat No. Tower-3/1602 in the Respondent’s project “Hero Homes”, Sector-104, Dwarka Expressway, Gurugram. The Applicant No. 1 had also alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) by way of commensurate reduction in the price of the apartment purchased by him.
2. The said application was examined by the Haryana State Screening Committee on Anti-Profiteering in its meeting held on 04.2019 and it observed extra charging of GST by the Respondent in terms of Section 171 of the CGST Act and had forwarded the said application with its recommendation to the Standing Committee on Anti-profiteering for further action, as per the provisions of Rule 128 of the CGST Rules, 2017.
3. The Standing Committee on Anti-profiteering examined the aforesaid application in its meeting held on 15.05.2019 and it was decided to forward the same to the DGAP for detailed investigation under Rule 129 (1) of the CGST Rules, 2017 to examine whether the benefit of reduction in the rate of tax or ITC had been passed on by the Respondent to his recipients. The DGAP had received the minutes of the meeting of the Standing Committee on Anti-Profiteering on 27.06.2019.
4. Thereafter, the DGAP had issued a notice to the Respondent on 07.2019 (Annex-2) under Rule 129(3) of the above Rules, 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 with respect to the project mentioned in his Application dated 20.02.2019 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 said notice, the Respondent was also given an opportunity to inspect the non-confidential evidence/information furnished by the Applicant No. 1 during the period 17.07.2019 to 19.07.2019. However, the Respondent did not avail of the said opportunity. Vide e-mail dated 30.10.2019 (Annex-3), Applicant No. 1 was also given an opportunity to inspect the non-confidential evidence/reply furnished by the Respondent on 04.11.2019 or 05.11.2019. The Applicant No. 1 availed of the said opportunity. The DGAP has stated that the investigation in this case had been carried out for the period from 01.07.2017 to 30.06.2019.
5. In his Report the DGAP has stated that in response to the notice dated 09.07.2019, the Respondent replied vide letters/e-mails dated 19.07.2019 (Annex-4), 22.07.2019 (Annex-5), 22.10.2019 (Annex-6), 30.10.2019 (Annex-7) 19.11.2019 (Annex-8) and 26.11.2019 (Annex-9). The Respondent has stated:‑
a. That a project in the name of “Hero Homes” at Sector-104, Dwarka Expressway, Gurugram, Harayana-122001 had been executed by him and the said project had been registered & approved by the Haryana Real Estate Regulatory Authority, Gurugram (“HARERA”) under Section 5 of the Real Estate (Regulation & Development) Act, 2016 e.f. 13.11.2018 bearing registration number RC/REP/HARERA/GGM/2018/24 dated 13.11.2018.
b. That the building plan of the project had been approved by the Town and Country Planning (TCP), Haryana vide Memo ZP968/AD (RA)/2018/21871 dated 24.07.2018 i.e. post implementation of Goods and Service Tax Act, 2017.
c. That the project was launched on 07.12.2018 i. e post implementation of GST.
d. That the construction activity of the project had been started in the month of March, 2019 i.e. post implementation of GST.
e. That the Applicant No. 1 was a resident of Village & Post office Ole, Mathura, Uttar Pradesh-281122 and had made an application dated 02.02.2019 for booking of Apartment No. 1602 in Tower T-3 of the Project having super area 1099 sq. ft. as per his preference of the location of the Apartment.
6. Vide the aforementioned letters/e-mails, the Respondent also submitted:‑
(a) Copies of GSTR-1 & GSTR-3B Returns for the period July, 2017 to June, 2019.
(b) Copies of ST-3 Returns for the period April, 2016 to June,
(c) Copies of all demand letters issued and sale agreement made with the Applicant.
(d) Copy of Balance Sheet for FY 2016-17 and 2017-18.
(e) Electronic Credit Ledger for the period 01.07.2017 to 31.03.2019.
(f) List of home buyers in the project “Hero Homes”.
(g) Copy of Project report submitted to the RERA.
(h) Tran-1 for the period July, 2017 to December, 2017.
(i) Details of applicable tax rates, pre-GST and post-GST.
(j) Copy of the first invoice raised with the projection construction cost dated 30.03.2019.
7. The DGAP has reported that he has carefully examined the various replies of the Respondent and the documents/evidence placed on record. The main issues for determination were whether the Respondent had benefited from the reduction in the rate of tax or the ITC after implementation of the GST on the supply of the construction services w.e.f. 01.07.2017 and if so, whether such benefit was passed on by the Respondent to the recipients, in terms of Section 171 of the CGST Act, 2017.
8. The DGAP has further reported that the Respondent had submitted a copy of the Project Report for the proejct “Hero Homes” and the payment schedule for the purchase of flats and vide letter dated 22.07.2019 and subsequent letter. submitted copies of demand letters issued to the Applicant No. 1. The details of the payment plan of the Aplicant No. 1 has been furnished by the DGAP in Table-A’ below:-
Table-‘A’
(Amount in Rs.)
