Shriram Properties Guilty of not passing ITC benefit to Its Customers: NAA

Raju Mittal Vs Shriram Properties Pvt. Ltd (NAA)

The Applicant No. 1 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 of the Unit No. 03-401 purchased from the Respondent in the project Shriram Summit, situated at Golahalli Electronic City, Bangalore on introduction of GST w.e.f. 01.07.2017, in terms of Section 171 of the CGST Act, 2017.

The Authority finds that the Respondent has profiteered by an amount of Rs. 20,57,207/- during the period of investigation i.e. 01.07.2017 to 30.04.2020. The Authority determines an amount of Rs. 20,57,207/- (including 12% asp under section 133(1) as the profiteered amount by the Respondent from his 1061 home buyers (as per Annexure A to this Order), including Applicant Nos. 1 to 4, which 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 accordance with the provisions of Rule 133 (3) (b) of the CGST Rules 2017. This amount profiteered is Rs. 1,581/- (including CST) in respect of the Applicant No.1, Rs 3161- (including (ST) in respect of Applicant No. 2, Rs 1,166/- (including GST) in respect of Applicant No. 3, and Rs 1,239/- (including GST) in respect of the Applicant No. 4.

 This Authority under Rule 133 (3) (a) of the COS'[ 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 Respondent is also liable to pay interest as applicable on the entire amount profiteered, i.e. Rs. 20,57,207/-, for the project `Shriram Summit’. Hence the Respondent is directed to also pass on interest @18% to the customers/ flat buyers/ recipients on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ payment, as per provisions of Rule 133 (3) (b) of the COST Rules, 2017.

FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY

1. The present report dated 31.03.2021 has been furnished by the Director General of Anti-Profiteering (DGAP), under Rule 129 (6) of the Central Goods & Services Tax (CGST) Rules, 2017, on the basis of application filed by the Applicant No. 1 alleging profiteering in respect of Construction Service supplied by the Respondent. The Applicant No. 1 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 of the Unit No. 03-401 purchased from the Respondent in the project “Shriram Summit”, situated at Golahalli Electronic City, Bangalore on introduction of GST w.e.f. 01.07.2017, in terms of Section 171 of the CGST Act, 2017.

2. Vide the above mentioned Report dated 31.03.2021, the DGAP has inter-alia stated that:-

a. The Karnataka State Screening Committee on Anti-profiteering examined the said application and forwarded the said application with its recommendation, to the Standing Committee on Anti-profiteering for further action, in terms of Rule 128 of the Rules.

b. The aforesaid Application was examined by the Standing Committee on Anti-profiteering. Thereafter, it decided to forward the same to the .DGAP to conduct a detailed investigation in the matter. Accordingly, investigation was initiated to collect evidence necessary to determine whether the benefit of ITC had been passed on by the Respondent to the Applicant No. I in respect of Construction Service supplied by the Respondent.

h. in response to the Notice dated 26.05.2020 and several reminders & summonses, the Respondent submitted his reply vide letters/c-mails dated 09.06.2020, 07.08.2020, 11.09.2020, 17.11.2020, 07.01.2021, 27.01.2021, 19.02.2021, 16.03.2021, 17.03.2021, and 24.03.2021. The replies of the Respondent have been summarized by the DGAP as below wherein the Respondent has submitted:-

i) That he was a real estate developer and engaged in the business of development of residential apartments. The Respondent was also engaged in providing development management services for other projects and had also developed multiple projects in pre GST and post GST periods.

ii) The Respondent stated that the project “Shriram summit” was in the category of budget homes in Bangalore which an average middle class buyer could easily afford. Keeping the same in mind, very thin margin was kept in the project. Further, pre-GST, he was eligible to avail credits of VAT and Service Tax and hence there would be very minimal chance of increase in credits clue to introduction of (1ST. The prices of goods like Steel and Cement had increased multi-fold while there had been no additional consideration collected from the customers.

i. Vide the aforementioned letters, the Respondent submitted the following documents/information:

(i) Copies of GSTR-1 Returns for the period July, 2017 to April, 2020.

(ii) Copies of GS’TR-313 Returns for the period July, 2017 to April, 2020.

(iii) Electronic Credit Ledger for the period July, 2017 to April, 2020.

(iv) Copies of VAT returns (including all annexures) & ST-3 returns for the period April, 2016 to June, 2017.

c. Further, the Standing Committee on Anti-profiteering, forwarded another application, filed by Applicant No. 2, 3 & 4 against the Respondent, in respect of purchase of a flat, in the project “Shriram Summit”.

d. On receipt of the references from the Standing Committee on Anti-profiteering on 06.05.2020, a Notice under Rule 129 of the Rules was issued by the DGAP on 26.05.2020, calling upon the Respondent to reply as to whether he admited that the benefit of ITC had not been passed on to the Applicant Nos. 1 to 4 by way of commensurate reduction in prices and if so, to suo mow 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 evidences information furnished by the Applicant No. 1, during the period 04.06.2020 to 06.06.2020. However, the Respondent did not avail of this opportunity.

e. In response to the Notice and several reminder letters, the Respondent did not submit all the requisite documents on the due date. Hence, three Summons under Section 70 of the CGST Act, 2017 read with Rule 132 of the Rules, were issued to the Respondent to submit all the relevant documents. In compliance of said summons, the Respondent submitted the relevant documents as mentioned in the subsequent paragraphs.

f. The period covered by the current investigation was from 01.07.2017 to 30.04.2020.

g. The time limit to complete the investigation was 05.11.2020. However, in terms of Rule 129(6) of the Rules vide, Notification No. 65/2020- Central Tax dated 01.09.2020 and Notification No. 91/2020- Central Tax dated 14.12.2020 the time limit for compliance was extended up to 31.03.2021.

(v) Copies of all demand letters/agreements issued to the Applicant Nos. 1 to 4.

(vi) Details of VAT, Service Tax, ITC of VAT, Cenvat credit for the period April, 2016 to June,2017 and output GST and ITC of GST for the period July, 2017 to April, 2020 for the project “Shriram Summit”.

(vii) Cenvat/ITC Register for the FY 2016-17, 2017-18, 2018­19 and for the period April, 2019 to April, 2020 for the project “Shriram Summit”.

(viii)List of home buyers in the project “Shriram Summit”.

(ix) Brief profile of the Respondent.

(x) Details of applicable tax rates, Pre-GST and Post-GST.

(xi) Status of Project as on 30.04.2020.

j. In the Notice dated 26.05.2020, the Respondent was informed that if any information/documents was provided on confidential basis, in terms of Rule 130 of the Rules, a non-confidential summary or such information/documents was required to be furnished. However, the Respondent informed that all documents provided by the Respondent, might be treated as confidential except documents related to the Applicant Nos. 1 to 4 only.

k. Vide e-mail dated 18.03.2021, an opportunity was given to the Applicant Nos. 1 to 4 to inspect the non-confidential documents/reply furnished by the Respondent on 19.03.2021 to 22.03.2021. However, the above Applicants did not avail the said opportunity.

l. After examining the subject applications, various replies of the Respondent and the documents/evidences on record, the DGAP observed that the main issues for determination were: –

i) Whether there was benefit of reduction in rate of tax or ITC on the supply of Construction Service by the Respondent after implementation of GST w.e.f. 01.07.2017 and if so,

ii) Whether the Respondent passed on such benefit to the recipients by way of commensurate reduction in price, in terms of Section 171 of the CGST Act, 2017.

m. Another relevant point in this regard was pars 5 of Schedule-Ill of the CGST Act, 2017 (Activities or Transactions which shall be treated neither as a supply of goods nor a supply of services) which reads as “Sale of land and, subject to clause (b) of paragraph S of Schedule II, sale of building”. Further, clause (b) of Paragraph 5 of Schedule IT of the CGST Act, 2017 reads as “(b) construction of a complex, building, civil structure or a part thereof including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration had been received after issuance of completion certificate. where required, by the competent authority or after his first occupation, whichever was earlier”. Thus, the 1TC pertaining to the residential units which was under construction but not sold was provisional Fit which might be required to be reversed by the Respondent if such units remain unsold at the time of issue of the completion certificate, in terms of Section 17(2) & Section 17(3) of the CGST Act, 2017, which read as under:

Section 17 (2) “Where the goods or services or both was used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempted supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as was attributable to the said taxable supplies including zero-rated supplies”.

Section 17 (3) “The value of exempted supply under sub-section (2) shall be such as might be prescribed and shall include supplies on which the recipient was liable to pay tar on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph S of Schedule II, sale of building”.

Therefore, the ITC pertaining to the unsold units might not fall within the ambit of this investigation and the Respondent was required to recalibrate the selling price of such units to be sold to the prospective buyers by considering the proportionate benefit of additional ITC available to him post-GST.

n. It was observed by the DGAP that prior to 01.07.2017, i.e., before the GST was introduced, the Respondent was eligible to avail credit of Service Tax paid on the input services as well as credit of VAT purchases (CENVAT credit of Central Excise Duty was not available) in respect of the flats for the project “Shriram Summit” sold by him. Further, post-GST, the Respondent could avail ITC of GST paid on all the inputs and input services. From the data submitted by the Respondent covering the period April, 2016 to April, 2020, the details of the ITC availed by him, his turnovers from the project “Shriram Summit”, the ratios of ITCs to turnover, during the pre-GST (April, 2016 to June, 2017) and post-GST (July, 2017 to April, 2020) periods, have been furnished in Table-‘A’ below:-

Table- ‘A’ (Amount in Its.)

o. From the above Table-`A’, it appears 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 6.88 % and during the post-GST period (July, 2017 to April, 2020), it was 6.96% for the project “Shriram Summit”. It confirmed that in post-GST, the Respondent had benefited from additional ITC to the tune of 0.08% 16.96% (-) 6.88%] of the turnover.

p. On the basis of the figures contained in Table- ‘A’ above, the comparative figures of the ratios of !TCs availed/available to the turnovers in the pre-GST and post-GST periods as well as the turnovers, the recalibrated base price and the excess realization (profiteering) during the post-GST period, have been tabulated in Table-‘B’ below.

Table-‘B’ (Amount in Rs.)

q. It was evident from the calculation explained in Table-`13′ based on the Respondent’s submissions, that the benefit of ITC which needed to be passed on by the Respondent to the buyers of flats came to Rs. 20,57,207/- which included 12% GST on the base amount of Rs. 18,36,792/- during the period 01.07.2017 to 30.04.2020 in respect of 1061. buyers (who had booked units as on 30.04.2020) including the Applicant Nos. 1 to 4. The homebuyer and unit no. wise break-up of this amount was given in Annex-15 to the DGAP’s Report dated 31.03.2021. This amount was inclusive of profiteered amount of Rs. 1,581/- (including MT) in respect of the Applicant No.1, Rs. 316/-(including GST) in respect of Applicant No. 2, Rs. 1,166/- (including GST) in respect of Applicant No. 3, and Rs. 1,239/- (including GST) in respect of the Applicant No. 4.

r. On the basis of the details of outward supplies of the Construction Service submitted by the Respondent, it was observed that the service had been supplied in the State of Karnataka only.

s. The benefit of additional ITC to the tune of 0.08% of the turnover had accrued to the Respondent post-GST and the same was required to be passed on by the Respondent to his recipients. Section 171 of the CGST Act, 2017 appeared to have been contravened by the Respondent in as much as the additional benefit of ITC @r0.08% of the base price received by the Respondent during the period 01.07.2017 to 30.04.2020, had not been passed on by the Respondent to the 1061 recipients including the Applicant Nos. 1 to 4. On this account, it appeared that the Respondent had realized an additional amount to the tune of Its. 20,57,207/- (including GSII) which was inclusive of profiteered amount in respect of the Applicant Nos. 1 to 4. The said Applicants 1 to 4 and 1057 other recipients were identifiable as per the documents provided by the Respondent giving the names and addresses along with unit.no. allotted to such recipients.

t. As aforementioned, the present investigation covered the period from 01.07.2017 to 30.04.202, profiteering, if any, for the period post April, 2020, had not been examined as the exact quantum of ITC that would be available to the Respondent in future could not be determined at this stage, when the construction of the project was yet to be completed.

3. The above Report had been carefully considered by this Authority and a Notice dated 17.06.2021 was issued to the Respondent to explain why the Report dated 31.03.2021 furnished by the DGAP should not be accepted and his liability for profiteering in violation of the provisions of Section 1.71 should not be fixed. The Respondent was directed to file written submissions which had been filed on 15.07.2021 wherein the Respondent had inter- alio, submitted that:-

a) The Project “Shriram Summit” had been developed on 56,792 Sq. mtr. of land area out of which 13,391 sq. mtr. was covered area and 44,910 sq. mtr. was open area. The project was High rise Residential Apartments having 1128 flats being constructed in 2 Phases. Phase-1 has 2 Blocks 2B+G+13 Floors in 17 towers, Block-01 10 Towers with 520 flats and Block-02 7 Towers with 392 flats.

The project “Shriram Summit” was in the category of budget homes in Bangalore which an average middle class buyer could easily afford. Further, in pre-GST period, the Respondent was eligible to avail credits of VAT and Service Tax and hence there would be very minimal chance of increase in credits due to introduction of GST. In filet, the prices of goods like steel and cement had increased multi­fold while there had been no additional consideration collected from the customers.

b) The impugned `Notice’ and `Report’ was unconstitutional and ultra-vires of the COST Act, 2017. The ‘Notice’ and ‘Report’ were issued under Section 171 of the CGST Act, 2017 read with Rule 126 of the COST Rules, 2017 determining the amount profiteered / not passed on by way of commensurate reduction in prices. In terms of Section 171 reproduced below, the Central Government may constitute an authority or empower an authority to examine the benefit was actually passed on. However, it had not prescribed the methodology to determine the same and just delegated the powers to this Authority:

(1) Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices.

(2) The Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.

(3) The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed.

Further, in terms of Rule 126 of the CGST Rules, 2017 mentioned below, this Authority may determine the methodology and procedure for determination as to whether the reduction in the rate of tax on the supply of goods or services or the benefit of ITC has been passed on.

“126. Power to determine the methodology and procedure. –

The Authority may determine the methodology and procedure for determination as to whether the reduction in the rate of tax on the supply of goods or services or the benefit of input tax credit has been passed on by the registered person to the recipient by way of commensurate reduction in prices.

Thus, on joint reading of Section 171 with Rule 126, it was evident that this Authority had been empowered to determine the methodology and procedure for determination as to whether the supplier had passed on the benefit to the recipient.

c) The methodology adopted by DGAP was arbitrary and grossly incorrect as the learned DGAP had arrived at the profiteering of Rs. 20,57,207/- on the basis of difference between the ratios of ITCs to turnovers to area sold under the Pre-GST and Post-GST Period. Since this Authority had not prescribed any methodology or procedure to determine the benefit to be passed on by the Supplier, the DGAP had adopted its own method by arriving at the benefit as a ratio of ITC availed pre-GST and post-GST which was arbitrary, grossly incorrect and could not be adopted for a supplier in the real estate sector. The DGAP has arrived at the profit of Rs. 20,57,207/-on the basis of difference between the ratios of ITCs to turnovers to area sold under the Pre-GST and Post-GST Period. The said method was not appropriate, as in the real estate sector, there was no correlation between the ITC and output tax liability.

d) In terms of Section 171, the benefit of ITC has to be passed on to the recipient by way of commensurate reduction in prices. The term ITC has to be interpreted in a way to mean that the taxes which were earlier (pre-GST) accumulating to cost of goods or services or were ineligible or not available and post introduction of GST are sub-subsumed or became eligible ought. to be treated as benefit thereby the requirement to pass on.

For Example:

a. a trader in goods was not eligible for availing Service Tax credit and by virtue of introduction of GST is eligible for availment of credit on services

b. a trader in goods was not eligible for availing CST credit and by virtue of introduction of GST is eligible for availment of credit on inter-State supply of goods

c. a trader in goods was not eligible for availing excise credit and by virtue of introduction of GST is eligible for availment of credit on all supply of goods and services

e) Anti-profiteering measure was not to apply to flats sold post introduction of GST. The benefit which was not available pre-GST and was available in post GST ought to have been passed to only those flat owners to whom the flat was sold pre-GST and there ought to be some demand pending against those flat owners post-GST. The GST Law was enforced on 01-Jul-2017, for the flats sold post 01-Jul-2017 for a negotiated price, GST benefit had already been adjusted in price and hence there ought to have been no additional benefit arising towards the same for further passing. Hence, the Respondent was not required to pass on the benefit, if any, to those flat owners where the flats were sold post 01-Jul-2017 for negotiated price. The Respondent placed reliance on the Stay granted by Hon’ble Delhi High Court in the case of DRA Aadithya Projects Pvt. Ltd. Vs. Union of India & Ors.

f) The impugned ‘Notice’ and DGAP’s Report were premature as the project was still under construction. The actual benefit, if any could be determined only after completion of the project.

The Respondent relied upon the judgment in the case of Hon’ble Bombay High Court in the case of ACIT Vs. NGC Networks India Pvt. Ltd. [TS-41-HC-2018(BOM)]. The Hon’ble Court followed its earlier decision in the case of CIT Vs. Cello Plast [TS-602-IIC-2012(BOM)] wherein the Hon’ble Court had applied the legal maxim lex non cogit ad impossibilia (law does not compel a man to do what he cannot perform). That maxim was applied by the Larger Bench of the Tribunal in the case of Hico Enterprises Vs. Commissioner of Customs ([2005) 189 ELT 1351.

g) The levy of Penalty under Section 171 (3A) read with Rule 133(3Xd) was unwarranted. The Respondent relied upon the decisions in the cases of:-

(1) Rajasthan Spinning & Weaving Mills Ltd. v. CCE [2005 (179) E.L.T 70 (Tri- Dcl)]

(ii) H.E.G Ltd. v. CCE, Bhopal [2005 (191) E.L.T. 1199 (Tri-Del)].

(iii) Flyingman Air Courier Pvt. Ltd v. CCE, Jaipur 12004 (170) E.L.T 417 (Tri-Del)]

(iv) Union of India v. Kamlakshi Finance Corporation Ltd [1991 (55) E.L.T. 433 (SC))

h) (i) That the intent to evade payment of taxes being absent, the levy of penalties under the said sections was not provided. In this connection, the Respondent relied on the following judicial pronouncements:

• Kalpataru Power Transmission Ltd. Vs. CST, Ahmedabad [2011 (22) STR 206 (Tri-Ahmd)]
• Commissioner of Central Excise Commissionerate, Jalandhar v. M/s Darmania Enterprises, Gurdaspur [2009 (14) STR 741 (P&H)J
• Ice Networks Pvt Ltd vs. CST, Bangalore [2011 (20) STR 59 (Tri-Bang)]
• Docsuns Services Pvt Ltd vs. CST, Ahmedabad [2011 (22) STR 68 (Tri-Ahmd)]
• Aditya Birla Nuvo Ltd vs. CCE, Vadodara [2011 (22) STR 41 (Tri-Ahmd)]
• Sneha Minerals vs. CCE, Belgaum [2011 (21) STR 657 (Tri-Bang)]
• Veerabhadreswara Transport vs. CCE, Belgaum (2010 (18) STR 621 (Tri-Bang)]
• Shapoorji Pallonji & Company Ltd vs. CST, Bangalore [2010 (20) STR 523 (Tri-Bang)]
• MIs Diamond’ Die Cast (P) Limited vs. The Commissioner of Central Excise, Bangalore — II [2007 (215) ELT 169 (SC)]
• Petron Engg. & Construction Ltd vs. CCEC, Visakhapatnam [2009 (243) ELT 272 (Tri-Bang.)]
• Commissioner of Central Excise v. Elgi Equipments Ltd [2001 (128) ELT 52 (SC)]
• Commissioner of Central Excise v. Supra Foundry Services (P) Ltd [2001 (132) ELT 543 (Kar)]
• Morvi Exports vs. CCE, Trichy [2011 (22) STR 71 (Tri-Chennai)]
• Kripasindhu Mohapatra vs. CCECST, BBSR-1 [2011 (21) STR 559 (Tri-Kolkata)]
• Roop Polymers Ltd vs. CCE, Delhi [2011 (21) SIR 74 (Tri-Del)]
• CCE, Raipur vs Orion Ferro Alloys Pvt. Ltd [2010 (259) E.I.T. 84 (Tri-Del)]
• JSW Steel Ltd vs. CCE, Belgaum [2010 (254) Err. 337 (Tri-Del)]

(ii) That the issues raised in present proceedings involve interpretation of complex provisions of the CGST Act. Thus, the issue was highly debatable and involved interpretation of legal provisions. Therefore, in such a situation, the levy of penalty was not justified. The Respondent also relied upon the following judgments in support of the contention that suppression could not be alleged when the matter involved interpretation of legal provisions:

• (spat Industries Ltd v CCE 2006 (199) ELT 509 (Tri —Mum)
• MRC Ltd v CCE 2007 (209) ELT 22 (Tri — Del)
• Chemicals & Fibres of India Ltd v CCE 1988 (33) ELT 55I (Tri)

(iii) Since there was no tax liability on the Respondent, the question of levy of penalty did not arise.

4. Copy of the above submissions dated 15.07.2021 filed by the Respondent were supplied to the DGAP for supplementary Report under Rule 133(2A) of the CGST Rules, 2017. The DGAP filed his clarifications vide supplementary report dated 28.03.2022 wherein stated that:-

a. For the contention raised by the Respondent that the impugned `Notice’ and ‘Report’ was unconstitutional and ultra-vires the DGAP has clarified that challenging the constitutional validity of Section 171 of the CGST Act, 2017 on Anti-profiteering and Rules made thereunder was erroneous and without any legal backing. The provisions of Section 171 of the COST Act, 2017 on Anti-profiteering have been passed by the Parliament. The Respondent could not proceed with an assumption that the Legislature enacting the statute had committed a mistake and when the language of the statute was plain and unambiguous. The Respondent was not at liberty to find a defect but to proceed on a footing to follow the intention of the Statute. If the view of the Respondent was accepted the whole exercise of the legislature would be an exercise in futility. Section 171 (1) of the Act, envisages that any reduction in the rate of tax or the benefit of ITC has to be passed on to the recipients by way of commensurate reduction in prices. In other words, every recipient of goods or services has to get the benefit from the supplier and hence, this benefit has to be calculated for each and every product supplied. The investigation by the DGAP was conducted under the provisions of Section 171 of the Act read with Rule 129 of the COST Rules, 2017, on the recommendation of the Standing Committee on Anti-profiteering and the Investigation Report was submitted to this Authority under Rule 129(6) of the Rules. The Report of the DGAP was only a finding, prepared on the basis of documents /replies/ statements given by the Respondent.

In response to the Respondent’s claim regarding non­prescription of methodology and procedure, it was stated that the “Methodology and Procedure” had been notified by this Authority vide its Notification dated 28.03.2018 under Rule 126 of the CGST Rules, 2017. However the main contours of the ‘Procedure and Methodology’ for passing on the benefits of reduction in the rate of tax and the benefit of ITC was enshrined in Section 171 (1) of the CGST Act, 2017 itself which states that “Any reduction in rate of tax on any supply of goods or services or the benefit of 17’C shall be passed on to the recipient by way of commensurate reduction in prices”. It was clear from the perusal of the above provision “reduction in the rate of tax on any supply of goods or services” does not mean that the reduction in the rate of tax was to be taken at the level of an entity/group/company for the entire supplies made by it. ‘therefore, the benefit of tax reduction had to be passed on at the level of each supply of Stock Keeping Unit (SKU) to each buyer of such SKU and in case it was not passed on, the profiteered amount had to be calculated on each SKU. Further, the above Section mentions “any supply” i.e., each taxable supply made to each recipient thereby clearly indicating that netting off of the benefit of tax reduction by any supplier was not allowed. Each customer was entitled to receive the benefit of tax reduction on each product purchased by him. The word “commensurate” mentioned in the above Section gives the extent of benefit to be passed on by way of reduction in the prices which had to be computed in respect of each product based on the tax reduction as well as the existing base price (price without GST) of the product. The computation of commensurate reduction in prices was purely a mathematical exercise which was based upon the above parameters and hence it would vary from product to product and hence no fixed mathematical methodology could be prescribed to determine the amount of benefit which a supplier was required to pass on to a recipient or the profiteered amount. However, to give further clarifications and to elaborate upon this legislative intent behind the law, this Authority had been empowered to determine/expand the Procedure and Methodology in detail.

However, one formula which fits all cannot be set while determining such a “Methodology and Procedure” as the fact of each case was different. In real estate project parameters such as date of start and completion of the project, price of the house/commercial unit, mode of payment of price, stage of completion of the project, timing of purchase of inputs, rates of taxes, amount of ITC availed, total saleable area, area sold and the taxable turnover realized before and after the GST implementation would always be different than the other project and hence the amount of benefit of additional ITC to be passed on in respect of one project would not be similar to another project. Issuance of Occupancy Certificate/ Completion Certificate would also affect the amount of benefit of ITC as no such benefit would be available once the above certificates were issued. Therefore, no set parameters could be fixed for determining methodology to compute the benefit of additional ITC which would be required to be passed on to the buyers of such units. Further, the facts of the cases relating to the Fast-Moving Consumer Goods (FMCGs), restaurants, construction and cinema houses was completely different and therefore, the mathematical methodology employed in the case of one sector cannot be applied in the other sector otherwise it would result in denial of the benefit to the eligible recipients. Moreover, both the above benefits had been granted by the Central as well as the State Governments by sacrificing his tax revenue in the public interest and hence the suppliers was not required to pay even a single penny from his own pocket and hence, he had to pass on the above benefits as per the provisions of Section 171 (1).

The CGST Rules had provided an elaborate mechanism for determination of the benefits and hence there was sufficient machinery to implement the anti-profiteering provisions.

Moreover, the powers conferred upon this Authority, Standing Committee, the State Screening Committees and the DGAP had been clearly defined under Rule 122-137 of the CGST Rules, 2017. Therefore, powers conferred upon the above bodies were within the ambit of the Constitution of India and were well canalized.

b. For the contention raised by the Respondent that the methodology adopted by the DGAP was arbitrary and grossly incorrect, the DGAP has clarified that he had consistently adopted a uniform methodology to work out profiteering in respect of the real estate sector. An exhaustive data in the form of ‘Homebuyers’ list’ was obtained from the Respondent and based on that data, the amount of profiteering during the period of investigation was worked out. The same methodology had been adopted in case of the Respondent. While calculating profiteering, no other factors related to cost were taken into consideration as there was no such provision in the Anti-profiteering law. Accordingly, it was stated that the methodology adopted by the DGAP in this ease was strictly in terms of Section 171 of the COST Act, 2017 and the Rules made thereunder.

c. For the contention raised by the Respondent that benefit to be determined basis the ITC which was cost to Respondent in pre-GST, the DGAP has clarified that in pare 15 Table ‘A’ of the Report dated 31.03.2021, the CENVAT of Service Tux paid on input services & ITC of VAT paid on purchase of inputs in the Pm GST period had been clearly indicated. Further, ITC of GST available in the post GST period had also been clearly indicated. Therefore, the contention of the Respondent was not correct. ITC was available on the inputs (goods and services) purchased/used in the project, which was cost to the Respondent. Hence, when ITC was being considered in the investigation then it implied that the cost to the Respondent had been considered. Considering the cost or input turnover again, would have no use in computing the amount of profiteering or benefit of ITC to be passed on under Section 171 of the CGST Act, 2017.

Section 171 (1) of the CGST Act, 2017 was very clear which stated that any Suction in the rate of tax or the benefit of ITC had to be passed on to the recipient by way of commensurate reduction in prices. Therefore, the benefit of ITC was to be passed on to each recipient or to say flat buyers in the instant case. Now, if output taxable turnover was not considered in the investigation, then it would be difficult to ascertain that out of total benefit of ITC accrued to the Respondent in the GST period, what amount of benefit was to be passed on to which recipient or flat buyer. Since each recipient was eligible to get his/her due benefit in terms of above said Section, the output taxable turnover was to be considered or in the instant case the amounts raised by the Respondent from his flat buyers were to be considered. On the basis of same, the total benefit of ITC would be proportionately passed on to each recipient/flat buyer. Though, the input credit on taxes had no direct nexus with the output turnover but the credit so availed was for payment of tax on behalf of the buyers and additional benefits whatsoever accrued shall have to be passed to the flat buyers. Hence, the methodology on the basis of the cost adopted by the Respondent in this regard could not be accepted as it was not based on correct interpretation of the above provisions of Section 171.

In the erstwhile pre-GST regime, various taxes and cesses were being levied by the Central Government and the State Governments, which got subsumed in the GST. Out of these taxes, the ITC of some taxes was not being allowed in the erstwhile tax regime. For example, the ITC of Central Sales Tax, which was being collected and appropriated by the States, was not admissible. Similarly, in case of construction service, while the ITC of Service Tax was available, the ITC of Central Excise Duty paid on inputs was not available to the service provider. Such input taxes, the credit of which was not allowed in the erstwhile tax regime, used to get embedded in the cost of the goods or services supplied, resulting in increased price. With the introduction of (1S1′ with effect from 01.07.2017, all these taxes got subsumed in the GST and the ITC of GST was available in respect of all goods and services, unless specifically denied. Broadly, the additional benefit of ITC in the GST regime would be limited to those input taxes, the credit of which was not allowed in the pre-GST regime but was allowed in the GST regime. This additional benefit of ITC in the GST regime was required to be passed on by the suppliers to the recipients by way of commensurate reduction in prices, in terms of Section 171 of GST Act, 2017. However, considering the vast difference in the nature and type of goods and services supplied by various trades and industry, it would not be feasible to prescribe a uniform method/practice/principle/rule to calculate such additional benefit of ITC available in the GST regime. The additional benefit of ITC would vary depending on the conditions of the supply as well as the nature of goods or services supplied and had to be determined on a case-to-case basis, in terms of Chapter XV of the CGST Rules, 2017.

Furthermore, the sale of land being a transfer of immovable property and license approvals were outside the ambit of both Service Tax as well as GST. There was no implication of the cost of land in arriving at the ratio of total credit available to the Respondent as abatement for the same was provided in detennination of taxable turnover. Further, cost of land, land development rights, license approvals etc. were integral parts of the cost of project and were already accounted for in the turnover i.e. Demands made from the flat. buyers. This had no relevance whatsoever in determination of the benefit of the additional ITC that accrues to a supplier (here the Respondent) due to implementation of GST, which was required to be passed on to the recipients (here the flat buyers) in terms of Section 171 of the CGST Act, 2017. Therefore, the DGAP has conducted his investigation within the scope of Section 171 of the CGST Act, 2017 and Rules made thereunder, on the basis of information and documents collected from the Respondent and submitted the report on his findings to this Authority. Thus, the claim of the Respondent was unacceptable.

d. For the contention raised by the Respondent that Anti-profiteering measure was not to apply to flats sold post introduction of GST, the DGAP has clarified that he had investigated the matter of additional benefit of lit in respect of project which was launched before implementation of GST (pre-GST era) and continued in GST regime. It was done because in the erstwhile tax regime (pre-GST), various taxes and cesses were being levied by the Central Government and the State Governments, which got subsumed in the GST. Out of these taxes, the ITC of some taxes was not allowed in the erstwhile tax regime. In case of Construction Service, while the ITC of Service Tax was available, the ITC of Central Excise Duty paid on inputs was not available to the service provider. Such input taxes, the credit of which was not allowed in the erstwhile tax regime, used to get embedded in the cost of the goods or services supplied, resulting in increased price. With the introduction of GST w.e.f 01.07.2017, all these taxes got subsumed in the GST and the ITC of GST was available in respect of all goods and services, unless specifically denied. Broadly. the additional benefit of ITC in the GST regime would be limited to those input taxes, the credit of which was not allowed in the pre-GST regime but was allowed in the GST regime. Therefore, in the cases where projects were launched in pre-GST regime, the prices of the flats/units/home were fixed in pre-GST regime considering the various factors affecting the cost keeping in mind the prevailing taxes, cost of the raw material and ITC available, however, in all such case, there had been availability of additional benefit of ITC in GST regime. Therefore, the additional benefit of ITC in post-GST regime which was not available earlier was required to he passed on by the suppliers to all the recipients by way of commensurate reduction in price, in terms of Section 171 of CGST Act, 2017.

Therefore, the averment made by the Respondent was incorrect. As stated above, the Respondent had been benefitted with additional ITC only after introduction of the GST. This additional benefit of ITC pertained to the entire project or in other words related to each flat/unit of the project of the Respondent. Hence all unit/flat buyers were eligible to get their due benefit of ITC from the Respondent irrespective of his bookings made in pre-GST or post-GST period. Whatever was the negotiated price, the benefit of additional ITC had to be specifically passed on to all the recipients by the Respondent. this benefit had to be passed on over and above any other kind of negotiations made with the homebuyers.

e. For the averment made by the Respondent that the impugned `Notice’ and ‘Report’ was premature, the DGAP has submitted that the maxim ‘lex non cogit ad impossibilia’ was not applicable in the present case. It implied that law did not permit a man to do that which he could not possibly perform. The case laws cited by the Respondent was based on this maxim alone. Quantification of profiteered amount was a pure mathematical exercise. The credit available in the pm GST period as well as the CPC of GST available in the post GST period during a given time frame was always available. Likewise, the turnover (amount received) during the same time frame was also available. Therefore, it was not impossible to work out profiteered amount for any time frame. The possibility to perform the act of working out the profiteered amount was always there. Therefore, the case law cited by the Respondent was distinguishable and hence was not applicable.

Further, both the DOAP and this Authority were statutorily required to complete its task within a given time frame. Moreover, the ITC availed and the consequential profiteering, if any, had to be determined at a given point of time and such determination could not be deferred till the completion of the project. To address the contention of the Respondent that he might profiteer in one milestone but might incur a loss in other milestone, a reasonably long period from July, 2017 to April, 2020 had been considered to calculate the quantum of ITC available to the Respondent during the pre-GST period and comparied it with the ITC available in the post-GST period. Furthermore, the ITC taken into consideration was proportionate with the area sold in the project.

The contention of the Respondent was based on mere assumption. The costing of the project, calculation regarding availability of Cenvat credit, his pricing, profit etc. were not looked into while determination of profiteering. Section 171 of the COST Act, 2017 requires the supplier of goods or services to pass on the benefit of reduction in tax rate or ITC to the recipients by way of commensurate reduction in prices. If such benefit was not passed on by way of reduction in prices and the benefit was appropriated by the supplier, it amounts to profiteering. The act of profiteering had no relation to the net profit making or the net loss-making status of the supplier or the entity, Even a loss-making entity or supplier could indulge in profiteering and conversely, a profit-making entity could pass on the due benefit to the recipients, in terms of Section 171 of the COST Act, 2017. The Respondent was availing ITC or GST paid on all the inputs and input services being used in the entire project/projects. The Respondent was eligible to utilize the ITC in respect of sold area on the critical date in the project and remaining ITC pertaining to the unsold area was required to be reversed. Therefore, the ITC utilized would always be less than the available ITC. Accordingly, in the investigation report also, the ITC proportionate with the sold area on the critical date had been considered by the DGAP.

In the impugned period the Respondent had availed ITC and utilized it for payment of outward taxes. The Respondent had also collected GST from the home-buyers without passing on the benefit of additional ITC to them. This was in contravention to Section 171 of the CGST Act, and Rules made therein. The Benefit under Section 171 of the Act has to be passed on at the time of raising the invoices/receipt of advances . in all the investigated cases pertaining to Construction Service, the amount of credit availed was taken instead of credit utilized as the unutilized credit was available for utilization to set off the future tax liabilities. Therefore, the DGAP had conducted his investigation within the scope of Section 171 of the CGST Act, 2017 and Rules made thereunder, on the basis of information and documents collected from the Respondent and submitted the report on his findings to this Authority.

f. For the contention raised by the Respondent that the levy of Penalty under Section 171 (3A) read with Rule 133(3)(d) was unwarranted, the DGAP has submitted that the contention of the Respondent made in this pare was wrong as none of the cases mentioned by the Respondent was related to Anti-Profiteering provisions and hence was not relevant in this case. The Central Government had been empowered under Section 164 of the COST Act, 2017 to lay down Rules for implementation of the Act and accordingly, the levy of interest and penalty was inserted in the Rules. Hence, it could not be termed as bad in law.

5. Copy of the above clarifications/supplementary report of the DCAP dated 28.03.2022 was supplied to the Respondent to file his rejoinder/submissions. The Respondent had filed his rejoinder/ submissions dated 21.04.2022 vide which he had reiterated and relied upon his submissions made earlier. The Respondent requested for personal hearing in the matter.

6. The proceedings in the matter could not be completed by the Authority due to lack of required quorum of members in the Authority during the period 29.04.2021 till 23.02.2022, and that the minimum quorum was restored only w.e.f. 23.02.2022 and hence the matter was taken up for further proceedings vide Order dated 10.03.2022.

7. Therefore, hearing in the matter was held on 12.05.2022. It was attended by Shri Pradeep 1anakiraman, Applicant No. 4 and Shri Harshit Nahar, Chartered Accountant for the Respondent. During the personal hearing, the Respondent has re-iterated his arguments based on his written submissions dated 15.07.2021 and 21.04.2022. The Respondent during the hearing further requested time till 25.05.2022 to file his consolidated written submissions. The Applicant No. 4 reiterated his complaint

8. The Respondent vide his email dated 24.05.2022 filed his written submissions wherein he has submitted that: –

a. Top 5 contractors of the project “Shriram Summit” are as follows:-

b. The Occupancy Certificate dated 25.09.2022 issued by the Bangalore Development Authority was also submitted.

9. The Authority has carefully considered the Reports filed by the DGAP, all the submissions and the documents placed on record, and the arguments advanced by the Respondent during the hearing. It is clear from the plain reading of Section 171(1) 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 rrc. 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. It is observed from the 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 6.88%, whereas, during the post-GST period (July-2017 to April, 2020), it was 6.96% for the project ‘Shriram Summit’. This confirms that, post-GST, the Respondent has been benefited from additional ITC to the tune of 0.08% (6.96% – 6.88%) of his turnover for the project ‘Shriram Summit’ and the same was required to be passed on to the customers/flat buyers/recipients. The DGAP has calculated the amount of ITC benefit to be passed on to all the flat buyers as Rs. 20,57,207/- for the project `Shriram Summit’, which was availed by the Respondent.

10. The Respondent has raised several contentions in the matter and the findings of the Authority are as under:-

10.1 One of the contentions of the Respondent is that the impugned ‘Notice’ and the ‘Report’ are premature, unconstitutional and ultra-vires. In this regard, the Authority finds that the provisions of Section 171 of COST Act, 2017 relating to anti- profiteering have been passed by Parliament and all the State and Union Territory Legislatures. They have delegated the task of prescribing the powers and function of this Authority to the Central Government on the recommendation of GST Council, which is Constitutional body created under 101′ Amendment the Constitution. Accordingly, Central Government has formulated and notified CGST Rules, 2017. Therefore, Rules 126 to 133, which prescribe the functions and powers of this Authority and DGAP under Section 164 of CGST Act, 2017 have sanction of the Parliament and all the State Legislatures. Hence, any notice or report issued under these Rules is legally valid and constitutional and by no stretch of imagination it can be help to be ultra virus.

10.2 Another contention of the Respondent is that the methodology adopted by the DGAP is arbitrary and grossly incorrect. In this regard, the Authority finds that the main contours of the ‘Procedure and Methodology’ for passing on the benefits of reduction in the rate of tax and the benefit of ITC are enshrined in Section 171 (1) of the CGST Act, 2017 itself, which states that “Any reduction in sale of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices.”

Therefore, Section 171 itself provides the procedure and methodology for determination of the profiteered amount and therefore, no guidance is required to be provided. The Respondent has gut benefit of ITC, which he is required to pass on to the buyers. It is also submitted that the facts of each case are different so quantum of profiteering is determined by taking into account the particular facts of each ease. Hence, there cannot be one-size-fits-all mathematical methodology. A straight jacketed approach is not feasible as the facts of each case vary substantially.

Method of determination of profiteered amount varies from industry to industry. For example, in one real estate project, date of start and completion of the project, price of the house/commercial unit, mode of payment of price, stage of completion of the project, timing of purchase of inputs, rates of taxes, amount of ITC availed, total saleable area, area sold and the taxable turnover realized before and after the GST implementation would always be different than those of the other project and hence the amount of benefit of additional ITC to he passed on in respect of one project would not be similar to that of another project. Issuance of Occupancy Certificate/ Completion Certificate would also affect the amount of benefit of ITC as no such benefit would be available once the above certificates arc issued. Therefore, no set of parameters can be fixed for determining methodology to compute the benefit of additional ITC which would be required to be passed on to the buyers of such units.

Further, the power to determine its own Methodology Procedure has been delegated to the NAA under Rule 126 of the CGST Rules, 2017, as per the provisions of Section 164 of the above Act. Such power is generally available to all the judicial, quasi-judicial and statutory authorities to carry out their functions and duties and hence no special favor has been shown to the Authority while granting such power. The Authority has only been allowed to ‘determine’ the methodology and not to ‘prescribe it’ which it has to do keeping in view the facts of individual case. Since the functions and powers to be exercised by the N.A.A. have been approved by competent bodies, the same are legal and binding on the Respondent.

10.3 Yet another contention of the Respondent is that the benefit was to be determined on the basis of ITC, which was cost to the Respondent in pre-GST period. In this regard, the Authority finds that prior to 01.07.2017 is. before the introduction of GST, the Respondent was eligible to avail CENVAT credit of Service Tax paid on input services as envisaged under sub-rule (1) of Rulc 2 of CENVAT Credit Rules, 2004 and also ITC of VAT paid on inputs. However, the Respondent was ineligible to avail credit of CENVAT paid on inputs under CENVAT Credit Rules, 2004. Whereas on introduction of GST from 01.07.2017, the Respondent could avail the ITC of CST paid on all inputs and input services in pursuance to the seamless credit facility allowed under Section 16 of the CGST Act, 2017 read with the rules prescribed there under.

Further, the press release dated 15.06.2017 issued by CMG referred to by the Respondent unequivocally clarifies that “Under GST, full input credit would be available for offsetting the headline rate of 12%. As a result, the input taxes embedded in the flat will not (& should not) form a part of the cost of the flat. Me input credits should take care of the headline rate of 12% and it is for this reason that refund of overflow of input credits to the builder has been disallowed” and expected the builders to pass on the benefits of lower tax burden under the GST regime to the buyers off property by way of reduced prices/installments.

The DGAP in its reply dated 28.03.2022 has elaborately discussed this issue and accordingly, the DGAP following the standard procedure and methodology had compared the ITC to turnover ratios in pm & post GST periods in the present case which is rational, logical & appropriate in terms of Section 171. Therefore, in view of the above, the contention made by the Respondent regarding ITC being cost cannot be accepted.

10.4 The Authority finds that, the Respondent has also made averment that Anti- Profiteering measure does not to apply to flats sold post introduction of GST. In this regard, it is to mention that the DGAP has investigated the matter of additional benefit of 1TC in respect of project which was launched before implementation of GST (pre-GST era) and continued in GST regime. It was done because in the erstwhile tax regime (pre-GST), various taxes and cesses were being levied by the Central Government and the State Governments, which got subsumed in the GST. Out of these taxes, the ITC of some taxes was not allowed in the erstwhile tax regime. In case of Construction Service, while the ITC of Service Tax was available, the ITC of Central Excise Duty paid on inputs was not available to the service provider. Such input taxes, the credit of which was not allowed in the erstwhile tax regime, used to get embedded in the cost of the goods or services supplied, resulting in increased price. With the introduction of GST w.e.f. 01.07.2017, all these taxes got subsumed in the GST and the ITC of GST was available in respect of all goods and services, unless specifically denied. Broadly, the additional benefit of ITC in the GST regime would be limited to those input taxes, the credit of which was not allowed in the pre-GST regime but was allowed in the GST regime. Therefore, in the cases where projects were launched pre-GST regime, the prices of the flats/units/home were fixed in pre-GST regime considering the various factors affecting the cost keeping in mind the prevailing taxes, cost of the raw materials and ITC available, however, in all such cases, there had been availability of additional benefit of ITC in GST regime. Therefore, the additional benefit of ITC in post-GST regime which was not available earlier was required to be passed on by the suppliers to all the recipients by way of commensurate reduction in prices, in terms of Section 171 of COST Act, 2017.

Therefore, the averment made by the Respondent is incorrect. As stated above. the Respondent has been benetitted with additional TIC only after introduction of the GST. This additional benefit of 1TC pertained to the entire project or in other words related to each flat/unit of the project of the Respondent.

Hence all unit/flat buyers are eligible to get their due benefit of ITC from the Respondent irrespective of his bookings whether made in pre-GST or post-GST period, provided the project has commenced before 1.7.2017. Whatever was the negotiated price, the benefit of additional ITC has to be specifically passed on to all the recipients by the Respondent. This benefit has to be passed on over and above any other kind of negotiations made with the homebuyers.

10.5 The Respondent has also contended that the levy of penalty under section 171(3A) read with Rule 133(3)(d) is unwarranted. In this regard, the. Authority finds that, vide Section 112 of the Finance Act, 2019 specific penalty provisions have been added for violation of the provisions of Section 171(1) which have come in to force w.e.f. 01.01.2020, by inserting Section 171(3A). The Respondent is liable for the imposition of penalty for the period 01.01.2020 to 30.04.2020 under the provisions of the above Section. Further, the facts of each case are different from every other case. The Respondent has referred to several case laws in support of the contention that penalty was not imposable due to lack of intention to evade payment and also the matter related to interpretation of statute. However, the Authority finds that all referred cases pertain to Central Excise and are not directly relevant to Anti-Profiteering. Further, the provisions of Section 171 and Rules made thereunder are very simple and unambiguous with no scope of wrong interpretation.

In view of the above, the case laws relied upon by the Respondent are of no help to him.

11. For the reasons mentioned herein above, the Authority finds no reason to differ from the above-detailed computation of profiteering in the DGAP’s Report or the methodology adopted.

The Authority finds that the Respondent has profiteered by an amount of Rs. 20,57,207/- during the period of investigation i.e. 01.07.2017 to 30.04.2020. The Authority determines an amount of Rs. 20,57,207/- (including 12% asp under section 133(1) as the profiteered amount by the Respondent from his 1061 home buyers (as per Annexure A to this Order), including Applicant Nos. 1 to 4, which 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 accordance with the provisions of Rule 133 (3) (b) of the CGST Rules 2017. This amount profiteered is Rs. 1,581/- (including CST) in respect of the Applicant No.1, Rs 3161- (including (ST) in respect of Applicant No. 2, Rs 1,166/- (including GST) in respect of Applicant No. 3, and Rs 1,239/- (including GST) in respect of the Applicant No. 4.

12. This Authority under Rule 133 (3) (a) of the COS'[ 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.

13. The Respondent is also liable to pay interest as applicable on the entire amount profiteered, i.e. Rs. 20,57,207/-, for the project `Shriram Summit’. Hence the Respondent is directed to also pass on interest @18% to the customers/ flat buyers/ recipients on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ payment, as per provisions of Rule 133 (3) (b) of the CGST Rules, 2017.

14. The complete list of homebuyers has been attached with this Order, with the details of amount of benefit of ITC to be passed on along with interest @ 18% in respect of the project `Shriram Summit’ of the Respondent as in the Annexures A.

15. The Authority also order that the profiteered amount of Rs. 20,57,207/- for the project `Shriram Summit’ along with the interest (0, 18% from the date of receiving of advance from the homebuyer till the date of passing the benefit of ITC shall be paid/passed on by the Respondent within a period of 3 months from the date of this order failing which it shall be recovered as per the provisions of the CGST Act, 2017.

16. It has also been found that the Respondent has denied the benefit of additional ITC to his customers/recipients in contravention of the provisions of Section 171(1) of the COST Act, 2017 and resorted to profiteering and hence, committed an offence under section 171 (3A) of the CGST Act, 2017. Therefore, the Respondent is liable for the imposition of penalty for the period 01.01.2020 to 30.04.2020 under the provisions of the above Section. Accordingly, a 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.

17. The concerned jurisdictional CGST/SGST Commissioner is also directed to ensure compliance of this Order. It may be ensured that the benefit of ITC has been passed on to each homebuyer as per this Order along with interest @18%. In this regard an advertisement of appropriate size to be visible to public at large may also be published in minimum of two local newspapers/ vernacular press in Hindi/English/local language with the details i.e., Name or builder (Respondent) – NI/s Shriram Properties Pvt. Ltd, Project- “Shriram Summit”, Location- Golahalli Electronic City, 13angalore and amount of profiteering Rs. 20,57,207/- so that the concerned home buyers can claim the benefit of 1 IC if not passed on. Home buyers may also be informed that the detailed NAA Order is available on Authority’s website www.naa.gov.in. Contact details of concerned Jurisdictional CGST/SGST who are nodal officer for compliance of the NAA’s order may also he advertised through the said advertisement.

18. The concerned jurisdictional CGST/SGST Commissioner shall also submit a Report regarding compliance of this Order to the Authority and the DGAP within a period of 4 months from the date of receipt of this order.

19. Further, the DGAP is also directed to monitor the compliance of the order by the concerned jurisdictional CGST/SGST Commissioner.

20. The present investigation has been conducted up to 30.04.2020 only. However, the Respondent is liable to pass on the benefit of ITC which would become available to him till the date of issue of Completion Certificate. Accordingly, the concerned jurisdictional Commissioner CGST/SGST are directed to ensure that the Respondent passes on the benefit of ITC to the eligible home buyers/shop buyers/customers as per the methodology approved by this Authority in the present case and submit report to this Authority through the DGAP. The Applicants or any other interested party/person shall also be at liberty to file complaint against the Respondent before the Karnataka State Screening Committee in case the remaining benefit of ITC is not passed on to them.

21. Further, the Hon’ble Supreme Court, vide its Order dated 23.03.2020 in Suo Moto Writ Petition (C) no. 3/2020, while taking sue mow cognizance of the situation arising on account of Covid-19 pandemic, has extended the period of limitations prescribed under general law of limitation or any other specified laws (both Central and State) including those prescribed under Rule 133(1) of the can Rules, 2017, as is clear from the said Order which states as follows:-

“A period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f: 15th March 2020 till further orderly to be passed by this Court in present proceedings.”

Further, the Hon’ble Supreme Court, vide its subsequent Order dated 10.01.2022 has extended the period(s) of limitation till 28.02.2022 and the relevant portion of the said Order is as follows:-

“The Order dated 23.03.2020 is restored and in continuation of the subsequent Orders dated 08.03.2021, 27.04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may he prescribed under any general of special laws in respect of all judicial or quasi-judicial proceedings.”

Accordingly this Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017.

22. A copy of this order be supplied, free of cost, to the Applicants the Respondent. File of the case be consigned after completion. A copy or this order be sent to both the Applicants, the Respondent, Commissioners CGST/SGST Bangalore, the Principal Secretary (Town and Country Planning), Government of Karnataka as well as Karnataka RERA free of cost for necessary action.