Nitesh Kumar Singhal Vs SSBC Real Estate Pvt. Ltd. (NAA)
NAA held that ITC benefit of Rs. 16,49,897/- was required to be passed on to 39 flat buyers by SSBC Real Estate Pvt. Ltd.
In this case appellants alleged profiteering by SSBC Real Estate Pvt. Ltd. in respect of purchase of Flat Nos. 1002 and 1003 in the Respondent’s project ‘The Elegance’ situated at Partap Nagar, Jaipur. Both the Applicants alleged that the Respondent had not passed on the full benefit of ITC to them by way of commensurate reduction in prices and charged GST ® 12% on the amount due to them against payments.
The Authority has carefully considered the Report of the DGAP, the submission filed by the Respondent and the other material placed on record including arguments made during hearings and finds that the Applicant No. 1 and 2 had filed complaint against Respondent alleging that the Respondent had not passed on the benefit of ITC to them by way of commensurate reduction in prices on the purchase of Flat No. s 1002 & 1003 respectively in his “The Elegance’ Project which was being executed by the Respondent at Partap Nagar in Jaipur. The said complaint was examined by the Standing Committee on Anti-Profiteering and forwarded to the DGAP for detailed investigation, who vide his investigation Report dated 30.12.2020 furnished to this Authority, had stated that the “The Elegance”, Project of the Respondent, was constructed under Joint Development Agreement (JDA) with M/s Jaipur Constructions & M/s GPM Infrastructure Pvt. Ltd. under revenue sharing basis at 50:50 ratio. Construction of project was to carried out by the Respondent on his own account and own expenses. Since the entire cost of all purchases of inputs, capital goods and input services for construction of all units of the impugned project was incurred by the Respondent hence he had availed Input Tax Credit on tax paid on said inputs, capital goods and input services during pre and post GST periods. As the input Tax Credit (ITC) @ 6.39 % and 1.59% of the turnover was available to the Respondent during the post-GST period and the pre-GST period respectively as per the Table- C mentioned at para 9 supra, therefore, he had benefited from the additional ITC to the tune of 4.80% (6.39% – 1.59%) of the turnover during the period from 01.07.2017 to 31.03.2019, which was required to be passed on to the flat buyers of this Project. The DGAP had also found that since the Respondent has not reduced the basic prices of his flats/units by 4.80% due to the additional benefit of ITC and had charged GST at the increased rate of 12% on the pre-GST basic prices hence he has contravened the provisions of Section 171 of the CGST Act, 2017 and Rules made thereunder. The DGAP had observed that as mentioned above, the benefit of Rs. 16,49,897/- was required to be passed on to 39 flat buyers/customers/recipients including Applicants by the Respondent for the period from 01.07.2017 to 31.03.2019 if not already passed on.
The DGAP has computed the ratio of CENVAT as a percentage of the turnover for the pre-GST period and compared it with the ratio of ITC to the turnover for the post-GST period, and then computed the percentage of the benefit of additional ITC which the Respondent was required to pass on to the flat buyers/customers/recipients. The above ratios have been computed by the DGAP on the basis of data/details provided by the Respondent which have been duly verified from his Service Tax, VAT and GST Returns filed by him for the period April 2016 to June 2017 and July 2017 to November 2019 respectively. Since, the ratios calculated by the DGAP are based on the factual record submitted by the Respondent, hence the computation made by the DGAP can be relied upon while computing the profiteered amount. The above methodology has been approved by this Authority in all the cases where the benefit of ITC was required to be passed on to the flat buyers/customers/recipients. The above methodology is appropriate, logical, reasonable, and in consonance with the provisions of Section 171 of the CGST Act, 2017.
Since the home buyers/customers/recipients are identifiable as per the documents placed on record, the Respondent is directed to pass on an amount of Rs. 16,49,897/- to 39 home buyers/customers/recipients, out of which the amount required to be passed on to the Applicant No. 1 and 2 is Rs. 1,08,480/- and 1,55,904/- respectively if already not passed on . Such amount shall be passed on/ returned along with the interest @ 18% per annum from the dates from which the above amount was collected by him from them till the payment is made, as prescribed under Rule 133 of the CGST Rules, 2017 within a period of 3 months from the date of passing of this order as per the details mentioned in Annexure-21 & 22 attached with the Report dated 31.12.2020. The details of the homebuyers/customers/ recipients along with profiteered amount due to each of them is attached as Annexure A to this Order.
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/customers/recipients of the above Project commensurate with the benefit of ITC received by him.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
The present Report dated 30.12.2020, has been furnished by the Applicant No. 03 i.e. the Director General of Anti-Profiteering (DGAP) after a detailed investigation under Rule 129 of the Central Goods and Service Tax (CGST) Rules, 2017. The brief facts of the case are that a reference was received from the Standing Committee on Anti-profiteering on 03.12.2019 to conduct a detailed investigation in respect of applications filed under Rule 128 of the CGST Rules, 2017 by the Applicant No. 1 and 2, alleging profiteering by the Respondent in respect of purchase of Flat Nos. 1002 and 1003 in the Respondent’s project “The Elegance” situated at Partap Nagar, Jaipur. Both the Applicants alleged that the Respondent had not passed on the full benefit of ITC to them by way of commensurate reduction in prices and charged GST ® 12% on the amount due to them against payments.
2. On receipt of the aforesaid reference from the Standing Committee on Anti-profiteering, the DGAP had issued Notice under Rule 129 of the CGST Rules 2017, on 10.12.2019 calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the recipients by way of commensurate reduction in prices and if so, to suomoto determine the quantum thereof and indicate the same in his reply to the Notice as well as to furnish all documents in support of his reply.
3. The DGAP had afforded an opportunity to the Respondent to inspect the non-confidential evidences/information which formed the basis of the said Notice, during the period 20.12.2019 or 24.12.2019. Similarly an opportunity was also given to both the Applicants to inspect the non-confidential documents/reply furnished by the Respondent on 22.12.2020 or 23.12.2020 or 28.12.2020 but neither Respondent nor Applicants had availed the aforesaid opportunities. However, the Applicant No. 1 vide his email dated 21.12.2020 had requested to provide the non-confidential data through email. Accordingly, the DGAP had sent the said data and requested him to confirm receipt of ITC benefit passed on by the Respondent.
4. The DGAP has submitted that the statutory time limit to complete the investigation was 02.06.2020 which was extended up to 30.11.2020 by virtue of Notification No. 35/2020-CT dated 03.04.2020, Notification No. 55/2020-CT dated 27.06.2020, Notification No. 65/2020-CT dated 01.09.2020 and Notification No. 91/2020-CT dated 14.12.2020 issued by Central Government under Section 168 A of the CGST Act, 2017 which provided that where, “any time limit for completion or compliance of any action, by any authority, had been specified in, or prescribed or notified under section 171 of the said Act, which falls during the period from the 20th day of March, 2020 to the 306 day of March, 2021 and where completion or compliance of such action had not been made within such time, then, the time-limit for completion or compliance of such action, shall be extended up to the 311h day of March, 2021.”
5. In response to the above said Notice dated 21.10.2019 and subsequent reminders and Summons of the DGAP, the Respondent vide his emails dated 06.01.2020, 23.01.2020, 04.02.2020, 20.07.2020, 08.09.2020, 26.10.2020, 23.11.2020, 22.12.2020 and 24.12.2020 had furnished following documents:-
(i) Copies of GSTR-1 returns for the period July, 2017 to November, 2019.
(ii) Copies of GSTR-3B returns for the period July, 2017 to November, 2019.
(iii) Copies of ST-3 and VAT returns for the period April, 2016 to June, 2017.
(iv) Tran-1 and Tran-2 has not been filed. Tax rates – pre-GST and post-GST.
(v) Copy of audited Balance sheet for FY 2016-17, 2017-18 & 2018-19.
(vi) Copies of Sale agreement/Contract, all Demand Letters, Statement of Accounts and Possession Letter issued to the Applicants.
(vii) Copy of Electronic Credit Ledger for the period July, 2017 to November,
(viii) Copy of Electronic Cash Ledger for the period July, 2017 to November, 2019.
(ix) Declaration in Annexure-IV to the Notification No. 3/2019-CT (Rate) dated 29.03.2019 along with Calculation of Eligible GST input for the Elegance Project upto 31st March, 2019.
(x) CENVAT/ Input Tax Credit register for the period April, 2016 to November, 2019.
(xi) Details of VAT, Service Tax and GST turnover, output tax liability payable and input tax credit availed for the project “The Elegance”.
(xii) Copy of Joint Development Agreement dated 19.05.2014.
(xiii) Copy of Completion Certificate no. 2241 dated 31.05.2019.
(xiv) Copy of Project Report submitted to RERA.
(xv) List of home buyers & commercial shop buyers in the project “The Elegance along with details of benefit passed on.
(xvi) Copies of Confirmation of Accounts, Ledgers and journal entry vide which benefit passed on to the customers.
(xvii) Booking Agreements of the Applicants.
(xviii)Completion Certificate.
(xix) Details of Type of Tax Levied on output Goods and Services.
(xx) Demand Letter and Possession Letter of Applicants.
(xxi) RERA Reports.,
and requested to keep confidential the documents mentioned above except (xvii) to (xxi) in terms of Rule 130 of the CGST Rules 2017.
6. Vide the above said documents/information, the Respondent has inter alia stated that:-
a. he was a real estate developers and wholly engaged in the construction of residential flats. Presently he was undertaking two projects out of which one was “The Elegance” which was started in 2013-14 at Jaipur. In the instant project there were 96 residential flats consisting of total build-up area of 1,07,136 sq. ft. Another project was “SSBS Su-prem” which consisted of total 14 units and the first booking was made only on 01.08.2017 of these units which is in Post-GST regime.
b. he had opted new GST rate scheme i.e. 5% GST without input tax credit with effect from 01.04.2019 in terms of Notification No. 3/2019-CT (Rate) dated 29.03.2019 and accordingly he had not availed any input tax credit from 01.04.2019 onwards.
c. he entered into an agreement with M/s. Jaipur Constructions & M/s. GPM Infrastructure Pvt. Ltd. (Land Owners) on “Revenue Sharing” basis vide agreement dated 19th May 2014 wherein, it is agreed between them that the construction of the project will be carried out by him on his own account and own expenses and the revenue received on sale of units will be shared between him and the Land owners in 50:50 ratio.
d. he had received the Completion Certificate on 31.05.2019 issued by Chartered Engineer. He claimed that he had passed on the benefit of Input Tax Credit at the rate of Rs. 19.85/- per sq. ft. to each unit holder on 22.04.2019 by crediting their ledger accounts through journal entry and reduced it from their outstanding balance as on date.
e. the Applicant No. 1 had booked Flat No. 1002 through Sales Agreement dated 26.04.2017 for Rs. 31,62,345/- (inclusive of Taxes). The Applicant No. 1 regularly made defaults in payment and had still not paid full amount even after possession of flat. He (the Respondent) had issued following demand notes to the Applicant No. 1 as tabulated below;-
Table ‘A’
