Parveen Kumar Bansal Vs Sternal Buildcon Pvt. Ltd. (NAA)
Authority finds and determines that the Respondent has profiteered by an amount of Rs. 42,21,321/- for the project `Signum 36′ during the period of investigation i.e. 01.07.2017 to 30.06.2019. The above amount that has been profiteered by the Respondent from his shop buyers/ recipients of supply in the above mentioned project 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 line with the provisions of Rule 133 (3) (b) of the GCST Rules 2017.
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 shops 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. 42,21,321/-, for the project `Signum 36′. Hence the Respondent is directed to also pass on interest @18% to the customers/ shop 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.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. The National Anti-Profiteering Authority (NAA) vide Interim Order No. 28/2020 dated 27.11.2020 in this matter had passed the following order:-
“21. We have carefully considered the Report furnished by the DGAP, the submissions made by the Respondent and the other material placed on record. On examining the various submissions, the observations of this Authority are as follows:-
a) The DGAP, in Para 16 of his report, has stated that the Respondent had entered into an agreement with the Contractor for the construction of Residential Units on 31.08.2017 and the construction activities commenced on 10.09.2017 and the draw of the flats was held on 18.09.2017. Therefore, the DGAP has concluded that the Residential project i.e. The Serenas’ of the Respondent was launched in the post-GST regime and there was no price history of the residential units sold in the pre-GST regime which could be compared with the post-GST base price to establish whether there was any profiteering by the Respondent or not.
However, as per the heading ‘Other Current Liabilities’ under Note 6 of the Annual Financial Statement of the Respondent for the period 2016-17, it is observed that the Respondent has received an amount of Rs. 16,77,22,611/- as ‘Security from Applicants(d)’ which is explained as “(d) During the Financial Year, the Company has launched “Affordable Housing Project” by the name & style of “SERENAS” under the Affordable Housing Scheme by Haryana Urban Development Authority Limited. The flats shall be allotted to the applicants by way of a draw of lots which is yet to happen as on 31st March 2017 & pending the same, the application money received has been shown as Security from Applicants.” Given the above, it is clear that the Respondent has received the above mentioned ‘Security Amount’ in the pre-GST period and that it relates to the residential units of The Serenas’. Hence, the finding of the DGAP that there wasn’t any price history of his residential units in the pre-GST period needs to be revisited since this Authority is of the view that the above-said security amount received from the applicants merits to be incorporated in the pre-GST turnover while computing the quantum of profiteering.
b) Further, this Authority observes that the two projects, namely The Serenas’ (comprising residential units) and Signum 36′ (comprising commercial units) have been developed and executed by the Respondent under a single GST registration on the same plot of land having common facilities and common areas. Further, the ITC paid is also common for the commercial and the residential area of the projects. Further, it is observed that the Respondent has also been maintaining a common Input Tax Credit Ledger and other connected records for the residential and commercial units of The Serenas’ and Signum 36′. Therefore, these two projects deserve to be considered as an integrated project comprising both, residential and commercial units for the purpose of computation of profiteering in terms of Section 171 of the CGST Act, 2017.
c) Needless to state that while computing the quantum of profiteering in the instant case, the amounts received as ‘Security Amount’ in respect of ‘the Serenas’ and the ‘Advance Token Money’ in respect of Signurn 36′ shall be appropriately factored in the computation.”
2. The brief facts of the case have been mentioned in the NAA’s I.O. No. 28/2020 dated 27.11.2020 and the same are reproduced below:
i A reference was received from the Standing Committee on Anti- profiteering on 28.06.2019, to conduct a detailed investigation in respect of an application filed under Rule 128 of the CGST Rules, 2017 by Applicant No. 1 alleging profiteering by the Respondent in respect of purchase of a flat no. 7-205 (2BHK-T3), in the Respondent’s project “The Serenas”, Sector-36, Sohna, Gurgaon-122002. The Applicant No. 1 alleged that the Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in prices and charged full rate of GST on the amount due to him against payments.
ii. On receipt of the aforesaid reference from the Standing Committee on Anti-profiteering on 28.06.2019, a notice under Rule 129 of the CGST Rules was issued by the DGAP on 08.07.2019 to 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 price 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 documents in support of his reply. Further, the Respondent was allowed to inspect the non-confidential evidence/information which formed the bases of the said notice, during the period 15.07.2019 to 17.07.2019. The Respondent availed of the said opportunity on 22.07.2019 and inspected the documents.
iii. Vide E-mail dated 18.02.2020, Applicant No. 1 was also allowed to inspect on 26.02.2020 or 27.02.2020 the non-confidential documents/reply furnished by the Respondent. However, the Applicant No. 1 did not avail of the said opportunity.
iv. The period covered by the current investigation was from 01.07.2017 to 30.06.2019 and the time limit to complete the investigation was extended up to 02.03.2020 by this Authority, vide Order dated 12.12.2019, in terms of Rule 129(6) of the CGST Rules, 2017.
v. The Respondent had submitted to the DGAP that the dwelling unit of Applicant No. 1 had been cancelled on 09.04.2018 due to default in making payment as per the Haryana Affordable Housing Policy 2013, and the amount was refunded to him by the Respondent.
vi. The DGAP has reported that the Respondent has submitted that Anti-profiteering provisions did not apply to the project “The Serenas” since the draw for the selection of the allottees, the allotments, the Builder-Buyer agreements, and construction activities were executed in the GST period only. On scrutinizing the documents submitted by the Respondent it was found that the Respondent entered into an agreement with the Contractor for the construction of Residential Units on 31.08.2017 after which construction activities started on 10.09.2017. Further the Respondent held the draw on 20.07.2017. Post draw, the first Builder-Buyer agreement was entered into on 18.09.2017. Therefore, it was observed that the Residential project “The Serenas” was launched in the post-GST regime and there was no price history of the residential units sold in the pre-GST regime which could be compared with the Post-GST base price to establish whether there was any profiteering by the Respondent or not as the Respondent neither availed any ITC nor had any turnover in pre-GST regime on Residential dwelling units. Further as per para 5 of Annexure- A of Affordable Housing Policy 2013 notified by the Haryana Government on 19.08.2013, Rs. 3,600/- per sq. ft. (for other High and Medium Potential Towns) was the Maximum allotment rate on per sq. ft. carpet area basis for Sohna and this was not the actual rate at which units were to be sold but the suppliers of construction service were free to fix their base price subject to the ceiling of Rs. 3,600/- per sq. feet. In the instant case, all activities related to the residential project had been done only after the introduction of GST w.e.f. 01.07.2017. Therefore, the provisions of Section 171 of the CGST Act, 2017 were not attracted in the case of Residential Units, and no profiteering was found therein.
vii. The DGAP has also reported that the Respondent had registered the impugned Group Housing Project under the provisions of Haryana Real Estate (Regulation and Development) Act, 2016 (HRERA) under Registration No. 02 of 2017 dated 19.06.2017, and the Respondent was permitted to develop the project along with certain commercial retail shops in the shopping complex named as “Signum-36” within the Group Housing Project. The Respondent submitted that he had received a sum of Rs 4,49,25,897/- during the pre-GST regime as advance token money/underwrite money in respect of commercial units in the commercial complex “Signum-36” in the Group Housing Project “The Serenas” before the start of any construction activities in the project. The Builder Buyer Agreement (BBA) in respect of Commercial Units sold was first executed on 03.11.2017 i.e. during the post GST period. Further, neither tax was levied/recovered under the provisions of Haryana Value Added Tax Act, 2003 nor had he availed any ITC since, there was no transfer of property in goods that had occurred in the pre-GST period consequently ‘NIL’ Return under the provision of HVAT Act, 2003 was filed. However, Service tax as applicable was payable on a ‘receipt basis’ and he was claiming credit in respect of service tax paid on various input services received by him, such as Legal, Architecture & structure engineers relatable to the commercial units only. Therefore, the Respondent had both CENVAT Credit as well as Turnover in the pre-GST period with regard to Commercial units and as such could be compared with the post-GST period.
viii. Concerning the Commercial Project “Signum-36”, The DGAP has reported that that before the GST was introduced; the Respondent had been availing credit of Service Tax paid on input services only. No credit was availed in respect of Central Excise Duty paid on the inputs as also the input tax credit of VAT paid on inputs by the Respondent. Further, post-GST, the Respondent was entitled to avail input tax credit of GST paid on all the inputs and the input services including the sub-contracts. From the information submitted by the Respondent for the period April 2016 to June 2019, the details of the input tax credit availed by him, his turnovers from the commercial project “Signum-36”, the ratios of input tax credits to turnovers, during the pre-GST (April 2016 to June 2017) and post-GST (July 2017 to June 2019) periods, are as per Table-A’ below:-
Table-A
(Amount in Rs.)
