Jotbir Singh Bhalla Vs Suncity Projects Pvt. Ltd. (NAA)
The brief facts of the case are that the DGAP had received a reference from the Standing Committee on Anti-Profiteering on 28.06.2019 to conduct a detailed investigation in respect of a complaint filed by Applicant No. 1 before the Standing Committee on Anti-profiteering, stating therein that he had purchased a flat in the project ‘Suncity Avenue-102’, Sector-102, Gurgaon, Haryana from the Respondent, and that the Respondent had not passed on the benefit of input tax credit to him by way of commensurate reduction in price in terms of Section 171 of the CGST Act, 2017. Before recommending the investigation under Rule 129 (1) of the CGST Rules, 2017, the aforesaid complaint had been examined by the Standing Committee on Anti-profiteering in its meeting held on 15.05.2019.
Held by NAA
Whereas the Respondent was required to pass on the ITC benefit of Rs. 2,71,11,917/- (including GST), in respect of the period July 2017 to June 2019, in terms of provisions of Section 171 of the CGST Act, 2017, he has only passed on Rs. 2,67,88,794/- (including GST) to his homebuyers and that the remaining amount of ITC benefit that remains to be passed on to 20 homebuyers (as detailed in Table D of this Order amounts to Rs.7,14,837/- Hence we take the view that in compliance with the provisions of Section 171 of the CGST Act, 2017, the Respondent is required to pass on ITC benefit amounting to Rs. 7,14,837/- (inclusive of GST) to the twenty homebuyers as detailed at Sr. No. 3 of Table D of this Order. The Respondent is thus directed to pass on the above amount to the said homebuyers within a period of three months of this Order.
Further, it is also revealed from the submissions of the Respondent that he has not passed on interest @18% on the profiteered amount to his homebuyers, including Applicant No. 1 and the 20 homebuyers who are yet to receive the commensurate benefit. Hence, in line with the provisions of Section 171 (1) of the CGST Act, 2017 read with Rule 133 (3) (b) of the CGST Rules, 2017, we order that the applicable interest shall be paid by the Respondent to his homebuyers from the date of receipt of the additional amount of consideration in the hands of the Respondent till the amount is paid to each buyer, as the Respondent has used this amount in his business. Accordingly, the DGAP is directed to ensure that the interest, at the applicable rate, is paid to the eligible home buyers and submit his report confirming payment of the interest within three months of this Order. In case the interest is not paid the same shall be recovered by the concerned CGST/SGST Commissioner and paid to the eligible buyers.
While deciding this matter, we also take into consideration the fact that till the end of the period of investigation, i.e. till July 2019, only 736 of the 761 residential units had been sold and none of the shops in the commercial complex had been sold during the period of investigation. Further, we observe that the present investigation of the DGAP was only up to 30.06.2019. Hence, any additional benefit of ITC, which shall accrue subsequently to the respondent, shall also be passed on to the eligible homebuyers by the Respondent. Further, the total additional ITC that will be finally available to the Respondent cannot be determined at this stage since the construction of the project is yet to be completed. Therefore, we order that the DGAP shall carry out a comprehensive investigation of the said project of the Respondent from the perspective of Section 171 of the CGST Act 2017 at the time of issue of occupancy certificate.
Further, this Authority as per Rule 136 of the CGST Rules 2017 directs the Commissioners of CGST/SGST Haryana to monitor this order under the supervision of the DGAP by ensuring that the amount profiteered by the Respondent as ordered by this Authority is deposited in the CWFs of the Central and the Haryana State Government as per the details given above passed on to all the eligible buyers. A report in compliance of this order shall be submitted to this Authority by the concerned Commissioner within a period of 4 months from the date of receipt of this order.
Note: Subsequent Corrigendum to NAA Order No. 81/2020
Subsequently, the National Anti-Profiteering Authority issued a Corrigendum dated 11.12.2020 to Order No. 81/2020 dated 10.12.2020 in the matter of Jotbir Singh Bhalla & Anr. v. Suncity Projects Pvt. Ltd.
The NAA clarified/corrected paragraph 29 of its original order. In the 5th and 6th lines of paragraph 29 on page 26, the words “deposited in the CWFs of the Central and the Haryana State Government as per the details given above” were directed to be read as “passed on to all the eligible buyers.”
Accordingly, the direction in the original order requiring monitoring under Rule 136 of the CGST Rules, 2017 must be read as requiring the profiteered amount determined by the Authority to be passed on to all the eligible buyers, instead of being deposited in the Consumer Welfare Funds of the Central and Haryana State Governments.
The corrigendum is therefore material while reading and reporting the operative directions contained in paragraph 29 of the original NAA Order No. 81/2020.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING APPELLATE AUTHORITY
The present Report dated 23.03.2020 has been furnished by the Director General of Anti Profiteering (here-in-after referred to as the DGAP) under Rule 126 of Central Goods and Services Tax Rules (CGST) 2017. The brief facts of the case are that the DGAP had received a reference from the Standing Committee on Anti-Profiteering on 28.06.2019 to conduct a detailed investigation in respect of a complaint filed by Applicant No. 1 before the Standing Committee on Anti-profiteering, stating therein that he had purchased a flat in the project “Suncity Avenue-102”, Sector-102, Gurgaon, Haryana from the Respondent, and that the Respondent had not passed on the benefit of input tax credit to him by way of commensurate reduction in price in terms of Section 171 of the CGST Act, 2017. Before recommending the investigation under Rule 129 (1) of the CGST Rules, 2017, the aforesaid complaint had been examined by the Standing Committee on Anti-profiteering in its meeting held on 15.05.2019.
2. On receipt of the aforesaid reference and the supporting documents from the Standing Committee on Anti-profiteering on 28.06.2019, a Notice under the provisions of Rule 129(3) of the CGST Rules, 2017 was issued by the DGAP on 08.07.2019 calling upon the Respondent, to intimate as to whether he admitted that the benefit of ITC had not been passed on to the Applicant No. 1 by way a commensurate reduction in the price of the flat and if it was so, to suo-moto compute the quantum of the same and mention it in his reply to the Notice along with the supporting documents. Further, vide DGAP’s Notice dated 08.07.2019, the Respondent was allowed to inspect the non-confidential evidence/information submitted by Applicant No. 1 on any day between 15.07.2019 and 17.07.2019. The Respondent availed of the opportunity to inspect the non-confidential documents on 17.07.2019. Likewise, vide DGAP’s email dated 10.01.2020, Applicant No. 1 was also offered the opportunity to inspect the non-confidential documents/ information furnished by the Respondent on either 14.01.2020 or 15.01.2020, which Applicant No. 1 availed of on 15.01.2020.
3. The DGAP has reported that the period covered by the current investigation was from 01.07.2017 to 30.06.2019. the DGAP has also stated that the time limit to complete the investigation had been extended up to 27.03.2020 in terms of Rule 129(6) of the CGST Rules, 2017 by this Authority vide its Order dated 12.12.2019.
4. Further, the DGAP has reported that in response to the DGAP’s Notice dated 08.07.2019, the Respondent vide his letters/ e-mails dated 16.08.2019, 12.11.2019, 13.12.2019, 31.12.2019, 02.01.2020 10.01.2020 and 17.01.2020 has submitted before the DGAP that:-
(i) He had developed an affordable group housing project, “Suncity Avenue-102”, situated at village Dhankot, Sector-102, Gurugram, Haryana under License No. 3 of 2015, issued by Director General, Town & Country Planning, Haryana, Chandigarh
(ii) He had suo moto passed on the benefit of ITC to his customers/ homebuyers by adjusting the last demand raised by him on his customers/ homebuyers by way of a commensurate reduction in price despite the absence of any formal mechanism stipulated for the calculation of the Anti-profiteering; that to evidence that he had passed on the benefit to Applicant No. 1 and other customers/ homebuyers and he was submitting the following documents, namely — a copy of the `Acknowledgement and No Grievance Letter’ dated 12.12.2019 issued by Applicant No. 1 as also a similar ‘Acknowledgement and No Grievance Letter’ of Sh. Birinder Singh (the buyer of residential unit No. B-902), and a copy of the “Ledger Account” maintained by him in respect of Applicant No. 1.
5. The DGAP has also reported that vide his abovementioned replies, the Respondent also furnished the following documents/ information:-
(a) Copies of his GSTR-1 returns for the period July 2017 to June 2019.
(b) Copies of his GSTR-3B returns for the period July 2017 to June 2019.
(c) Copies of the Tran-1 & Trans-2 filed by him.
(d) Copies of his VAT & Service Tax (ST-3) returns for the period April 2016 to June 2017.
(e) Copies of all the demand letters issued to Applicant No.1 and a copy of the Agreement he had executed with the Applicant No.1.
(f) Details of the various taxes and tax rates leviable in his case in the pre-GST and the post-GST periods.
(g) Copy of his Balance Sheet (including all Annexures), his Profit & Loss Account, and Cost Audit Report for financial years 201617 & 2017-18.
(h) Copy of Electronic Credit Ledger for the period 01.07.2017 to 30.06.2019.
(i) CENVAT Credit/Input Tax Credit registers for the period from April 2016 to June 2019,
(j) 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 June 2019 for the project “Suncity Avenue-102”.
(k) List of homebuyers in the project “Suncity Avenue-102” along with the details of Input Tax Credit benefit passed on.
(1) Ledger Account statement maintained by him for his homebuyers.
6. The DGAP has further reported that a careful examination of the case records has revealed that the main issue for determination is as to whether the Respondent had benefitted on account of input tax credit (ITC) as a result of the implementation of GST w.e.f. 01.07.2017 and if so, whether such benefit was passed on by the Respondent to his homebuyers/ recipients in terms of Section 171 of the Central Goods and Services Tax Act, 2017.
7. The DGAP has reported that based on the examination of case records, especially the Agreement executed between the Respondent and Applicant No. 1 and the Intimation-cum-Demand letters issued by the Respondent to Applicant No.1, the Payment Plan agreed between them is given in Table- ‘A’ below.
Table-`A’
(Amount in Rs.)
