Nilang Shastri Vs Swati Realty (NAA)
Applicant alleged profiteering by Respondent Swati Realty in respect of purchase of a Flat in the Respondent’s project –Swati Florence, Ahmedabad, Gujarat. The Applicant has alleged that the Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in price after the implementation of GST w e f 01.07.2017.
We find that, Section 171 (1) of the CGST Act, 2017 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 ITC On the issue of reduction in the tax rate, it is apparent from the DGAP’s Report that there
The Respondent has also submitted his own calculations and arrived at profiteered amount of Rs. 1 64,52,3591-. The above profiteered amount was arrived at by including the CENVAT/ ITC of VAT amounting to Rs. 69,49.0981- and considering the Build-up Area of 39,599.57 sq. mt. as the Total Saleable Area in place of the Area of 19,875 sq. mt. considered from the homebuyers list. In this regard, this Authority finds that the above profiteered amount calculated by the Respondent is incorrect as the inclusion of the CENVAT Credit of VAT amounting to Rs. 69,49,098/- is not possible as the Respondent has not produced any VAT Return/VAT Assessment Order evidencing that he was eligible to avail the above credit of VAT Further, the exact quantum of profiteering cannot be computed by considering the Build-up Area in place of the Area from the homebuyers list. Hence, the calculations to arrive at profiteering amount carried out by the Respondent is not correct and cannot be accepted as discussed in paras above.
Hence, the Authority finds no reason to differ from the above-detailed computation of profiteering in the DGAP’s Report or the methodology adopted The DGAP’s Report concludes that the ITC as a percentage of the turnover that was available to the Respondent for the project ‘Swati Florence’ during the pre-GST period (April-2016 to June-2017) was 2.31% and during the post-CST period (July-2017 to July-2020), it was 8.64% This confirms that. post-GST, the Respondent has been benefited from additional ITC to the tune of 6.33% (8.64% – 2.31%) of his turnover and the same was required to be passed on to the customers/home buyers/recipients Hence. as tabulated in Table ‘C’ above, the Authority determines the profiteered amount for the period from July-2017 to July-2020 in the instant case, as Rs. 4,52 79,754/- and the same was required to be passed on by the Respondent to their customers/home buyers/recipients
It is also evident from the Report of the DGAP that during the investigation, the Respondent has claimed that he has passed on benefit of ITC amounting to Rs. 1.78,71,200/- to the customers/home buyers/recipients To verify the claim of the Respondent, the DGAP sent e-mails to 177 customers/home buyers/recipients asking them to confirm whether they have received the benefit of ITC as claimed by the Respondent Out of 177 customers/home buyers/recipients. only 36 customers/home buyers/recipients replied. Out of these 36 customers/home buyers/recipients, only 32 customers/home buyers/recipients confirmed the receipt of benefit of ITC from the Respondent. Hence. the verification of passing on the benefit of additional ITC done by the DGAP is not conclusive and it cannot be confirmed that the Respondent has passed on an amount of Rs 1,78,71,200/- to his customers/home buyers/ recipients. Therefore, the profiteered amount required to be passed on to the customers/home buyers/recipients by the Respondent is determined to be Rs. 4,52,79.7541-
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
