2022 (5) TMI 958 - NAPA - GST

NAPA dismisses anti-profiteering case against developer as project phases fell outside GST implementation period under Section 171

NAPA dismissed anti-profiteering allegations against a developer regarding two flats in Project River View Heights. The Authority found Phase-I was ... Profiteering - purchase of two flats in Project River View Heights - it is alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) by way of commensurate reduction in price - contravention of section 171 of CGST Act - penalty - HELD THAT:- The Respondent had three Phases viz. Phase-I, Phase-II and Phase-III comprising building Nos. A-J-K-L-M, B1-B2-H1-H2-I and C1-C2-D1-D2-E1-E2-F1-F2 respectively in 'River View Heights'. Out of these three Phases, Phase-I was completed by August 2014, which is well before the implementation of GST and Phase-III had not been started uptil 27.08.2020. Further, in respect of Phase-II, it is on record that, it has already been investigated vide Order No. 51/2019 dated 21.10.2019 passed by this Authority under Rule 133 of the CGST Rules 2017 read with section 171 of the CGST Act 2017, vide which profiteered amount of Rs. 2,13,468/- (including GST @12%) for the period 01.07.2017 to 31.10.2018, has been confirmed in relation to 26 home buyers. It is found that no grounds, in the present case, to differ from the Report of the DGAP. Since the said Phase-I was not in existence in the GST period and the said Phase-III was yet to be started/registered as on 27.08.2020 hence, the Anti-Profiteering provisions under Section 171 of the CGST Act 2017 are not applicable on the said Phase-I and Phase-III of 'River View Heights' of the Respondent. The instant case does not fall under the ambit of the Anti-Profiteering provisions of Section 171 of the CGST Act, 2017. As per the provisions of Rule 133 (1) of the CGST Rules, 2017 this Order was required to be passed within a period of 6 months from the date of receipt of the Report from the DGAP under Rule 129 (6) of the above Rules. Since, the present Report has been received by this Authority on 31.08.2020, the Order was to be passed on or before 01.03.2021. Issues Involved:1. Violation of Section 171 of the CGST Act, 2017.2. Quantum of profiteering.Detailed Analysis:1. Violation of Section 171 of the CGST Act, 2017:The core issue was whether the Respondent violated Section 171 of the CGST Act, 2017, which mandates passing on the benefit of reduced tax rates or increased Input Tax Credit (ITC) to consumers by reducing prices. The Director General of Anti-Profiteering (DGAP) initially investigated Phase-II of the Respondent's project 'River View Heights' and confirmed that the Respondent had benefited from ITC amounting to Rs. 2,13,468/- (including GST) during the period from 01.04.2017 to 31.10.2018, which was not passed on to the home buyers. This led to an order directing the Respondent to pass on the benefit along with interest at 18%.Upon further investigation, the DGAP was directed to examine the entire project, including Phases I and III. The DGAP found that Phase-I was completed before the implementation of GST (01.07.2017), and Phase-III had not started construction as of the investigation date. Therefore, the anti-profiteering provisions under Section 171 were not applicable to these phases. The investigation confirmed that Phase-II had already been scrutinized, and the profiteering amount was established.2. Quantum of Profiteering:The DGAP’s detailed analysis confirmed the profiteered amount for Phase-II as Rs. 2,13,468/- (including GST @12%) for the period 01.07.2017 to 31.10.2018. This amount was to be passed on to the 26 home buyers of Phase-II. For Phases I and III, since Phase-I was completed before GST implementation and Phase-III had not commenced, no profiteering was determined for these phases. The DGAP’s findings were supported by the Respondent’s submissions and verified through the RERA website, confirming that only Phase-II was registered under RERA and subject to GST.Conclusion:The Authority concluded that the Respondent did not violate Section 171 of the CGST Act, 2017, for Phases I and III of the 'River View Heights' project. The anti-profiteering provisions were inapplicable to these phases as Phase-I was completed pre-GST and Phase-III had not started. The profiteering for Phase-II had already been established and addressed in the previous order. Consequently, the proceedings against the Respondent were concluded, and the DGAP’s report dated 27.08.2020 was accepted.Order:The order was passed within the prescribed limitation period, considering the extensions granted by the Supreme Court due to the COVID-19 pandemic. Copies of the order were supplied to the applicants and the Respondent for necessary actions, and the file was consigned after completion.