2023 (7) TMI 1218 - CCI - GST

ITC benefit passing obligation extinguished after NCLT approved resolution plan but new management liable for ongoing collections under Section 171

Director General of Anti-Profiteering, Central Board of Indirect Taxes & Customs, Versus M/s. Puma Realtors Pvt. Ltd

The CCI held that profiteering proceedings under Section 171 of CGST Act, 2017 against the original developer could not continue after NCLT approved the ... Profiteering - reduction in the rate of tax or benefit of ITC on the supply of construction service by the Respondent after implementation of GST w.e.f. 01.07.2017 or not - benefit of ITC passed on or not - Section 171 of the CGST Act, 2017. - The company was under CIRP proceedings and taken over by the successful resolution applicant. Whether the proceedings already initiated against the Respondent viz. M/s. Puma Realtors Pvt. Ltd. under Section 171 of the CGST Act, 2017 and CGST Rules, 2017 in the matter of the project 'Ire° Rise' should be continued even after passing of NCLT order dated 01.06.2021 or not? - HELD THAT:- Any claim of not passing on the benefit of ITC to the recipients under Section 171 of the CGST Act and the Rules made there under, would not survive in view of the Order dated 01.06.2021 passed by the NCLT under Section 31 of the Code which extinguishes his all liabilities including any liability on account of passing on the benefit of ITC to the recipients of the Project lreo Rise as the same has not been incorporated in the Approved Resolution Plan. Further the New Management viz. M/s One Group Developers can also not be held liable for the liability of M/s. Puma Realtors Pvt. Ltd. of not passing on the benefit of ITC to the eligible home- buyers/recipients under Section 171 of the CGST Act, 2017 in view of the NCLT order dated 01.06.2021 - the proceedings already initiated against the Respondent viz. M/s. Puma Realtors Pvt. Ltd. for determining the benefit of Input Tax Credit under Section 171 of the CGST Act, 2017 and rules made there under, with regard to the project 'Ireo Rise' shall be discontinued henceforth. Whether directions to investigate M/s One Group Developers which has taken over the project lreo Rise' as per NCLT's Order dated 01.06.2021, under section 171 of CGST Act 2017 and CGST Rules, 2017 be passed or not? - HELD THAT:- It is revealed from the material brought on record that by virtue of Order dated 01.06.2021 of the NCLT, the management of M/s. Puma Realtors Pvt. Ltd. (Respondent) has been taken over by M/s One Group Developers under the Code. It is also revealed that M/s One Group Developers is collecting the outstanding installments from the homebuyers/recipients for the project 'Ireo Rise' and is also collecting GST thereon. It is further revealed that the CC has not been issued till date in respect of this project and it is still under execution. Hence M/s One Group Developers is apparently liable for passing on the benefit of ITC under the provisions of Section 171 of the CGST Act and Rules made there under as it is availing the benefit of ITC - the DGAP is directed to investigate M/s One Group Developers with regard to the project 'Ire° Rise' for any violation of Section 171 of the CGST Act, 2017. Issues Involved:The judgment involves determining whether the proceedings against the Respondent should be continued after a specific NCLT order and whether investigations should be initiated against a new management entity.Issue No. 1:The Commission held that the claim of not passing on the benefit of Input Tax Credit (ITC) to recipients under Section 171 of the CGST Act would not survive due to the NCLT order dated 01.06.2021, which extinguished all liabilities, including the liability of passing on ITC benefits. The new management, M/s One Group Developers, cannot be held liable for the previous management's actions. Consequently, proceedings against the Respondent, M/s. Puma Realtors Pvt. Ltd., regarding the project 'Ireo Rise' shall be discontinued.Issue No. 2:The judgment revealed that M/s One Group Developers took over the management of M/s. Puma Realtors Pvt. Ltd. as per the NCLT order. It was found that the new management is collecting payments from homebuyers for the project 'Ireo Rise' and is also collecting GST. As the Completion Certificate has not been issued yet for the project, M/s One Group Developers is directed to investigate for any violation of Section 171 of the CGST Act and Rules regarding the benefit of ITC.Separate Judgment:The Commission's findings were based on the DGAP's Report dated 31.01.2023 and the Respondent's submissions. The Commission decided to discontinue proceedings against the Respondent and directed an investigation into M/s One Group Developers for potential violations of Section 171 of the CGST Act and Rules. The order was to be supplied to the DGAP and the Respondent, with the file to be closed upon completion.