CCI drops anti-profiteering proceedings against real estate developer under Section 171 CGST Act 2017

CCI examined anti-profiteering provisions under Section 171 of CGST Act, 2017 across multiple real estate projects. For Yoovilla Phase-I, occupancy certificate was issued in July 2016 during pre-GST period, making anti-profiteering provisions inapplicable. Project T-Villa had no sold units for comparison. Project SOHO lacked pre-GST sales data and CENVAT comparison basis. Project V2 Villa P-I commenced in March 2022 under mandatory 5% GST rate without ITC eligibility. CCI concluded none of the projects fell under anti-profiteering provisions and dropped proceedings against respondent under Rule 133(5) of CGST Rules, 2017.

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Issues Involved:
1. Determination of profiteering amount.
2. Applicability of anti-profiteering provisions to various projects.
3. Verification of project status and compliance with GST and RERA regulations.

Summary:

1. Determination of Profiteering Amount:
The Competition Commission of India (CCI) received a report from the Director General of Anti-Profiteering (DGAP) on 16.02.2023, which followed an investigation under Rule 133(5) of the Central Goods & Service Tax (CGST) Rules, 2017. The National Anti-Profiteering Authority (NAA) had previously determined an amount of Rs. 1,96,69,483/- as the benefit of Input Tax Credit (ITC) not passed on to recipients by the Respondent during the period from 01.07.2017 to 30.11.2020.

2. Applicability of Anti-Profiteering Provisions:
The DGAP issued a notice to the Respondent to reply whether the benefit of ITC had been passed on to buyers in all other projects. The Respondent argued that the anti-profiteering provisions were not applicable to other projects as they were either sold post-receipt of Occupancy Certificate (OC) or commenced in the GST regime without transitioning from the erstwhile tax regime. The projects in question included Yoovilla Phase I, Tanti Villa, Yoovilla Phase II, and SOHO.

3. Verification of Project Status and Compliance:
The DGAP verified the Respondent's claims regarding MRERA registration and project status. For Yoovilla Phase I, the project was completed in the pre-GST period, making anti-profiteering provisions inapplicable. For T-Villa, there were no sales during the investigation period, thus anti-profiteering provisions did not apply. For SOHO, the project commenced in the GST regime with no pre-GST sales, hence anti-profiteering provisions were also inapplicable. For V2 Villa P1, the project was launched after 01.04.2019 and followed the new GST rate structure of 5% without ITC, making anti-profiteering provisions inapplicable.

Conclusion:
The Commission concluded that Section 171(1) of the CGST Act, 2017, which requires passing on the benefit of ITC by way of commensurate reduction in prices, was not applicable in the present case. The proceedings initiated against the Respondent under Rule 133(5) of the CGST Rules, 2017 were thereby dropped. A copy of the order was supplied to all parties, and the case file was consigned after completion.

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