2024 (1) TMI 1371 - CCI - GST

DGAP ordered fresh investigation into alleged profiteering in flat purchase under Section 171 CGST Act 2017

The CCI directed the DGAP to investigate alleged profiteering in a flat purchase case under Section 171 of the CGST Act, 2017. The first applicant claimed ... Profiteering - purchase of Flat - contravention of provisions of Section 171 of the Central Goods & Service Tax Act, 2017 - HELD THAT:- The Applicant No. 1 during the hearing claimed that his objections had not been addressed in DGAP's report dated 14.02.2023 - the Commission under Rule 133(4) of the CGST Rules, 2017 directs the DGAP to investigate the matter on the issues provided. The Respondent & Applicant No. 1 are also directed to extend all necessary assistance to the DGAP and furnish him with necessary documents or information as required during the course of the investigation. Issues Involved:1. Alleged profiteering by the Respondent in the sale of flats.2. Discrepancies in the calculation of saleable area.3. Verification of Input Tax Credit (ITC) benefits passed on to homebuyers.4. Accuracy of the Respondent's turnover figures during the pre-GST period.5. Request for forensic audit of the Respondent's accounts.6. Re-verification of GST benefits allegedly paid to homebuyers.Issue-wise Detailed Analysis:1. Alleged Profiteering by the Respondent:The case originated from applications alleging profiteering by the Respondent in the sale of flats, specifically concerning the non-passing of ITC benefits to homebuyers. The Director General of Anti-Profiteering (DGAP) conducted an investigation and reported a profiteered amount of Rs. 11,99,09,043, including GST. This amount included specific amounts for the applicants, which were Rs. 1,75,220 for Applicant No. 1 and Rs. 59,437 for Applicant No. 2. The Respondent had passed on ITC benefits of Rs. 14,28,58,414 to 302 homebuyers, but an additional amount of Rs. 7,70,819 was yet to be passed to 19 homebuyers, including the applicants. The DGAP's findings were based on the CENVAT/Input Tax Credit availability before and after GST implementation.2. Discrepancies in the Calculation of Saleable Area:The DGAP was directed to re-calculate the saleable area based on RERA documents. The DGAP, after re-investigation, found that the total saleable area was 12,19,138 sq. ft. as per the homebuyers list, which was corroborated by the Respondent's reconciliation statement. The Applicant No. 1 had claimed a different figure of 12,39,814 sq. ft., but this was not found in the RERA summary. The DGAP maintained that the calculation of the saleable area was correct and in accordance with standard practices.3. Verification of ITC Benefits Passed on to Homebuyers:The DGAP's report indicated that ITC benefits had been passed on to various homebuyers, but discrepancies were noted in the verification process. The Applicant No. 1 alleged that credit notes were not issued to him and other buyers, and that verification emails were sent to incorrect email addresses. The Commission directed the DGAP to re-verify ITC benefits by contacting all 303 homebuyers to confirm the receipt of benefits.4. Accuracy of the Respondent's Turnover Figures During the Pre-GST Period:The Applicant No. 1 challenged the Respondent's claimed turnover of Rs. 50,85,24,517 during the pre-GST period, citing discrepancies with the audited balance sheet. The DGAP clarified that the turnover was derived from the homebuyers list and that consolidated balance sheets pertain to multiple projects, making it difficult to isolate turnover for a single project without considering all transactions.5. Request for Forensic Audit of the Respondent's Accounts:The Applicant No. 1 requested a forensic audit to ascertain the correct turnover figures and other financial details. The DGAP, however, found no evidence of document manipulation or forgery and deemed a forensic audit unnecessary. The DGAP relied on statutory documents and reconciled records submitted by the Respondent.6. Re-verification of GST Benefits Allegedly Paid to Homebuyers:The DGAP's initial verification involved a random selection of 100 homebuyers, of whom only 34 confirmed receipt of ITC benefits. The Commission directed the DGAP to send emails to all 303 homebuyers to ensure comprehensive verification of ITC benefits passed on by the Respondent.Conclusion:The Commission directed the DGAP to further investigate the issues raised, including the re-verification of ITC benefits, discrepancies in saleable area calculations, and the accuracy of turnover figures. The Respondent and Applicant No. 1 were instructed to cooperate with the DGAP's investigation, and a copy of the order was provided to all parties involved.