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2020 (3) TMI 1406 - NAPA - GSTProfiteering - purchase of Duplex Row House - it is alleged that the Respondent had not passed on the benefit of ITC - benefit of transitional ITC - violation of section 171 of CGST Act - HELD THAT - It is revealed that the Respondent is executing a project known as Sahej Valley at Dandipalli in Rourkela. It is also revealed that the Applicant No. 1 has purchased a Duplex Row House No. B3 in the above project and has alleged vide his application dated 09.08.2018 that the Respondent has not passed on the benefit of ITC to him. The above application was examined by the Odisha State Screening Committee on Anti-Profiteering under Rule 128 (2) of the CGST Rules, 2017 and after having prima-facie satisfied itself that the Respondent has violated the provisions of Section 171 (1) of the CGST Act, 2017 had forwarded it to the Standing Committee on Anti-Profiteering for further action. The Standing Committee had considered this application in its meeting held on 11.03.2019 and sent it to the DGAP for investigation under Rule 129 (1) of the above Rules. It is apparent from the perusal of the details of the Electronic Credit Register attached as Annexure-8 with his Report by the DGAP that the Respondent has become entitled to the benefit of ITC during the period from July, 2017 to March, 2019. However, it has not been explained by the DGAP on which project the above ITC has become available to the Respondent and in case this ITC has become available on the purchases made in respect of the above project why the benefit of the above amount should not be passed on to the buyers of the houses in the above project - It is also revealed from the perusal of the e-mail dated 18.04.2019 sent by the ICICI Bank which has given loan to the Respondent for purchasing the above house that the Bank has released payment of Rs. 17,69,850/- vide cheque dated 20.05.2016 and an amount of Rs. 3,90,150/- vide cheque issued on 27.09.2016 in favour of the Respondent. Both the above cheques have been issued during the pre-GST period. It is further revealed that an amount of Rs. 5,40,000/- was released in favour of the Respondent vide cheque issued on 03.04.2018 during the post GST period. Based on the facts the Report dated 20.09.2019 furnished by the DGAP cannot be accepted and he is directed to further investigate the present case under Rule 133 (4) of the CGST Rules, 2017 on the following issues and submit his detailed Report under Rule 129 (6) of the Rules within a period of 3 months from the date of passing of this order - (i) What was the basis of accepting the Completion Certificate issued by a private Architect? (ii) Which is the Competent Authority to issue the Completion Certificate in the State of Odisha? (iii) Whether the above Respondent has earned ITC on the above project during the period from July, 2017 till date? (iv) Whether the above Respondent has utilised the ITC during the period from July, 2017 till date for discharging his output GST liability in respect of the above project? (v) Whether the Respondent has claimed transitional credit through the TRAN-1 statements filed in respect of the above project? (vi) Whether the Respondent has availed benefit of additional ITC since July, 2017 till date and he is liable to pass on the same to his buyers? (vii) Whether the above land owners have sold their share of the houses and if so whether they have passed on the benefit of ITC to the buyers of these houses ? (viii) Whether Applicant No. 1 is entitled to the benefit of ITC? (ix) Whether rest of the 8 house buyers are eligible for the benefit of ITC?
Issues Involved:
1. Acceptance of Completion Certificate issued by a private architect. 2. Identification of the Competent Authority for issuing Completion Certificate in Odisha. 3. Earning of ITC by the Respondent on the project from July 2017 onwards. 4. Utilization of ITC by the Respondent for output GST liability on the project. 5. Claim of transitional credit by the Respondent through TRAN-1 statements. 6. Availment and passing on of additional ITC by the Respondent to buyers. 7. Sale of houses by landowners and passing on ITC benefit to buyers. 8. Entitlement of Applicant No. 1 to ITC benefit. 9. Eligibility of other house buyers for ITC benefit. Detailed Analysis: 1. Acceptance of Completion Certificate issued by a private architect: The DGAP's report relied on a Completion Certificate dated 31.03.2016 issued by a private architect, Mr. Arijit Sarkar, to claim that the project was completed before the implementation of GST on 01.07.2017. However, this Authority noted that such a certificate should be issued by a competent authority duly notified by the State of Odisha, and reliance on a private architect's certificate was not correct. 2. Identification of the Competent Authority for issuing Completion Certificate in Odisha: The Authority questioned the DGAP on the basis of accepting the Completion Certificate from a private architect and directed to identify the competent authority in Odisha responsible for issuing such certificates. 3. Earning of ITC by the Respondent on the project from July 2017 onwards: The DGAP reported that the Respondent availed ITC during the period from July 2017 to March 2019. However, the DGAP did not clarify which project this ITC pertained to and whether it should be passed on to the buyers of the houses in the project. 4. Utilization of ITC by the Respondent for output GST liability on the project: The DGAP's report included details from the Electronic Credit Register showing ITC availed by the Respondent. The Authority noted the need for clarification on which project this ITC was utilized for discharging output GST liability. 5. Claim of transitional credit by the Respondent through TRAN-1 statements: The Authority noted that the DGAP's report showed the Respondent availed transitional credit as per TRAN-1 statements but did not provide sufficient proof or explanation regarding its relation to the construction service. 6. Availment and passing on of additional ITC by the Respondent to buyers: The DGAP claimed that the ITC availed by the Respondent was related to repair and maintenance works, not the construction of the project. However, the Authority found this claim unsubstantiated and directed further investigation to determine if the Respondent availed additional ITC since July 2017 and if it should be passed on to buyers. 7. Sale of houses by landowners and passing on ITC benefit to buyers: The project land belonged to two landowners who developed it in collaboration with the Respondent. The DGAP did not clarify whether these landowners sold their share of houses and if the ITC benefit was passed on to buyers. The Authority directed further investigation on this matter. 8. Entitlement of Applicant No. 1 to ITC benefit: Applicant No. 1 argued that the project was under construction as of 01.07.2017 and completed in February 2018, thus entitling him to ITC benefits. The Authority noted that the payment sequence indicated eligibility for ITC benefit and directed further investigation to confirm this entitlement. 9. Eligibility of other house buyers for ITC benefit: The DGAP's report did not clarify whether the other buyers of the units were entitled to the ITC benefit. The Authority directed further investigation to determine the eligibility of the remaining house buyers for ITC benefits. Conclusion: The Authority found the DGAP's report insufficient and directed a further detailed investigation under Rule 133(4) of the CGST Rules, 2017, on the specified issues. The DGAP was instructed to submit a comprehensive report within three months.
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