2023 (8) TMI 1199 - CCI - GST

Profiteering - project Palm Wood Royale Gulmohar Green - benefit of reduction in the Rate of tax or ITC on the supply of Construction Service by the Respondent after implementation of GST - benefit of Input Tax Credit not passed - contravention of provisions of section 171 of the CGST Act, 2017 - HELD THAT - It is revealed that the Respondent has executed two Projects viz. Anandam Square (Commercial Project) and Gulmohar Green (Residential Project). In respect of the commercial project Anandam Square the Commission has observed that in the said project ITC as percentage of turnover that was available to the Respondent during the pre-GST period (April, 2016 to June, 2017) was 4.17% and during the post-GST period (July, 2017 to November, 2019), it was 3.89%. It clearly confirms that the Respondent has not profiteered through additional Input Tax Credit in respect of project Anandam Square post-GST. Therefore, he is not required to pass on the benefit of ITC to his buyers. The instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017 - the proceedings initiated against the Respondent under Rule 133 (5) of the CGST Rules, 2017 are hereby dropped.

Issues Involved:
1. Inclusion of ITC of VAT in the pre-GST period for computation of profiteering.
2. Correction of erroneous ITC figures in the post-GST period.
3. Investigation into the benefit of reduction in the rate of tax or ITC on the supply of construction service post-GST.
4. Verification and recalculation of profiteered amount.

Summary:

1. Inclusion of ITC of VAT in the pre-GST period for computation of profiteering:

The National Anti-Profiteering Authority (NAA) directed the Director General of Anti-Profiteering (DGAP) to verify the authenticity of VAT Assessment Orders submitted by the Respondent for the period from April 2016 to June 2017. The DGAP was instructed to incorporate the verified ITC of VAT into the computation of the profiteered amount.

2. Correction of erroneous ITC figures in the post-GST period:

The Respondent contended that the DGAP had erroneously taken the ITC of GST as Rs. 3,44,11,808/- instead of Rs. 59,31,808/-. The DGAP admitted the error and was directed to rectify it and recalculate the profiteered amount accordingly.

3. Investigation into the benefit of reduction in the rate of tax or ITC on the supply of construction service post-GST:

The DGAP investigated whether there was a benefit of reduction in the rate of tax or ITC on the supply of construction service post-GST and if the Respondent had passed on such benefit to the recipients by way of commensurate reduction in price, as mandated by Section 171 of the CGST Act, 2017. It was found that the Respondent was constructing two projects, one residential and one commercial, and had maintained separate books of accounts for both. The investigation focused on the commercial project "Anandam Square."

4. Verification and recalculation of profiteered amount:

Upon re-investigation, the DGAP verified the VAT ITC and corrected the ITC figures for the post-GST period. The revised figures showed that the ITC as a percentage of turnover during the pre-GST period was 4.17% and during the post-GST period was 3.89%, indicating no additional benefit from ITC post-GST. Consequently, it was concluded that the Respondent did not contravene Section 171 of the CGST Act, 2017, as no additional ITC benefit accrued to the Respondent in respect of the project "Anandam Square."

Conclusion:

The Competition Commission of India concluded that the Respondent had not profiteered through additional ITC in respect of the commercial project "Anandam Square" post-GST. Therefore, the proceedings initiated against the Respondent under Rule 133 (5) of the CGST Rules, 2017, were dropped.

← Previous Next →