GST Anti Profiteering; Non-payment of Interest on profiteered Amount: CCI directs to pay Interest to Home Buyers [Read Order]

National Anti-Profiteering Authority, the Competition Commission of India (CCI) in a case of GST anti-profiteering directed to pay Interest to home buyers on non-payment of interest on profiteered amounts.

A complaint filed under Rule 128 of the Central Goods and Service Tax (CGST) Rules, 2017, accused MICL Realty LLP of not passing on the Input Tax Credit (ITC) benefits to a homebuyer.

The investigation, triggered by a complaint from a homebuyer, focused on MICL Realty LLP’s project “Aaradhya Nine-Ghatkopar Avenue” in Mumbai. The complainant alleged that despite assurances of ITC benefits, MICL Realty LLP did not reduce the property price accordingly.

The Director General of Anti-Profiteering (DGAP) conducted a thorough examination, considering the period from 01.07.2017 to 03.12.2019. The company argued that it had passed on the benefit of ITC amounting to Rs. 94,83,735/- to 48 homebuyers, as confirmed by bank statements and customer acknowledgements.

 The Respondent (MICL Realty LLP) had benefited from an additional ITC of 0.07% of turnover post-GST implementation. The excess benefit of ITC amounted to Rs. 6,43,756/-, and the Respondent had not passed on Rs. 35,114/- to 4 eligible homebuyers.

The Complainant submitted that the Respondent had committed to giving ITC against the GST paid and refunding the excess amount post-completion of the project. However, after receipt of possession, he called and emailed the Respondent but no response was received. The Complainant also submitted that the Respondent had processed the refund for a close set of people. Further, the Complainant submitted copies of receipts of payments made by him and the Letter/e-mail correspondence made with the Respondent along with his application in APAF-1 form.

On the issue of reduction in the tax rate, it was apparent from the DGAP’s Report that there has been no reduction in the rate of tax in the post-GST period. Hence, the only issue to be examined is whether there was any net benefit of ITC with the introduction of GST.

The post-GST period, the Respondent has been benefited from additional ITC to the tune of 0.07% (4.26% ­4.19%) of his turnover and the same is required to be passed on by him to the recipients of supply, including the Complainant.

The DGAP had further submitted that on examination of all the documentary evidences and after getting confirmations from the buyers and the Bank, it appeared that in some cases, the Respondent has passed on the benefit of ITC more than the required commensurate benefit whereas in some cases, the benefit of ITC passed on was less than the required commensurate benefit.

Further, it is also revealed that the Respondent has not paid the interest amount @ 18% thereon, from the date when the above amount was profiteered by him till the date of such payment made as per the detailed furnished by the DGAP vide Annexure- 21 of his report dated 29.10.2021.

Accordingly, the Respondent is directed to pay the interest to the 4 home buyers w.e.f. the date he had profiteered the above amount till the date on which the benefit was passed on. The DGAP is also directed to ensure that the interest at the applicable rate, is paid by the Respondent and payment of the interest within three months of the Order shall be confirmed by him.

To Read the full text of the Order CLICK HERE

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