The Competition Commission of India (CCI) quashed profiteering charges on the ground of maintenance of separate bank accounts for projects by Bhartiya Urban Pvt Ltd.
A Report was received from the Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP) after a detailed investigation under Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules, 2017.
The Applicant No. 1 stated that the Respondent had resorted to profiteering in respect of supply of Construction Service related to the purchase of a flat. The Applicant No. 1 had also alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) by way of commensurate reduction in the price of the flat purchased by him, on implementation of GST w.e.f. 01.07.2017.
The DGAP had issued a notice and called upon the Respondent under Rule 129 of the CGST Rules, 2017 to reply as to whether the benefit of ITC had been passed on by him to the recipients by way of commensurate reduction in prices and also asked him to suo-moto determine the quantum of benefit which was not passed on.
The DGAP has concluded that in this case, the allegation was that post implementation of GST, the benefit of input tax credit was not passed on by the Respondent by way of commensurate reduction in the prices, to the recipients. However, as discussed above, there was no benefit of additional input tax credit that accrued to the Respondent post introduction of GST.
In fact, the input tax credit as a ratio of Respondent’s turnover decreased from 9.95% to 9.27%. Moreover, the effective rate of tax has also gone up from 16.15% to 18%, post introduction of GST. Section 171(1) of the Central Goods and Services Tax Act, 2017 dealing with profiteering can be invoked in the event when there was a reduction in the rate of tax or there is an increase in the input tax credit. Since neither of the conditions prescribed under the aforesaid Section 171 (1) has been met, the said statutory provision is not applicable to the present case for the project “Nikoo Homes – l”.
A Coram comprising Ravneet Kaur, Chairperson and Dr. Sangeeta Verma, Member observed that “The Karnataka RERA has informed that M/s. Bhartiya Urban Pvt. Ltd. has maintained separate Bank accounts for above projects. The above information was sought from the Karnataka RERA only to confirm whether the Respondent has kept separate accounts for each project or not.”
“In view of the above findings, we find that the instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017. Accordingly, the proceedings initiated against the Respondent under Rule 133 (4) of the CGST Rules, 2017 are hereby dropped” the CCI noted.
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