NAA booked Builder Paramount Propbuilt for not passing ITC benefit to Customers [Read Order]

The National Anti-Profiteering Authority ( NAA ) in its case number 47/2019 i.e. Shri Gaurav Gulati v M/s Paramount Propbuilt held Paramount Propbuilt Pvt. Ltd. to be liable of anti-profiteering for not passing on the benefit of ITC arising out of the reduction in the price of flat, on the introduction of GST.

The applicant had filed a complaint on 19.06.2018 before the Uttar Pradesh State Screening Committee on Anti-profiteering alleging that he was not passed the benefit of Input Tax Credit by way of reduction in the price of flat, on the introduction of GST on his booking a flat in the respondent’s project “Paramount Emotions”. The DGAP after computing the amount of ITC not passed on/required to be passed on claimed that the profiteering had been examined w.r.t. the 1557 buyers who had made bookings either during the pre-GST period or during the post-GST period but before the receipt of Completion Certificate.

The respondent submitted that the assumptions made and the criteria used by the DGAP to assess the profiteered amount was incorrect. He stated that in case of a real estate development company, there were multiple kinds of inputs some of which were eligible for ITC in the pre-GST regime, however post-GST, while many of the indirect taxes had been subsumed and ITC was available on inputs, there were constraints/conditions on utilizing the ITC especially when any excess ITC was not available as a refund and further submitted documentary evidence to support other contentions relating to completion certificate and passing of benefit.

The Quorum consisting of Sh B.N. Sharma as the Chairman, Sh J.C. Chauhan and Sh Amand Shah as the technical members held that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in the present project and resorted to profiteering on the basis of the following contentions raised by the parties:

1. That no evidence was produced w.r.t. the calculations after which the impugned amount was achieved and that the ITC benefit was passed.
2. That the respondent’s contention that he had reduced the prices of the houses several times keeping in view the market conditions as well as the terms of payment and there is no ground to believe that he had given the benefit on account of the additional ITC which had accrued to him after the introduction of GST. Further, evidence suggests that he had given different discounts to a different set of buyers which also leads to the conclusion that these discounts did not pertain to the benefit of ITC.