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NAA confirms profiteering charges against Pivotal Infrasturcture Pvt. Ltd. and directs the company to refund the amount of Rs. 2.97 Crores to buyers.

As the current investigation was upto 30th June 2019 only, therefore authority directed for further investigation of respondent's projects for the period from 01st July 2019 to 30th June 2020.


(Image is for representation purpose only)

The brief facts of the case are that the Applicant No. 1 had alleged profiteering by the Respondent in respect of purchase of Flat in the “Devaan” project of the Respondent situated at Sector-84, Gurgaon-122001. The Applicant had also alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) availed by him by way of commensurate reduction in the price of the above flat. 

It is established that on the basis of the CENVAT/input tax credit availability pre and post-GST and the details of the amount collected by the Respondent from the Applicant No. 1 and the other home/shop buyers during the period from 01.07.2017 to 24.01.2018, the amount of benefit of input tax credit that needed to be passed on by the Respondent to the recipients came to Rs. 2,29,52,071/- for the residential flats. Further, the amount of benefit of input tax credit that needed to be passed on by the Respondent to the home buyers during the period from 25.01.2018 to 30.06.2019, came to Rs. 2,21,32,354/-. In respect of the commercial shops sold by the Respondent during the period from 01.07.2017 to 30.06.2019, the benefit of input tax credit that was required to be passed on by the Respondent to these buyers of the commercial shops amounts to Rs. 32,20,266/-. Therefore, the total benefit of input tax credit for the period from 01.07.2017 to 30.06.2019 in respect of both residential flats and the commercial shops is determined as Rs. 4,83,04,691/-.

It is also evident from the Report of the DGAP that the Respondent had claimed that he has passed on benefit of Rs. 1,85,25,586/- to the home/shop buyers against the profiteered amount of Rs. 4,83,04,692/-. The DGAP has specifically admitted in his Report that for verification of the benefit already passed on by the Respondent he had summoned the credit notes and the payment ledger of the home buyers which have been duly verified by him with the details submitted by the Respondent and found to be correct.

Respondent is directed to return the ITC benefit of Rs. 33,731/- including the GST to the Applicant No. 1, Rs.  2,74,75,785/- including the GST to the 844 other flat buyers and Rs. 22,82,618/- including the GST to the 39 commercial shop buyers as per the provisions of Rule 133(3)(c) along with the interest @ 18%. 

This Authority under Rule 133(3)(a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats/shops commensurate with the benefit of ITC received by him as has been detailed above. Since the present investigation is only up to 30.06.2019 the DGAP is directed to further investigate the quantum of ITC benefit under Rule 133(4) of the above Rules which the Respondent is required to pass on to the home/shop buyers w.e.f. 01.07.2019 till 30.06.2020.

It is also evident that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his above project in contravention of the provisions of Section 171(1) of the CGST Act, 2017 and has thus resorted to profiteering. Hence, he has committed an offence under Section 171(3A) of the CGST Act, 2017 and therefore, he is apparently liable for imposition of penalty under the provisions of the above Section. Accordingly, a Show Cause Notice be issued to him directing him to explain why the penalty prescribed under Section 171(3A) of the above Act read with Rule 133(3)(d) of the CGST Rules, 2017 should not be imposed on him.

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on Jun 30, 2020

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