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2019 (5) TMI 785

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..... e Act had come to the notice of the DGAP he was legally bound to ascertain the truth of the allegation after conducting detailed investigation as per the provisions of Rule 129 (1) of the CGST Rules, 2017 as it not only adversely affects the interests of the common buyers but also amounts to wrongful appropration of the concession which has been granted by the Central as well as the State Government by sacrificing their own revenue and hence no illegality has been committed by him by launching the present investigation against the Respondent. The Respondent has also stressed that the computation of the benefit/ loss could not be done before completion of the project. It is apparent from the record that the above project was launched by the Respondent in the year 2013 and was likely to be completed by March, 2019 after a lapse of a period of about 6 years whereas he had been regularly availing the benefit of additional ITC w.e.f. 01.07.2017 to pay his output tax liability by appropriating the benefit of ITC which he was required to pay to the flat buyers. The Respondent can not be allowed to enrich himself at the cost of the buyers and keep them waiting till the project was complete .....

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..... ; 89,68,979/-. The Respondent has also realized an additional amount to the tune of ₹ 49,169/- from the Applicant No. 1 which includes both the profiteered amount @1.79% of the taxable amount (base price) and GST on the said profiteered amount - 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 commensurate with the benefit of ITC received by him as has been detailed above. Since the present investigation is only up to 30.06.2018 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondent. It is also evident from the facts that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his Anand Vilas Project in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus realized more price from them than what he was entitled to collect and has also compelled them to pay more GST on the additional realisation than what they were required to pay by issuing incorrect tax invoices and hence he has committed an offence under section 122 (1) (i) of the CGST Act, 2017 and t .....

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..... ed to him. The Applicant No. 1 had also furnished an e-mail dated 28.08.2017 through which he had asked the Respondent why he was not being given the benefit of ITC when GST was being charged from him @12% and vide e-mail dated 28.08.2017, the Respondent had communicated that the benefit of ITC would be calculated at the time of the completion of the project and if due, would be proportionately passed on to the above Applicant. The Applicant No. 1 had also submitted the following documents along with his complaint:- (a) Duly filled in Form APAF-I (b) Payment Schedule pre-GST & post-GST (c) Copy of Tax Invoice post-GST (d) Copy of Demand Note pre-GST (e) Statement of GST paid upto 02.01.2018 (f) Copy of receipts of payment (g) ID proof (Aadhar Card) (h) Copies of e-mails requesting for passing on the benefit of ITC (i) Detailed work-sheet 4. The above complaint was considered by the Standing Committee on Anti-profiteering in its meeting held on 09.02.2018 and was forwarded to the DGAP on 28.02.2018 for investigation whether the benefit of ITC had been passed on by the Respondent to the above Applicant or not. 5. The DGAP had issued Notice under Rule 129 of the CGST Rules, 2017 o .....

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..... available to him as has been described as under:- a) All the purchases of marble and steel etc. had been done from the suppliers based in Haryana by paying Value Added Tax (VAT), on which ITC was available under the Haryana VAT Act and no purchases had been made from outside the State. b) In the service contracts in respect of design, architecture, horticulture work, cutting and testing and painting etc., the contractors were charging Service Tax on which CENVAT credit was available. c) In one contract, the civil contractor had charged Service Tax and VAT (WCT) from the Respondent on which CENVAT Credit was available and the VAT (WCT) was eligible as deduction under the Haryana VAT Act. III. That costs of various inputs had increased during the period of agreement for sale executed with the above Applicant, the details of which had been submitted by the Respondent with the reply. He had also claimed that there were several exempted services which formed part of the transaction and in a number of cases ITC had not been allowed and hence its figures were always dynamic. IV. That the Respondent had requested that except the following documents all other information was to be treated a .....

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..... 00 36,666 7,275 - 8,58,741 2 Booking+60 06.11.2016 10% 7,27,500 87,300 36,666 7,275 - 8,58,741 3 Booking+120 05.01.2017 10% 7,27,500 87,300 36,666 7,275 - 8,58,741 4 Booking+180 06.03.2017 10% 7,27,500 87,300 36,666 7,275 - 8,58,741 5 Booking+270 04.06.2017 10% 7,27,500 87,300 36,666 7,275 - 8,58,741 6 Booking+311 15.07.2017 10% 7,27,500 87,300 36,666 7,275 - 8,58,741 7 Booking+375 17.09.2017 10% 7,27,500 87,300 - 48,888 48,888 9,12,576 8 Booking+420 01.11.2017 10% 7,27,500 87,300 - 48,888 48,888 9,12,576 9 Booking+480 31.12.2017 10% 7,27,500 87,300 - 48,888 48,888 9,12,576 10 On App. of OC or within 18 Months of Booking (whichever is later) Not due till date of application 5% 3,63,750 43,650 - 24,444 24,444 4,56,288 11 At the time of offer for possession 5% 3,63,750 43,650 - 24,444 24,444 4,56,288 Total 100% 72,75,000 8,73,000 2,19,996 43,650 1,95,552 1,95,552 88,02,750 10. The DGAP has also submitted that the claim of the Respondent that the exact amount of ITC would be finally determined and the benefit passed on to the buyers at the time of handing over possession might be correct but the profiteering, if any, had to be computed at a point of time in terms of Rule 129 (6) of th .....

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..... l (Pre-GST) July, 2017 to March, 2018 April, 2018 to June, 2018 Total (Post-GST) 1. CENVAT of Service Tax Paid on Input Services A 167,90,834 39,87,427 207,78,261 - 2 Input Tax Credit of VAT Paid on Purchase of Inputs (B) 21,27,046 8,23,223 29,50,269 - 3 Input Tax Credit of VAT(WCT) paid to sub Contractors (C) 107,38,476 26,43,641 133,82,117 - 4 Total CENVAT/Input Tax Credit Available (D)=(A+B+C) 296,56,356 74,54,291 371,10,647 - 5 Input Tax Credit of GST Availed (E) - 532,51,994 84,12,610 616,64,604 6 Total Taxable Turnover (F) 4243,39,766 1127,06,432 5370,46,198 3843,52,825 657,71,797 4501,24,622 7 Ratio of CENVAT/ Input Tax Credit Pre-GST [(G) = (D)/(F) and Ratio of Input Tax Credit Pre-GST Post-GST [(G) = (E)/(F)] 6.91% 13.70% 13. On the basis of the above Table the DGAP has argued that it was evident that the ITC as a percentage of the total turnover that was available to the Respondent during the pre-GST period was 6.91% and during the post-GST period it was 13.70% and therefore, it was clear that post-GST, the Respondent had benefited from additional ITC to the extent of 6.79% (13.70%-6.91%) of the total turnover. He has further argued that the issue of profiteering had been .....

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..... GST. The DGAP has also alleged that by not reducing the basic price by 6.79% due to additional benefit of ITC and by charging GST at the increased rate of 12% on the pre-GST basic price, the Respondent had violated the provisions of Section 171 of the of the CGST Act, 2017. 15. The DGAP has also stated that on the basis of the CENVAT/ITC available pre and post-GST and the details of the amount collected by the Respondent from his purchasers during the period from 01.07.2017 to 30.06.2018, the amount of benefit of ITC not passed on by the Respondent or the profiteered amount came to ₹ 3,42,31,077/- which included 12% GST on the basic profiteered amount of ₹ 3,05,63,462/-. He has also supplied the details of all the buyers who had purchased flats from the Respondent along with their unit numbers vide Annexure-22 attached with the Report. The DGAP has further stated that the above amount was inclusive of ₹ 1,65,975/- (including 12% GST over the basic amount of ₹ 1,48,192/-) which the Respondent had profiteered from the Applicant No. 1. He has also intimated that the construction service was supplied in the State of Haryana only. 16. The DGAP has also stated th .....

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..... made by him with them. He has further submitted that vide his email dated 28-Jul-2017 he had intimated the above Applicant that the benefit accruing to him, if any, would be calculated at the time of completion of the project and the same would be passed on to him. He has also claimed that the DGAP had also not disputed his this contention as had been mentioned in para 13 of the report. The Respondent has reiterated that the profiteering needed to be computed on the overall project and the benefit would be passed on to the buyers on the completion of the project and calculation of the same before completion would not give true account of the actual benefit/ loss accruing to the Respondent. 20. The Respondent has also pleaded that as per entry 5 (b) of 'Schedule II' of the CGST Act, construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly was deemed to be supply of service liable to GST, however, the said entry specifically excluded the cases where the entire consideration had been received after issuance of completion certificate or after its first occupation. He has further pleade .....

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..... t would be incorrect to infer that the entire ITC was the benefit accruing to the Respondent. The Respondent has further argued that he was required to follow the guidelines issued by the Real Estate Regulatory Authority (RERA) Haryana according to which he could not increase the price of the flats and if the benefit computed by the DGAP was passed on to the buyers without taking in to account the reversals on the unsold flats, he would not be able to recover the amount from the buyers due to the Real Estate (Regulation and Development) Act, 2016 and therefore, the profit/ loss should be calculated on the completion of the project. He has also claimed that he was yet to receive the balance instalments from the buyers and if any benefit would accrue due to additional ITC it would be passed on and adjusted in the last instalment. 21. The respondent has also submitted that the Real Estate Sector had unique complexities due to long turnaround time unlike manufacture of goods and construction of a building was a long drawn process. He has further submitted that the manufacturing of goods took short time and hence computing of the benefit per unit was easy due to availability of exact qu .....

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..... that he had made purchases during the pre-GST period and hence the benefit of CENVAT credit of Excise Duty paid on the inputs was not available for providing the construction services under the erstwhile regime, however the same was available in the GST regime on the basis of which the DGAP had computed the benefit which had accrued to him. The Respondent has further contended that the DGAP had not taken in to account the fact that he was engaged in procurement of goods from traders and he was not aware whether the trader was purchasing such goods from a trader or manufacturer and therefore, the benefit of Excise Duty, if any, had accrued to the vendor of the Respondent and not to him which had not been passed on to him. The Respondent has also highlighted that the prices of the goods procured by him had not reduced post GST. He has also claimed that as per the provisions of Section 171 of the CGST Act, any reduction in the rate of tax on any supply of goods or services or the benefit of input tax credit had to be passed on to the recipients by way of commensurate reduction in prices and it was the duty of the supplier to do so and the law did not require the recipient to pass on t .....

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..... of penalty. He has also quoted the case of Bharjatiya Steel Industries v. Commissioner Sales Tax, U.P. 2008 (11) SCC 617 in which it was held that:- An assessing authority has been conferred with a discretionary jurisdiction to levy penalty. By necessary implication, the authority may not levy penalty. If it has the discretion not to levy penalty, existence of mens rea becomes a relevant factor. He has also placed reliance on the case of Sumeet Industries Ltd. v. Commissioner of Central Excise, Surat 2004 (164) E.L.T. 335 (Tri - Mumbai)], in which the Hon'ble Tribunal has held that: "power to levy the penalty should not be ordinarily imposed unless there is a deliberate defiance of law or contumacious or dishonest conduct or a conscious disregard to an obligation is established in the facts of a case". He has also cited the judgement passed in the case of Assistant Commercial Taxes Officer v. Rishab Special Yarns Limited (2008) 011 VST 0032J, in which the Hon'ble Rajasthan High Court has held as under:- "In my considered opinion, mere contravention of provisions of Section 78 (2) of the Act of 1994 cannot authorise the assessing officer to impose penalty unde .....

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..... ern of the Respondent given in Annexure-2. He has further stated that the ITC of the Respondent was varying due to the changes in the rates of GST on the inputs and hence it was difficult to ascertain the costs and pass on the benefit before closure of the project. He has also claimed that 42% of the total saleable area had not been sold as on 30.06.2018 as was evident from Annexure-3 and since the ITC was required to be reversed on the unsold area the accurate computation of the benefit could not be made at this stage. He has further claimed that after completion of the project no GST could be charged and the ITC has to be reversed however, the DGAP had calculated the benefit on the assumption that the whole area would be sold therefore, the calculation of the benefit made by the DGAP was incorrect. He has also contended that as per the RERA guidelines he could not increase the prices of the flats and in case the benefit was passed on at this stage the wrongly passed benefit could not be recovered. He has further contended that he vide the payment schedule (Annexure-4) had stated that "all other additional charges and taxes as applicable, in terms of application form, shall b .....

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..... cation at the time of completion of the project. He has further stated that no malafide intention had been established on the part of the Respondent not to pass on the benefit to his customers and in fact, he had discharged his obligation as per the provisions of Section 171 of the CGST Act and hence penalty was not attracted in his case. 32. The Respondent has also submitted that in accordance with the antiprofiteering clause he had passed on the benefit in respect of the Anand Vilas project not only to the Applicant No. 1 but to all the buyers who had purchased flats. He has also contended that without prejudice to the disagreement on the methodology of computation of the benefit, he had passed on the benefit on account of ITC subject to modification and credited the same to all the buyers and intimation had also been given to them as per Annexure-5. He has further submitted that he had also passed on the benefit accuring to the customers of his other projects also in respect of which OCs had been applied post GST on a non-prejudice basis. He has also pleaded that there was no mens rea or malafide intent in the instant case and imposition of penalty was not sustainable. He has fu .....

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..... penalty could be imposed as it was well settled that the penalty had to be prescribed in the main statute/Act itself. He has further argued that the Rules could not prescribe penalty by travelling beyond the provisions of the Statute/Act and such exercise of power amounted to "excessive delegation". He has also pleaded that in a similar situation of Sikkim State Lottery Rule imposing a fee of ₹ 2,000/- per lottery draw on the distributor was struck down by the Hon'ble Sikkim High Court in the case of Shubh Enterprises v. Union of India; W. P. (C) No. 41 OF 2013 decided on 14.10.2015 which was later on affirmed by the Hon'ble Supreme Court on the grounds of excessive delegation since the parent statute i.e. the Lottery Regulation Act, 1998 did not envisage such a fee. Similarly, the Hon'ble Madras High Court had struck down Rule 3 (ee) of the Gold Control Rules, 1969 since it did not contain any guidelines for the licensing authorities to determine "too low a turnover" holding that the Rule would work differently for different individuals depending upon the particular officer, as per the law settled in the case of B. Narasimhalu Chettiar v. Gov .....

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..... has no opportunity to meet the case against him. This is all the more so when a larger period of limitation can be invoked on a variety of grounds. Which ground is alleged against the assessee must be made known to him, and there is no scope for assuming that the ground is implicit in the issuance of the show cause notice. [See Collector of Central Excise v. H.M.M. Limited, 1995 (76) E.L.T. 497 and Raj Bahadur Narayan Singh Sugar Mills Limited v. Union of India, 1996 (88) E.L.T. 24]." 35. The Respondent has also cited the judgment passed by the Hon'ble Supreme Court in the case of CCE v. HMM Ltd., 1995 (76) ELT 497 (SC), wherein the Hon'ble Court has ruled as under:- "2. …... There is considerable force in this contention. If the Department proposes to invoke the proviso to Section 11A(1), the show cause notice must put the assessee to notice which of the various commissions or omissions stated in the proviso is committed to extend the period from six months to 5 years. Unless the assessee is put to notice, the assessee would have no opportunity to meet the case of the department. The defaults enumerated in the proviso to the said sub-section are more than .....

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..... evied GST@ 5% w.e.f. 22.09.2017. The Respondent was also made eligible to avail ITC w.e.f. the above date. However, the ITC claimed by the Respondent was not sufficient to meet his output tax liability and he had to pay the balance amount of tax in cash as is evident from the perusal of the table prepared by the DGSG. It is also apparent from the returns filed by the respondent for the months of September, 2017, October, 2017 and November, 2017 that the ITC available to him as a percentage of the total value of taxable supplies was between 2.69% to 3% whereas the GST on the outward supply of his product was 5% which was not sufficient to discharge his tax liability. Moreover in this case the rate of tax has been increased from 0% to 5% instead of reduction in the same. Therefore, there appears to be no reason for treating the price fixed by the Respondent as violation of the provisions of the Anti-Profiteering clause. 37. The Respondent has also claimed that there was no nexus between the instalments received and the ITC as the ITC was dependent on the goods and services purchased by the Respondent and the taxable turnover was based on the instalments received from the buyers. He h .....

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..... sed on in respect of the ongoing projects i.e. the Emerald Bay and the Aman Vilas. The Respondent finally prayed that the present proceedings may be dropped and penalty may not be imposed. 39. In continuation of the earlier submissions, the Respondent has filed additional submissions dated 05.11.2018 in which he has furnished status of all the projects along with the details of the benefit passed vide Annexure-I, details of compliances in respect of the projects vide Annexures-2A, 2B & 2C, sample letter of intimation to buyers vide Annexure-3 and reasons for difference between the area sold of the projects in his submissions dated 11.10.2018 vide Annexure-4. He has also stated that out of the total 11 projects OCs had been received in respect of 8 projects and the buyers had occupied them after registration of the conveyance deeds. He has further stated that sale of land as per Schedule III of the CGST Act and clause 5 (b) of Schedule II was not to be treated as supply of goods or services therefore, ITC would not be available on the sale of the flats of 6 projects after receipt of OCs and hence, the provisions of Section 171 of the CGST Act should not be applicable on these pr .....

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..... it has been contended by the DGAP that as per Rule 126 of the CGST Rules, 2017, the Authority had been empowered to determine the methodology and procedure for determination as to whether the reduction in the rate of tax or the benefit of ITC had been passed on by a registered person to the recipients by way of commensurate reduction in prices or not. He has also submitted that this Rule did not stipulate that the Authority should prescribe the methodology and procedure to quantify the amount of profiteering and hence the quantum of profiteering had to be computed on a case to case basis analysis by devising appropriate method as per the nature and facts of each case and no uniform methodology could be prescribed for determination of the quantum of benefit to be passed on. He has further stated that in Rule 126, the word used was 'determine' and not 'prescribe'. c. On the issue of the CGST Act, 2017 that it does not contemplate levy of penalties: The DGAP has submitted that this issue pertained to the proposal of the Authority to impose penalty on the Respondent which was the exclusive domain of the Authority and he being the investigative arm could not file any Rep .....

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..... ent had benefited from the additional ITC to the tune of 1.79% [4.00% (-) 2.21%] of the taxable turnover. He has further claimed that as per the revised details given in the Table-E above, the comparative figures of ITC availed/available during the pre-GST period and the post-GST period, were computed in the Table-'F' as under: Table-"F' (Amount in Rs.) S. No. Particulars Pre-GST Post- GST 1 Period A April, 2016 to June,2017 July,2017 to June, 2018 2 Output tax rate (%) B 5.50% 12.00% 3 Ratio of CENVAT/ Input Tax Credit to Taxable Turnover as per Table - A above (%) C 2.21% 4.00% 4 Increase in tax rate post-GST (%) D =12% less 5.50% - 6.50% 5 Increase in input tax credit availed post-GST (%) E= 4.00% less 2.21% - 1.79% 6 Analysis of Increase in input tax credit: 7 Base Price raised during July, 2017 to June, 2018 (Other Than Cancelled Units) F 44,37,82,127 8 Other than Base Price raised during July, 2017 to June 2018 G 5,72,78,156 9 Total Taxable Value raised during July, 2017 to June, 2018 H=F+G 50,10,60,283 10 GST Collected 12% over Basic Price I=F*12% 5,32,53,855 11 GST Collected@ 18% over other than Basic Price J=G*18% 1,03,10,068 12 Total GST Collected K=I+J 6 .....

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..... s should be calculated when the consideration had been received post-GST by taking into account the proportionate taxable turnover in respect of these 148 Units. He has also intimated that in view of the details of outward supplies of the construction service furnished by the Respondent, it was found that the service was supplied in the State of Haryana only. The DGAP has further mentioned that the Respondent vide Annexure-2A attached to his submissions dated 05.11.2018 had submitted before the Authority that he had passed on the benefit of ₹ 1,97,77,419/- to the 303 flat buyers including the units under cancellation and accordingly, a summary of the category wise profiteering & the benefit passed on has been furnished by him in the Table-'G' given below:- Table-"G" (Amount in Rs.) S. No. Category of Customers No. of Units Area (in Sqf) Amount Received Post GST Profiteering Amt. as per Annex-22 Benefit claimed to have been Passed on by Respondent Difference Remark A B C D E F G H=F-G I 1 Applicant 1 1,940 24,38,844 49,169 53,994 (4,825) Excess Benefit passed on. 2 Other Than Applicant 92 2,25,420 38,99,63,392 78,64,128 62,73,889 15,90,239 Further Benefit .....

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..... 7; 4,825/- (53,994/- (-) 49,169/-) which might be adjusted against the future demands from the above Applicant. He has also claimed that the investigation had revealed that the Respondent had realized an additional amount of ₹ 15,90,239/- which included both the profiteered amount @1.79% of the taxable amount (base price) and the GST on the said profiteered amount from 92 other recipients who were not Applicants in the present proceedings and since they were identifiable as per the documents furnished by him therefore, this additional amount of ₹ 15,90,239/- was required to be returned to such eligible buyers. 46. The revised Report filed by the DGAP was considered by the Authority and it was decided that the Applicants and the Respondent be asked to appear before the Authority on 15.01.2019. Since, the Respondent had asked for adjournment of the hearing scheduled on 15.01.2019, the Authority decided to accord next hearing opportunity on 21.01.2019. During the hearing, the Respondent has filed reply dated 19.01.2019 on the DGAP's revised Investigation Report as follows:- i. The Respondent has submitted that the benefit of ITC pertained to all the buyers on account o .....

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..... passed on by him to them on these instalments. He was also asked to submit compliance of Section 171 of the CGST Act, 2017 in case of his other on going projects and Occupation/Completion Certificates in case of the completed projects as he had himself admitted during the course of the hearings that he was executing other projects also and had taken suo moto initiative to pass on the benefit of additional ITC which he had received on these projects. The Respondent, vide his submissions dated 04.02.2019 has submitted the following points and documents:- a. Detail of instalments received post GST till 31st Dec 2019 as per Annexure-A b. OCs of the completed projects as per Annexure-B c. The Respondent has further submitted that he had not sold any unit under the Project Anand Vilas after 30th June, 2018. 48. The submissions of the Respondent were forwarded to the DGAP on 06.02.2019 and the DGAP vide his Report dated 12.02.2019 has stated that:- a. As the OC for the project had already been applied and was expected to be received shortly, it would not be correct to re-quantify the profiteered amount by extending the period of investigation till 31.12.2018 as it would amount to re-inve .....

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..... ering by excluding the unsold area as compared to the original Report dated 27th August, 2018. He has further submitted that in view of this matter may be concluded. 51. We have carefully considered all the Reports filed by the DGAP, submissions of the Respondent and the other material placed on record and find that the Applicant No. 1 had booked Flat No. T4-2B on 09.05.2017 with the Respondent in his Anand Vilas Project located in Sector 81, Faridabad, Haryana for total consideration of ₹ 85,87,410/- as per the details furnished by the DGAP in Table A of his Report. It is also revealed from the record that the above Applicant vide his complaint dated 22.01.2018 had alleged that the Respondent was not passing on the benefit of ITC to him inspite of his request made through email dated 28.08.2017 although he had completed 60% of the work and was availing ITC on the purchase of the inputs at higher rates of GST which had resulted in bebefit of additional ITC to him and was also charging GST from him @12%. The above complaint was examined by the Standing Committee in its meeting held on 09.02.2018 and was forwarded to the DGAP for investigation who vide his Report dated 27.08.20 .....

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..... is no provision in the above Act or the Rules framed under it to withdraw the complaint once it has been made by following the prescribed procedure and despite withdrawal the offence of profiteering remains and therefore, the DGAP has rightly persued the investigation. Moreover, once violation of the provisions of Section 171 (1) of the above Act had come to the notice of the DGAP he was legally bound to ascertain the truth of the allegation after conducting detailed investigation as per the provisions of Rule 129 (1) of the CGST Rules, 2017 as it not only adversely affects the interests of the common buyers but also amounts to wrongful appropration of the concession which has been granted by the Central as well as the State Government by sacrificing their own revenue and hence no illegality has been committed by him by launching the present investigation against the Respondent. 53. The Respondent has also stressed that the computation of the benefit/ loss could not be done before completion of the project. It is apparent from the record that the above project was launched by the Respondent in the year 2013 and was likely to be completed by March, 2019 after a lapse of a period of .....

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..... nd since he had sold only 58% of the total saleable area he would have to reverse ITC in respect of the balance 42% area and he also could not increase the prices of the flats as per the RERA guidelines and hence the exact benefit of ITC could not be determined at this stage. However, the above argument of the Respondent is not correct as the benefit was required to passed on only to those buyers who had paid the instalments after coming into force of the GST and on the sold area only as the unsold area was not to be taken into consideration while computing the benefit. 56. The Respondent has also claimed that the Real Estate Sector had long gestation period and the rates of tax were being changed frequently due to which the benefit of ITC could not be calculated periodically. However, the claim of the Respondent can not be accepted as the buyers can not be compelled to wait till the completion of the project when the Respondent is utilising the additional ITC every month to discharge his output tax liability, the benefit of which he is legally bound to pass on to the flat buyers. Moreover, any change in the rates of tax is duly reflected in the quantum of ITC available to the Resp .....

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..... t it is due to him by following the legal options but he cannot contend that he would not pass on the benefit to his recipients on this ground and hence his claim is ultra vires of the above Section. 59. The Respondent has also stated that no penalty should be imposed on him as he had voluntarily passed on the benefit which had accrued to him to his customers subject to the modification/recalculation at the time of completion of the project. He has further stated that no malafide intention had been established on his part and he had discharged his obligation as per the provisions of Section 171 (1) of the CGST Act and hence penalty was not attracted in his case. However it is apparent from the record that the Respondent had not released the benefit for a period of about one year and tried to avoid its release on various grounds viz. that it would not be possible to compute the same before the completion of the project and that he would be required to reverse the ITC on the unsold flats. He has passed the benefit only after the present proceedings were initiated against him which shows that he was not willing to comply with the provisions of Section 171 (1) of the above Act and ther .....

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..... rovision in the Act to impose penalty for contravention of Section 171, no penalty could be imposed as it was well settled that a penalty has to be prescribed in the main statute/Act itself and therefore, imposition of penalty would amount to excessive delegation. The Respondent has also submitted that the Show Cause Notice issued to him on 29.08.2018 has merely mentioned the provisions of Section 122-127 of the CGST Act and Rule 133 of the CGST Rules, without specifying the exact allegations against him and the above Sections were not attracted in his case except for Section 125 which was general in nature. Perusal of the notice dated 29.08.2018 issued to the Respondent shows that he has been intimated that it was proposed to impose penalty under Section 122127 of the CGST Act, 2017 read with Rule 133 of the CGST Rules, 2017 and also to cancel his registration if the allegation of profiteering was proved against him, however, no specific instances of violation of the above Sections have been mentioned in the above Notice. Therefore, the proposed imposition of penalty under the above Sections and cancellation of his registration is not sustainable unless specific allegations how he .....

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..... iod from April, 2016 to June, 2017 (i.e. pre-GST) and during the period from July, 2017 to June, 2018 (i.e. post-GST), the ratio of CENVAT/ITC to the taxable turnover, pre-GST was 2.21% and during the post-GST period, it was 4.00% which shows that post-GST, the Respondent has benefited from the additional ITC to the tune of 1.79% [4.00% (-) 2.21%] of the taxable turnover which was required to be passed on to the buyers by the Respondent. It would be appropriate to mention here that vide his Report dated 27.08.2018 the pre-GST ratio had been computed as 6.19% and the post-GST ratio had been shown as 13.70% as per Table C mentioned above and the Respondent was held to have availed additional ITC to the tune of 6.79%. The revised ratio calculated by the DGAP has not been challenged by the Respondent, moreover the same is based on the information supplied by the Respondent and therefore, the same is being treated to be correct. 65. The DGAP has also re-computed the profiteered amount after taking in to account the CENVAT/ITC availability pre and post-GST and the details of the instalments received by the Respondent from the Applicant No. 1 and the other home buyers during the period fr .....

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..... sideration post GST, only from 155 flat buyers. Therefore the ITC benefit is required to be passed on to the 155 buyers only at this stage and benefit should be passed on to the other buyers at a later stage when demands would be raised against them and payments received. 67. The DGAP has further mentioned that the Respondent vide Annexure- 2A attached to his submissions dated 05.11.2018 had submitted before the Authority that he had passed on the benefit of ₹ 1,97,77,419/- to the 303 flat buyers including the units under cancellation. The DGAP has also stated that the benefit claimed to have been passed on by the Respondent was less than what he should have passed on in respect of 92 cases (Sr. 2 of the Table G mentioned in para supra) amounting to ₹ 15,90,239/- (Annexure-24 of the Report) and the benefit claimed to have been passed on by the Respondent was higher (Annexure-25 of the Report) compared to what he should have passed on in respect of the 63 recipients of the flats including the Applicant No. 1 (Sr. 1 & 3 of Table G mentioned above) amounting to ₹ 19,31,599/-. He has further contended that the Respondent has also stated to have passed on the benef .....

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..... of ₹ 1,01,06,773/- inclusive of CST @12% or 18% on the base profiteered amount of ₹ 89,68,979/-. The Respondent has also realized an additional amount to the tune of ₹ 49,169/- from the Applicant No. 1 which includes both the profiteered amount @1.79% of the taxable amount (base price) and GST on the said profiteered amount. The Respondent has also realized an additional amount of ₹ 15,90,239/- which includes both the profiteered amount @1.79% of the taxable amount (base price) and GST on the said profiteered amount from 92 other flat buyers who were not Applicants in the present proceedings as per Annexure-24 of the Report. These buyers are identifiable as per the documents placed on record and therefore, the Respondent is directed to pass on this amount of ₹ 15,90,239/- along with interest @18% per annum to these 92 flat buyers from the dates from which the above amount was collected by him from the buyers till the payment is made. 71. In view of the above facts 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 commensurate with the benefit of .....

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