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2019 (5) TMI 785

The Respondent in his submissions has repeatedly stated that the Applicant No. 1 had withdrawn the complaint in which it was alleged that the Respondent had not passed on the benefit of ITC to him, on being satisfied with the clarification given by him on the issue of benefit of additional ITC and hence the investigation conducted against him should have been dropped. However, this contention of the Respondent is not acceptable as there 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. 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 ow .....

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lty as per the provisions of the CGST Act, 2017 and the Rules framed under it. The proposed imposition of penalty under the above Sections and cancellation of his registration is not sustainable unless specific allegations how he had violated the provisions of the above Sections are levelled against him. Therefore, the notice is ordered to be withdrawn to the extent that it proposes to impose penalty on him as per the provisions of the above Sections and the Rule. However, rest of the contents of the above show cause notice will continue to operate. The provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has profiteered an amount 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 - 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 .....

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ce and following demands had been raised on him by the Respondent as per the Table-'A' given below:- Table-"A" (Amounts in Rs.) Particulars BSP DEV Service Tax & VAT GST@12% Total Agreement Value 72,75,000 8,73,000 4,39,410 - 85,87,410 Paid in Pre-GST era B 43,65,000 5,23,800 2,63,646 - 51,52,446 Balance to be paid Post GST (C) = (A)-(B) 29,10,000 3,49,200 1,75,773 - 34,34,973 Demanded by the Respondent (D) 29,10,000 3,49,200 - 3,91,104 36,50,304 Excess Demand by the Respondent (E)= (D)-(C) 2,15,331 3. The DGAP has also stated that the above Applicant had claimed that the Respondent had completed approximately 60% of the project work using inputs which were liable to higher GST @18% or 28% due to which additional ITC benefit had accrued 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. Th .....

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018, 25.07.2018, 31.07.2018, 03.08.2018, 09.08.2018 and 13.08.2018. The contents of the replies given by the Respondent have been given in brief by the DGAP as under:- I. That the Respondent had intimated his buyers that he intended to compute the benefit of additional ITC at the time of handing over the possession so that correct amount of benefit could be passed on as it was not certain that the customers would take possession or leave the project or transfer the booking after availing benefit of additional ITC or they would pay the construction linked instalments on time or not. II. That no additional benefit of ITC had accrued after coming in to force of the GST to the Respondent and the benefit of ITC on all the taxes charged from him before GST, was 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 char .....

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tion service provided by the Respondent after coming in to force of the GST w.e.f. 01.07.2017 and whether the Respondent had passed on the above benefits to the recipients in terms of Section 171 of the CGST Act, 2017. The DGAP has also stated that the Respondent vide his letter dated 12.04.2018, had furnished copy of the agreement executed by him with the above Applicant for the purchase of one flat measuring 1940 square feet at the basic sale price of ₹ 3750 per square feet, copies of the demand letters and the payment schedule, the details of which were as under:- Table-"B (Amount in Rs.) S. No. Payment stages Due date Basic % BSP DEV Service Tax including SBC & KKC VAT CGST SGST Total 1 At the time of Booking 07.09.2016 10% 7,27,500 87,300 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, .....

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puts and credit of VAT (WCT) charged by the civil contractor on sub-contracts but the CENVAT credit of Excise Duty paid on inputs was not available. He has further found that post-GST, the Respondent had become entitled to avail ITC on GST paid on inputs and input services including on the sub-contracts. He has also averred that from the information supplied by the Respondent which had been further verified from the invoices issued during the pre-GST period (April, 2016 to June, 2017) and the post-GST period (July, 2017 to June, 2018), the details of the ITC availed by the Respondent and his taxable turnover were as per the Table-C given below:- Table-"C" (Amount in Rs.) S. No. Particulars April, 2016 to March, 2017 April, 2017 to June, 2017 Total (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 - .....

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rice from ₹ 3,956.25 per square feet to ₹ 3,914.82 per square feet. He has further contended that as per the provisions of Section 171 of the CGST Act, 2017, the benefit of the additional ITC which had accrued to the Respondent, was required to be passed on to the flat buyers. He has also claimed that the Respondent had not objected to passing on of the benefit of ITC at the time of giving possession of the flat, however, the fact was that the benefit had not been passed on till now. The DGAP has pleaded that the payments received from the above Applicant did not state that the benefit available to the Respondent had been passed on to the Applicant, which showed that the Respondent had retained the benefit which had accrued to him on account of 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 .....

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ar, the DGAP was represented by Sh. Anwar Ali T. P., Additional Commissioner and the Respondent was represented by Sh. Rakesh Sodhi, Sh. Himanshu Juneja, Sh. Kishor Kunai, Sh. Achal Chawla and Ms. Ruchi Jha. 18. The Respondent vide his reply dated 11.09.2018 has submitted that the Applicant No. 1 had withdrawn the complaint which alleged that the Respondent had not passed on the benefit of ITC to him which showed that he was satisfied with the explanation given by the Respondent on the issue of not passing on the benefit of ITC. 19. The Respondent has also submitted that the computation of the benefit/ loss could not be done before completion of the project and he had never denied to pass on the benefit to the buyers as was evident from the correspondence 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 profi .....

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mine how many flats would be sold before completion. He has further mentioned that in case if the flats were not sold before the completion, it would amount to sale of the building as per Schedule Ill of the GST law which would result in reversal of the ITC. The Respondent has also contended that the ITC which had been taken in to account for computation of the profiteered amount was based on all the credit availed by him till the time, assuming that he would be able to sell all the flats before completion, however, in case no sale could be made before completion, he would be required to reverse the proportionate credit to the extent of 42% of the area which was still unsold. He has also argued that due to the reversal of ITC which might happen later on, it 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 .....

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also claimed that he was eligible to take ITC in the pre GST regime as well however, the rate of tax on services had increased from 15% to 18% post GST and the rate of tax on goods had also increased from 5.25% VAT to 18%/ 12%/ 28% post GST. He has also furnished the comparison of tax rates under the erstwhile and post GST regime as under:- Sr. No. Description of goods/services Tax rate under erstwhile regime Post GST tax rate 1. Architect 15% 18% 2. Brokerage 15% 18% 3. Steel 5.25% 18% He has further claimed that he would be paying tax at the rate of 18%/28% on the inputs instead of 5.25%/13.125%, due to which ITC would increase but it could not be considered as additional benefit which had arisen to the Respondent. 24. The Respondent has also contended 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 tha .....

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ted before completion of the project, as accurate computation of the same was required as it would not be possible to recover it if it was passed on wrongly. He has also prayed that he should be allowed to pass on the benefit after the completion of the project and therefore, the imposition of penalty was not warranted. He has also argued that it was well settled that imposition of penalty was a quasi-criminal adjudication and hence, the mens rea or malafide intent ought to be necessarily present, which was absent in the present case. He has also cited the cases of Hindustan Steel Limited v. State of Orissa (1970) 25 STC 211 (SC) and CST v. sanjiv Fabrics 2010-TIOL-71-SC-CST wherein it has been held that mens rea was an essential ingredient for imposition 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 .....

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iable it would not be difficult to pass on the benefit with the last instalment. 28. Further, hearing in the case was held on 11.10.2018 during which the Respondent has submitted the following details:- Purchase summary for 'Anand Vilas' project-Annexure-2 Summary of payment details and pending dues-Annexure-3 Payment Schedule-Annexure-4 Detail of buyers with pending instalments-Annexure-5 Project details-Annexure-6 Details of taxes collected from buyers till date-Annexure-7 Undertaking to pass-on the benefit on completion of the project-Annexue-8 29. The Respondent has also stated that the benefit of ITC accruing to the Respondent was not certain due to variation in the project cost and the GST rates which was evident from the uneven purchase pattern 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 .....

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ld flats and requested to allow him to pass on the benefit at the time of completion of the project and also not to impose penalty. 30. Further, hearing in the case was held on 28.10.2018 wherein the Respondent has submitted the following details:- Annexure-2: Project status of all other projects Annexure-3: Certified copies of Occupancy Certificates (OCS) Annexure-4: Details of projects whose OCS have been obtained post CST Annexure-5: Letter sent to customers intimating that benefit has been passed on in respect of all on going projects Annexure-6: Press statements Annexure-6: Case law 31. The Respondent has also stated that no penalty should be imposed on him as he had passed on the benefit which had accrued to him to his customers subject to the modification 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 .....

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been benefited due to introduction of GST and the benefit had not been passed on to the recipients by commensurate reduction in the prices which were still prone to modification at the time of completion. He has further submitted that the real estate industry being dynamic and governed by the contractual obligations of the parties through the Buyer's Agreements and the sale considerations, it was advised and it was understanding of the Respondent to pass on the benefit of ITC only on closure of the obligations of the parties. He has also argued that under Rule 133 of the CGST Rules penalty could be imposed as was specified under the CGST Act and since there was no corresponding provision in the Act to impose penalty for contravention of Section 171 no 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 .....

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of the provisions of the Act or the Rules with intent to evade payment of Excise duty; this because, by the time the show cause notice was issued, Rule 9(2) had been amended to incorporate therein the period specified in Section 11A of the Act. The show cause notice does not set out any particulars in respect of fraud or collusion or wilful mis-statement or suppression of facts or contravention with intention to evade the payment of Excise duty. Not only does it not give any such particulars, it does not even make a bare allegation. 4. This Court has held that the party to whom a show cause notice of this kind is issued must be made aware of the allegation against it. This is a requirement of natural justice. Unless the assessee is put to such notice, he 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 .....

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the taxable turnover under the pre-GST and the post-GST era however, it had not been taken in to account that the rates of tax under both the regimes on the outward supplies made by the Respondent had also varied which had not been considered by the DGAP in his report. In this regard, the Respondent has quoted the findings given by this Authority in the case of Kumar Gandharv v. KRBL Limited 2018-VIL-02-NAA, Case No. 3/2018 decided on 04.05.2018 as under:- "6. We have carefully heard the Respondent and also perused the material placed on the record and it is revealed that the "India Gate Basmati Rice" sold by the Respondent was not liable for tax before the implementation of the GST and after coming into force of the CGST Act, 2017 it was levied 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 .....

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refer the matter to the DGAP to cause further investigation or inquiry. Therefore, he has contended that in view of the above provision it was incumbent upon the Authority to seek report from the DGAP before proceeding to pass any order with respect to other projects of the Respondent and the power of investigation could not be taken over by the Authority in the absence of any such prescription under the CGST Act / Rules. The Respondent has also stated that without prejudice to the above, as a provisional measure he had also passed on the benefit which had accrued to the buyers of the other projects also in respect of which OCs had been obtained post GST. He has also attached copies of the letters sent to the buyers intimating that the benefit had been passed 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 compli .....

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the RERA registration in respect of which the anti-profiteering application had been received and for which direction to investigate had been given by the Standing Committee. He has further stated that the investigation had covered all other recipients in that project, in addition to the Applicant No. 1. He has also contended that due to shortage of staff and other infrastructure he was not in a position to investigate all the projects of a supplier against which allegation of profiteering had been made. b. On the Issue of the modalities and mechanism of Antiprofiteering: The DGAP has submitted that the Respondent had mentioned that there were no guidelines/methodology for computing the quantum of "profiteering" by the supplier. In this regard, 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 .....

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,16,64,604 6 Total Taxable Turnover (E) 42,43,39,766 11,27,06,432 53,70,46,198 50,10,60,283 7 Total Saleable Area (in Sq ft.) as per Submission dated 28.09.2018 to NAA (F) 11,54,550 11,54,550 8 Sold Area (in Sq. ft.) relevant to above turnover as per Home Buyers List (G) 5,78,095 3,75,400 9 Relevant Proportionate input tax credit [(H)= (C*G)/(F)] or [(H)=(D*G)/(F)] 1,18,81,118 2,00,50,143 10 Ratio of CENVAT/Input Tax Credit Pre-GST & Post-GST[(I)=(H)/(E)] 2.21% 4.00% 42. The DGAP has also claimed that the ITC as a percentage of the total turnover that was available to the Respondent during the pre-GST period (April, 2016 to June, 2017) was 2.21% and during the post-GST period (July, 2017 to June, 2018), was 4.00% which showed that post-GST, the Respondent 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 t .....

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mentioned that the above computation of the profiteered amount was in respect of the 155 flat buyers whereas, the Respondent had booked 303 flats till 30.06.2018, out of which 148 buyers had booked them in the pre-GST period and also paid the booking amount in this period but they had not paid any consideration during the period between 01.07.2017 to 30.06.2018 post-GST, the period for which the investigation was being carried out. He has further mentioned that if the ITC in respect of these 148 units was calculated with reference to the 155 units where payments had been received after GST had come in to force, the ITC as a percentage of taxable turnover would be distorted and it would be erroneous and hence, the benefit of ITC in respect of these 148 units 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 atta .....

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ndent was required to be passed on to the Applicant No. 1 and the other recipients and therefore, the provisions of Section 171 of the CGST Act, 2017 had been violated by the Respondent as the additional benefit of ITC @1.79% of the base price received by the Respondent during the period from 01.07.2017 to 30.06.2018 had not been passed on to the Applicant No. 1 and the other buyers and the Respondent had realized an additional amount of ₹ 49,169/- from the Applicant No. 1 which included both the profiteered amount @1.79% of the taxable amount (base price) and the GST on the said profiteered amount, however, the Respondent has claimed to have passed on ₹ 53,994/- during the hearings therefore, the Respondent has passed on excess amount of ₹ 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 prese .....

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the DGAP has claimed in his Report that after taking in to account the profiteered amount of ₹ 15,90,239/- which was payable to the flat buyers the Respondent had paid an amount of ₹ 96,70,646/- in excess to them and hence the total extra benefit was ₹ 1,12,56,061/- (96,70,646+15,90,239). He has also stated that the DGAP had suggested to adjust this amount against the future instalments however, it would not be possible to do so and hence he should be allowed to adjust the same against the amount which was payable by the Respondent. 47. The Authority, during the hearing held on 21.01.2019, had directed the Respondent to submit the details of the instalments received by him from the buyers from 01.07.2018 to 31.12.2018 and the ITC benefit 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 receive .....

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been reduced however, he had already passed on the ITC benefit to all the buyers which was higher than what had been computed in the revised Report dated 28.12.2018. 50. The Respondent vide his submissions dated 06.03.2019 has stated that he had already supplied the required information and explanation regarding the pre-GST and the post-GST data/figures to the DGAP who had also filed his detailed investigation Report on 27th August, 2018 which included the unsold area and the Revised Report on 28th Dec., 2018 which excluded the unsold area and he had already passed on the ITC benefit to all the buyers on the basis of the area sold while the DGAP, vide his revised Report dated 28th Dec., 2018, had adopted different methodology and computed amount of profiteering 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 i .....

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eport of the DGAP should not be accepted and his liability for violating the provisions of Section 171 of the CGST Act, 2017 should not be fixed along with imposition of penalty as per Section 122-127 of the above Act read with Rule 133 of the CGST Rules, 2017 and his registration under the Act should also not be cancelled. The Respondent in his submissions has repeatedly stated that the Applicant No. 1 had withdrawn the complaint in which it was alleged that the Respondent had not passed on the benefit of ITC to him, on being satisfied with the clarification given by him on the issue of benefit of additional ITC and hence the investigation conducted against him should have been dropped. However, this contention of the Respondent is not acceptable as there 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 th .....

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nt through his submissions dated 11.09.2018 had sought time of 15 days to compute the benefit of ITC which he was required to pass on as per the provisions of Section 171 of the CGST Act, 2017 to the above Applicant as well as rest of the house buyers which was granted to him. Accordingly, he has himself computed and passed on the benefit of ₹ 53,994/- to the above Applicant and ₹ 1,97,23,425/- to rest of the flat buyers the details of which have also been furnished by him through his subsequent submissions. 55. The Respondent has also pleaded that as per entry 5 (b) of 'Schedule II' and 'Schedule III' of the CGST Act, 2017 where a building/flat is sold after issuance of the OC the ITC availed on it was required to be reversed and 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 .....

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profiteered amount by the DGAP. 58. The Respondent has also contended that he had made purchases from the traders who had not passed on the benefit of ITC to him and hence he could not further pass on the same to the house buyers. This pleading of the Respondent goes completely against the provisions of Section 171 (1) of the above Act as every registered person is required to pass on the benefit of additional ITC on every supply by commensurate reduction in the prices. Since the Respondent is a person duly registered under the above Act he is legally liable to pass on the benefit and he cannot deny the same on the ground that he had not received the benefit from his suppliers. The Respondent can always claim the benefit from his suppliers if he thinks that 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 t .....

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mention here that this Authority has power to 'determine' the methodology and not to 'prescribe' it as per the provisions of the above Rule and therefore, no set prescription can be laid while computing profiteering. Hence the objection raised by the Respondent on this ground is frivolous and without legal force. 61. The Respondent has also argued that the anti-profiteering Section has been introduced to ensure that the rate rationalization benefit was passed on to the society and only cases of mass impact were to be investigated. He has further contended that the CGST Act, 2017 did not provide for imposition of penalty under Section 122-127 read with Rule 133 of the CGST Rules. He has further pleaded that since there was no corresponding provision 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 .....

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also furnished copies of the letters and the credit notes through which the benefit has been released in favour of the buyers. The above action of the Respondent appears to have been taken to avoid the consequences of Section 171 of the above Act when he had realised that he was legally bound to pass on the benefit of additional ITC availed by him to the flat buyers. Therefore, the allegation made by the Respondent in this regard is false and cannot be accepted. 64. It is also apparent from the record that the DGAP has submitted revised investigation Report dated 28.12.2018, in which he has stated that after taking in to account the revised details of the area sold by the Respondent, the ITC availed and the Respondent's taxable turnover during the period 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 Resp .....

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T. He has further mentioned that if the ITC in respect of these 148 units was calculated with reference to the 155 units where payments had been received after GST had come in to force, the ITC as a percentage of taxable turnover would be distorted and erroneous and hence, the benefit of ITC in respect of these 148 units 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. It is observed from the documents placed on record as well as the above submissions of the DGAP that there are total 512 flats out of which 209 flats have remained unsold and 303 flats have been sold by the Respondent. Out of the above 303 flat buyers the Respondent has received consideration 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 .....

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by the Respondent and have also not been objected to by him they are treated to be correct. 69. The issue that needs to be dwelled upon is as to whether there was a case of not passing on of the benefit of ITC and whether the provisions of Section 171 of CGST Act, 2017 are attracted in the present case. Perusal of Section 171 (1) of the CGST Act, 2017 shows that it provides as under:- Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices. 70. It is established from the perusal of the above facts of the case that the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has profiteered an amount 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 inclu .....

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er objections which have been mentioned above during the course of the hearing on the issue of imposition of penalty. 73. The Respondent has himself admitted that he has passed on the additional ITC benefit of ₹ 1,99,42,985/- in respect to the project "Emerald Bay" and ₹ 53,19,592/- in respect to the project "Aman Vilas" being executed by him. Since the above claim of the Respondent is required to be verified the DGAP is directed to investigate the issue of passing on the benefit of additional ITC in respect of the above two projects and submit his Report within a period of 3 months from the receipt of this order in terms of Rule 133 (4) of the CGST Rules, 2017. 74. The Authority as per Rule 136 of the CGST Rules 2017 directs the Commissioners of CGST/SGST Haryana to monitor this order under the supervision of the DGAP by ensuring that the amount profiteered by the Respondent as ordered by the Authority is passed on to all the eligible buyers. A report in compliance of this order shall be submitted to this Authority by the Commissioners CGST [SGST within a period of 4 months from the date of receipt of this order. 75. A copy each of this order be sup .....

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