TMI Blog2019 (6) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... he worksheet filed by him. The DGAP has correctly analysed the ITC ratio as 2.66% and applying this ratio to the payments made on or after 01.07.2017 the profiteered amount is determined as ₹ 99,20,246/-. This amount includes profiteered amount of ₹ 18,563/- to be paid to the Applicant No. 1 and ₹ 80,37,392/- to all the other 231 buyers. The Respondent has also to pass on the benefit of profiteered amount of ₹ 18,64,290/to the land owner who will in turn pass on the benefit to his buyers. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his Project Laurel Heights in contravention of the provisions of Section 171 (1)(i) 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 therefore, he is liable for imposition of penalty under the provisions of the above Section - a Show Cause Notice be issued to him direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.41,285 1,06,808 - 48,57,225 Paid in Pre-GST era (B) 12,61,188 22,69,670 - 1,23,732 90,786 - 37,45,376 Balance to be paid Post GST (C) = (A)-(B) 2,22,562 4,00,530 4,55,182 17,553 16,022 - 11,11,849 Demanded by the Noticee (D) 2,22,562 4,00,530 4,55,182 - - 1,40,806 12,19,080 Excess Demand: (E)= (D)-(C) 1,07,231 3. The DGAP on receipt of the application issued a notice dated 10.09.2018 to the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the Applicant No. 1 by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total Land Other than Land 1 At the time of Booking 10.12.2014 1,30,000 66,702 - - 3,298 - 2,00,000 2 EMD 31.12.2014 1,66,750 4,67,338 - - 23,105 - 6,57,193 3 On or before completion of Basement Roof 11.05.2015 1,33,538 2,40,318 - - 11,881 - 3,85,737 4 On or before completion of 2 nd floor Roof 17.09.2015 1,18,700 2,13,616 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 74,188 1,33,510 - - 24,924 2,32,622 13 On or Before completion of Possession 74, 188 1,33,510 4,85,993 90,786 - 90,958 8,75,435 Total 14,83,752 26,70,200 4,85,993 90,786 1,23,733 1,40,806 49,95,270 6. The DGAP has submitted that in the present case the project was complete and the completion certificate was also received by the Respondent on 07.03.2018. It was also noticed that the Respondent had availed ITC till June 2018 only and therefore the exact amount of ITC available to the Respondent was known and based on these facts the net ITC benefit to be passed on was to be calculated taking into account the fact that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the sub-contractors. Accordingly based on the documents submitted by the Respondent for the period April 2016 to August 2018 the ITC ratio to the total turnover for the project Laurel Heights for the pre GST period (April 2016 to June 2017) and post GST period (July 2017 to August 2017) was arrived at by the DGAP. The report stated that the ITC ratio to the turnover during the pre GST period was 5.13% as compared to 7.79% during the post GST period as is given in the Table D below:- Table -D (Amount in Rs.) Sl. No. Particulars April, 2016 to March, 2017 April, 2017 to June, 2017 Total (Pre-GST) Balance Base price to be Collected as on 30.06.2017 from Existing Customers Agreement Value of Bookings made during 01.07.2017 to 07.03.2018 Total (Post-GST) 1 CENVAT of Service Tax Paid on Input Services (A) 1,12,67,630 27,16,478 1,39,84,108 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able E below:- Table- E (Amount in Rs.) Sl. No. Particulars Pre-GST Post-GST 1 Period A 01 04.2016 to 30.06.2017 After 01.07.2017 2 Output tax rate on Construction (%) B 9.8 or 10 12 or 18 3 Ratio of CENVAT/ Input Tax Credit to Total Turnover as per Table - D above (%) C 5.13 7.79 4 Increase in input tax credit availed post-GST (%) D= 7.79% less 5.13% - 2.66 5 Analysis of Increase in input tax credit: 6 Outstanding BSP Amt. as on 30.06.2017 to be collected post-GST from customers who made booking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal profiteered amount of ₹ 80,55,955/- which includes GST @12% on the base profiteered amount of ₹ 71 92,817/-. This amount also includes ₹ 18,563/- (base amount 16,574 + GST @12%) which is the profiteered amount in respect of the above Applicant. The report also submits that based on the joint developer s turnover as given in the GST returns the profiteered amount is arrived at ₹ 18,64,290/- which includes GST @18% on the base profiteered amount of ₹ 15,79,907/- and therefore the total profiteered amount in the present case has been arrived at ₹ 99,20,246/- which includes GST @12% or 18% on the base profiteered amount of ₹ 87,72,724/-. 10. The above report was considered by the Authority in its meeting held on 05.03.2019 and it was decided that the Applicants and the Respondent be asked to appear before the Authority on 26.03.2019. During the course of the hearing the Applicant No. 1 did not appear, the DGAP was represented by Sh. Bhupinder Goel, Assistant Director (Costs) and the Respondent was represented by Sh. Rangaiah, Senior Manager (Finance) and Sh. Badrinath, C. A. 11. The Respondent has filed his written submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sub-contractors 65.84 60% 41.12 24.72 Direct purchase of materials 30.80 28% 25.28 5.52 Services 5.72 5% 3.11 2 61 Statutory approvals 4.05 4% 3.18 0.87 Admin. cost 3.45 3% 0.29 3.16 Based on the above data the Respondent submitted that 60% of the total project cost was towards sub-contract charges and claimed that the benefit of additional credits as required under Section 171 of the CGST Act, 2017 would accrue to the sub-contractors. He has also claimed that he had negotiated with his sub-contractors and the sub-contractors had agreed to pass on the benefit of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnover and corresponding output tax was lower and could not be compared to the ITC on year-on-year basis. He has also claimed that after obtaining the occupancy certificate any flat sold will not be liable to GST and hence he would have to reverse the ITC availed against such unsold flats. He has further claimed that any contract for sale of residential flats consisted of undivided share in land and sale of constructed portion, while the land was immovable only the constructed portion was liable to tax. He has further stated that amounts received from the buyers were towards land and construction but the taxable turnover took into account only the construction value. Based on the above reasons the Respondent has claimed that the methodology adopted in the case of Pyramid Infratech Pvt. Ltd. or in his case was incorrect and should not be adopted. However the Respondent has finally stated that based on his own methodology he has arrived at the benefit of ITC derived by him and accordingly has passed on the same to his customers with whom agreements were entered into on or before 30.06.2017. Based on his methodology ₹ 9/- per sq. ft. has been passed on to his customers and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority, the Hon ble High Court of Delhi while granting stay has observed that the methodology to calculate the quantum of anti-profiteering needed more detailed and further examination. The above submission made by the Respondent is absolutely incorrect. The Hon ble High Court of Delhi in the W.P. (C) No. 10999/2018 dated 20.11.2018 = 2019 (3) TMI 149 - DELHI HIGH COURT has stated that: Be that as it may, as an interim arrangement, we direct the petitioner to deposit ₹ 5,11,60,450/- with the respondent authorities within 3 weeks from today. On the deposit being made, the same would be converted into an interest bearing FDR for a period of nine months. The FDR amount and the interest accrued thereon would abide by further orders of this court. It is made clear that this is only an interim arrangement and the court has not expressed any firm and final view . Accordingly the Respondent in the case of Pyramid Infratech Pvt. Ltd. had deposited the amount of ₹ 5,11,60 450/-. Therefore the Respondent s submission in this regard is totally baseless and devoid of any merit. 19. The third contention of the Respondent is that the total turnove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs 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. The Authority hereby determines the profiteered amount as ₹ 99,20,246/- and directs the Respondent to pass on the benefit of ₹ 18,563/- to the above Applicant, ₹ 80,37,392/- to the 231 buyers as given in the Annexure-16 of the DGAP report and ₹ 18,64,290/- to the land owner, along with interest @18% per annum to these 232 flat buyers from the dates from which the above amount was collected by him from the buyers till the payment is made. 22. It is also evident from the above narration of facts that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his Project Laurel Heights in contravention of the provisions of Section 171 (1)(i) 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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