TMI Blog2019 (6) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the amount of ITC as ₹ 74,36,865/- which was availed by the respondent vide Table-D on the basis of the information supplied by the respondent and hence the calculation done by him can be relied upon. The amount of profiteering in terms of Rule 133(1) of the CGST Rules, 2017 is determined as ₹ 81,67,546/- including GST @ 12% on the base profiteered amount - it is ordered that the respondent shall reduce price to be realized from the buyers of the flats commensurate with the benefit of ITC availed by him. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the Applicants as well as the rest 36 purchasers of flats 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 charge and has also compelled them to pay more GST than what they were required to pay by issuing incorrect tax invoices and hence he has committed offence under section 122 (1) (i) of the CGST Act, 2017 and therefore, he is liable for imposition of penalty under the above Section read with Rule 133 (3) (d) of the CGST Rules, 2017 - keeping in view the principles of natural justice it would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondent on 27.03.2017, i.e. before coming into force of the GST. He has also given the following schedule of demands raised by the Respondent on booking of the Villa by the above Applicant as per the Table-A below:- Table- A (Amounts in Rs.) Particulars BSP Service Tax GST Total Agreement Value (A) 51,00,000 1,91,250 - 52,91,250 Paid in Pre-GST era (B) 10,18,193 38,182 - 10,56,375 Balance to be paid Post GST (C)= (A)-(B) 40,81,807 1,53,068 - 42,34,875 Amount Demanded by the Respondent during 01.07.2017 to 30.09 2018 (D) 34,90,155 - 4,18,819 39,08,974 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional ITC available to him after implementation of the GST and he had assured his customers that any benefit which would accrue to him post-GST, after completion of the project, shall be duly passed on at the time of giving possession, so that accurate benefit could be passed on to the customers. 7. The Respondent further stated that he was involved in a single project, viz., City Park which comprises of both Villas and Plots (Land), the details of which are given in the Table- B below:- Table- B S.No. Type Total No. of Plots (Land) Total Plot Area (SQ. MTR) Total No. of Villas Total Area of Villas (SQ. MTR) 1 A 79 13,199.32 4 663.32 2 B 78 10,874.40 24 3,320.38 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s left with no grievance against the Respondent with regard to GST demand. The above Applicant had further requested to treat the present complaint against the Respondent as withdrawn. 10. The DGAP has also informed that the Respondent had also submitted Copies of GSTR-1 returns for the period July, 2017 to June, 2018, Copies of GSTR-3B returns for the period July, 2017 to June, 2018, Copies of VAT ST-3 returns for the period April, 2016 to June, 2017, Copies of all demand letters and tripartite agreement along with allotment letter issued to the applicant, Copy of statutory Audit Report for the FY 2016-17 including Director s Report, Copy of provisional Financial Statement for FY 2017-18, Tax rates - pre-GST and post-CST, Copy of Electronic Credit Ledger for the period 01.07.2017 to 30.06.2018, Copy of Electronic Cash Ledger for the period 01.07.2017 to 30.06.2018, CENVAT/lnput Tax Credit register for the period April, 2016 to June, 2018, Project Report submitted to RERA and the list of home buyers in the project City Park . 11. The DGAP vide his Report dated 29.10.2018 has further informed that the main issue for determination in the present case was whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,71,200 26.03.2017 15, 12,857 5. Completion of Civil Work 26.03.2018 10% 5,10,000 61,200 5,71,200 6. Plaster 04.06.2018 10% 5,10,000 61,200 5,71,200 06.06.2018 7. Flooring 04.06.2018 10% 5,10,000 - 61,200 5,71,200 8. Finishing Not due till date of application 5% 2,55,000 - 30,600 2,85,600 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hedule-III of the CGST Act, 2017 (activities or transactions which shall be treated neither as a supply of goods nor a supply of services) read as Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building . Further, Clause (b) of paragraph 5 of Schedule II of the Central Goods and Services Tax Act, 2017 read as (b) 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, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier . Therefore, the DGAP has submitted that these provisions make it clear that the ITC pertaining to Villas which were under construction but not sold, was provisional and the same might be required to be reversed by the Respondent in terms of Sections 17(2) 17(3) of the Central Goods and Services Tax Act, 2017 which read as under: 17 (2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total Service Tax Credit availed as per Returns (A) 2,91,284 - 2,91,284 - - - 2 Input Tax Credit of GST availed as per Returns (B) - - - 1,50,37,397 18,65,260 1,69,02,657 3 Total Taxable Turnover as per Returns (C) 3,96,49,001 3,92,74,231 7,89,23,232 6,53,08,955 1,03,83,432 7,56,92,387 4 Total Saleable Area of Villas in the project (Sqaure Mtr) (D) 8,993.05 8,993.05 5 Area Sold relevant to Taxable turnover as per returns (E) 3,521.06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se in tax rate post-GST (%) D=12% less 4.75% - 7.25% 5 Increase in input tax credit availed post-GST (%) E=9.83% less 0.15% - 9.68% Analysis of Increase in input tax credit: 6 Base Price collected during July, 2017 to June, 2018 F 7,56,92,387 7 Less: Units cancelled and amount refunded G 3,57,143 8 Net Base Price collected during July, 2017 to June, 2018 H=F-G 7,53,35,244 9 GST Collected @ 12% over Base Price I=H*12% 90,40,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts or in other words, the profiteered amount came to ₹ 81,67,546/- which included 12% GST on the base profiteered amount of ₹ 72,92,452/-. The home buyer and unit no. wise break-up of this amount was given in Annex-21 to the DGAP s Report dated 29.10.2018. This amount is inclusive of ₹ 3,78,389/- (including 12% GST on the base amount of ₹ 3,37,847/-) which is the profiteered amount in respect of the above Applicant, mentioned at serial no. 16 of Annex-21 . On the basis of the details of outward supplies of the construction service submitted by the Respondent, it was observed that the service was supplied in the State of Uttar Pradesh only. 21. The DGAP has also contended the benefit of additional input tax credit (9.68%) was more than the increase in rate of tax (7.25%) which meant that there was net benefit of input tax credit that accrued to the Respondent and the same was required to be passed on to the applicant and other recipients. Hence, the provision of Section 171 of the Central Goods and Service Tax Act, 2017 has been contravened by the Respondent in as much as the additional benefit of input tax credit @9.68% of the base price received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to refund the due benefit of ITC post GST to all his customers from whom full final payment had been received. He has further stated that after receiving the DGAP s Report, he had immediately issued cheques of Refund as well as Credit Notes on 20/11/2018 and onwards to all the beneficiary home buyers on account of ITC benefit as per the calculation mentioned in the DGAP s Report. 25. He has also submitted that he had issued cheques amounting to ₹ 26,08,535/- to all the 17 home buyers from whom he had received full final payment and credit notes of ₹ 55,59,010/- to rest of the 19 home buyer from whom partial payment was received in the post GST period between 01/07/2017 to 30/06/2018 aggregating to total benefit of ₹ 81,67,545/- as per the DGAP s Report. He has also submitted 36 (Thirty Six) copies of the cheques/credit notes along with the receipts of the home buyers on covering letters to whom these cheques/credit notes were issued. He has said that the reason of delay was only due to complex calculation which he was unable to do. 26. The Respondent has undertaken to pass on the additional benefits arising to him on account of increase in IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r issues raised by the Respondent had already been covered in the Investigation Report itself. 29. The Authority in its sitting held on 15.01.2019 had decided to hear the Applicants and the Respondent on 30.01.2019. 30. The final hearing was held on 30.01.2019 wherein the Applicant No. 1 was not present; Applicant No. 2 was represented by Sh. Rana Ashok Rajneesh, Assistant Commissioner and the Respondent was represented by Shri Adeep Veer Jain, Counsel. 31. The Respondent has filed written submissions on 30.01.2019 through which the Respondent has additionally submitted that he was involved in a single project viz. City Park which comprised both Villas and Plots (Land). There were three categories/types in the project viz. A , B C , Type A had 114 residential plots, Type B had 103 residential plots Type C had 154 residential plots. Out of the Layout Plan approved by UP RERA, the Respondent only owned dealt in 339 residential plots (after resizing of 6 plots). In Type A , the Respondent was constructing Villas on only 4 plots and rest of the plots were either sold as such without any development or were available for sale. In Type B , h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 the amount of ITC as on 30.06.2018, has accrued to the Respondent and the same was required to be passed on to the above Applicant and the other flat buyers. The DGAP has calculated the amount of ITC as ₹ 74,36,865/- which was availed by the Respondent vide Table-D supra on the basis of the information supplied by the Respondent and hence the calculation done by him can be relied upon. He has also computed the ratio of ITC to the taxable turnover which was available to the Respondent before coming in to force of the GST w.e.f. 01 07.2017 as 0.15% and after 01.07.2017 as 9.83% as per Table-E which proves that the Respondent had availed additional ITC of 9.68% (9.83%-0.15%) post implementation of GST. The DGAP has also computed the amount of profiteering as ₹ 81,67,546/- vide Table-E on the basis of the details supplied by the Respondent himself which he has not challenged and hence the amount of profiteering assessed by the DGAP can be deemed to be correct. The DGAP has also computed the details of the benefit of ITC which is required to be passed on by the Respondent to each flat buyer as per Annexure-21 which has been accepted by the Respondent. The Respondent at no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37. It is evident from the above that the Respondent has denied benefit of ITC to the Applicants as well as the rest 36 purchasers of flats 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 charge and has also compelled them to pay more GST than what they were required to pay by issuing incorrect tax invoices and hence he has committed offence under section 122 (1) (i) of the CGST Act, 2017 and therefore, he is liable for imposition of penalty under the above Section read with Rule 133 (3) (d) of the CGST Rules, 2017. Although notice for imposition of penalty has already been issued to the Respondent on 16.11.2018 however, no formal oral or written submissions have been filed by the Respondent on the quantum of penalty. Therefore, keeping in view the principles of natural justice it would be appropriate to issue fresh notice asking him to explain why penalty should not be imposed on him for the above offence. 38. A copy of this order be sent to the Applicants and the Respondent free of cost. File of the case be consigned after completion. - - TaxTMI - T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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