9911796707
TMI Blog2019 (10) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... application dated 30.05.2018 (Annexure-I of the Report) submitted to the Maharastra Screening Committee on Anti-profiteering under Rule 128 (2) of the CGST Rules, 2017, the Applicant No. 1 had alleged profiteering by the Respondents while he had purchased Flat No. 704, Building-2, Lodha Eternis, Andheri East, Mumbai, in "Lodha Eternis" project launched by the Respondents. The above Applicant had also alleged that the Respondents had not passed on the benefit of Input Tax Credit (ITC) although they had charged GST @ 12% w.e.f. 01.07.2017 from him. The Maharashtra State Screening Committee had examined the above application and after its prima facie satisfaction that the Respondents had violated the provisions of Section 171 of the CGST Act, 2017, had sent the same with its recommendations for necessary action to the Standing Committee on Anti-profiteering on 13.07.2018 as per the provisions of Rule 128 of the CGST Rules, 2017. This application was duly considered by the Standing Committee on Anti-profiteering in its meetings held on 07.08.2018 & 08.08.2018 and was referred to the DGAP for conducting detailed investigation on the allegations levelled by the Applicant No. 1. 2. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 and therefore, he was also made a co-noticee vide Notice F.No.22011/API/80/2018 dated 24.10.2018 issued by the DGAP. The Applicant No. 1 was also afforded an opportunity of inspecting the evidence produced by the Respondents between 19.11.2018 to 20.11.2018 however, he had requested vide his email dated 14.11.2018 to send him the copies of the evidence by post which were accordingly sent to him by the DGAP. The DGAP has also submitted that the present investigation has been conducted from 01.07.2017 to 31.08.2018 and the period for completing the investigation was upto 29.11.2018 as per the provisions of Rule 129 (6) of the CGST Rules, 2017. 5. The DGAP has also intimated that the Respondent No. 2 had filed replies to the Notice vide their letters dated 18.09.2018, 26.09.2018, 12.10.2018, 22.10.2018, 23.10.2018, 24.10.2018, 01.11.2018, 06.11.2018 and 12.11.2018. The contents of the replies given by the above Respondent have been given in brief by the DGAP as under:- I. That the Respondents had claimed that the allegation of the above Applicant was completely misplaced, unjustified & premature and all facts had not been placed on record by him. II. That the Respondents had al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Respondent No. 1 was not entitled to take credit during the erstwhile regime, worked out as Rs. 170/- per sq. ft. in building No. 2 and Rs. 196/- per sq. ft. in the "Lodha Eternis" Project, whereas the Respondent No. 1 had already given the benefit to the applicant by way of reduction in price @ Rs. 196/per sq. ft. amounting to Rs. 1,90,316 & Rs. 23,273/- on account of excess Maharashtra VAT (MVAT) paid @1% on total agreement value at the time of agreement registration. III. That the above benefit of Rs. 170/- per sq. ft. & Rs. 196/- per sq. ft. had been calculated without considering the reversal of the credit on account of credit attributable to unsold units post receipt of occupancy certificate. IV. That the GST benefit of Rs. 196/- per sq. ft. included transition credit of Rs. 48,74,677/- of which Rs. 36,70,830/- pertained to the goods lying in stock (work in progress-unsold flats as on 30.06.2017). It was also claimed that the Commissioner of State Taxes Maharashtra State had issued an internal Circular No. 23A of 2018 dated 01.09.2018 wherein it was stated that the developer was not eligible for transitional credit. 8. The DGAP has intimated that the Respondent No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk for level 7 07.12.2016 18,94,660 - 85,260 - - 19,79,920 13. On initiation of RCC work for level 8 16.12.2016 18,94,660 - 85,260 - - 19,79,920 14. On initiation of facade work external 14.02.2017 12,63,106 - 56,840 - - 13,19,946 15. Final Possession Demand Letter 18.08.2018/13.09.2018 12,63,106 - 56.840 - - 13,19,946 16. Amount yet to be Demanded - 25,263 - - 3,032 - 28,295 Total 2,52,62,127 12,71 ,629 10,37,112 2,91,433 1,90,316 2,76,71,985 10. The DGAP has also submitted that the contention of the Respondent No. 1 that the accurate quantum of ITC would be finally determined and the benefit passed on to the recipients at the time of giving possession might be correct as the above Respondent had passed on benefit of Rs. 1,90,316/-, vide his possession demand letters dated 18.08.2018 & 13.09.2018 but the profiteering, if any, had to be established at a point of time in terms of Rule 129 (6) of the CGST Rules, 2017. Therefore, the ITC available to the Respondents and the taxable amount received by them from the above Applicant and other recipients till 31.08.2018 had to be taken into account for determining profiteering. 11 . The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. and hence the Respondent No 1 had legal obligation to pass on any benefit in respect of the units sold by him to the buyers of the project Lodha Eternis. It was further submitted by the DGAP that prior to 01.07.2017 i.e. in the Pre-GST era, the Respondents were eligible to avail CENVAT credit of Service Tax paid on input services only and no credit was available in respect of the Central Excise Duty paid on the inputs, of VAT paid on inputs and of VAT (WCT) paid to the subcontractors. However, Post-GST, the Respondents were eligible to avail ITC of GST paid on inputs and input services including the subcontracts. He has also submitted that from the data submitted by the Respondents which had been duly verified from the GSTR-1 and GSTR-3B Returns, the details of the ITC availed by the Respondents and their taxable turnover for the project Lodha Eternis during the said periods, the ratio of ITC to turnover during the Pre-GST and Post-GST period was as under:- Table- "C" (Amount in Rs.) S.No. Particulars April, 2016 to March, 2017 April, 2017 to June, 2017 Total (Pre-CST) July, 2017 to Feb, 2018 March, 2018 to August, 2018 Total (Post-GST) (1) (2) (3) (4) (5)= ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D above (%) C 1.57% 7.32% 4 Increase in tax rate post-GST (%) D=12% less 4.75% - 6.50% 5 Increase in input tax credit availed post-GST (%) E=7.32% less 1.57% - 5.75% 6 Analysis of Increase in input tax credit: 7 Base Price collected during July, 2017 to August, 2018 F 64,76,43,664 8 Less: Units cancelled and amount refunded G 9 Net Base Price collected during July, 2017 to August, 2018 H=F-G 64,76,43,664 10 GST Collected @ 12% over Basic Price I=H*12% 7,77,17,240 11 Total Demand collected J=H+I 72,53,60,904 12 Recalibrated Basic Price K=H*(1-E) or 94.25% of H 61,03,95,002 13 GST @ 12% L=K*12% 7,32,47,400 14 Commensurate demand price M=K+L 68,36,42,402 15 Excess Collection of Demand or Profiteering Amount N=J-M 4,17,18,502 15. The DGAP has also stated on the basis of the above table(s) that the additional ITC of 5.75% of the taxable turnover should have resulted in commensurate reduction in the base price as well as cum-tax price, in terms of Section 171 of the CGST Act, 2017 and the benefit of the additional ITC was required to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Gupta, Sr. Vice President (Taxation), Sh. Timish Salot, Vice President (Taxation), Sh. Surendra S Gupta, Consultant, Sh. Santosh Thapliyal, Authorised Representative and Sh. Archit Agarwal, Chartered Accountant. 18. The Respondents vide their reply dated 10.01.2019 have submitted that they had agreed to pass on the GST Anti-Profiteering benefit prior to the receipt of the notice of the complaint from the DGAP. They have also submitted that based on the taxes and the duties incurred on the total construction cost on the projects completed in the past it was assumed by them that savings between 4% to 5% would accrue to them hence, they had considered average rate of 4.5% as the GST benefit on the balance construction cost to be incurred, as on 30.06.2017. They have further submitted that they had agreed to pass on the above benefit to the customers of Eternis Project which could be evidenced from their letter dated 18.08.2018 sent to the above Applicant wherein it was communicated that an amount of Rs. 1,90,316/- (Rs. 196 per sq. ft. * 971 sq. ft.) had been given as discount on account of GST benefit. They have also stated that the above fact had also been recorded by the DGAP in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax rates imposed in the GST period which might lead to the distorted figures of additional ITC. 21. The Respondents have also claimed that the credit and the taxable value did not synchronize in the same month or the same period in the instant case which was evident from the Table-C of the DGAP's Report as follows:- Sr.No. Particulars July 2017 to February 2018 March 2018 to August 2018 Total (Post GST) 1 Input tax credit of GST availed (A) 2,92,01,655 3,12,45,551 6,04,47,206 2 Total Taxable Turnover (B) 39,67,04,816 25,09,38,848 64,76,43,664 3 Total Saleable Area (C) 1,98,929 1,98,929 1,98,929 4 Area sold relevant to taxable turnover as per returns (D) 1,37,115 1,56,002 1,56,002 5 Relevant Credit (E) =(D)/(C)*(A) 2,01,27,709 2,45,03,056 4,74,03,270 6 Ratio of Input Tax Credit Post GST (F=E/B1) 5.07% 9.76% 7.32% The Respondents have therefore, submitted that as per the Table above, the ratio of availment of the ITC to the taxable turnover for the period from July-2017 to February-2018 was 5.07% and for the period from March-2018 to August-2018 was 9.76% whereas the DGAP had considered the average of both the periods as 7.32% and hence, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Report was incorrect:- Sr. No. Product Name Pre-GST average rate Post-GST average rate % of increase in cost 1 Ready Mix Concrete 4341 4,566 5.18% 2 Steel 31,276 38,032 21.60% 3 Granite & Marble 176 181 2.54% 25. The Respondents have relied upon the Order No. 3/2018 dated 04.05.2018 of this Authority passed in the case of Kumar Gandharv v. KRBL Ltd. = 2018 (5) TMI 760 - NATIONAL ANTI-PROFITEERING AUTHORITY and claimed that it was held in this case that the increase in the cost leading to increase in the ITC could not be considered as benefit received by the Respondent. The relevant extract of the said order is as follows:- "7. It is also revealed from the perusal of the tax invoices submitted by the Respondent that there was an increase in the purchase price of paddy in the year 2017 as compared to its price during the year 2016 which constitutes major part of the cost of the above product. It is further revealed from the records that the respondent had increased the MRP of his product from Rs. 540/- to Rs. 585/- which constituted increase of 8.33% keeping in view the increase in the purchase price. Therefore, due to the imposition of the GST on the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered upto 130% (100% in case of VAT and 30% in case of Service Tax) instead of 100% as under the Pre-GST regime, the Respondents were liable to pay VAT at @1% of the total contract value and Service Tax at the rate of 15% only on 30% of the basic contract value. The Respondents have further contended that the DGAP had taken both the turnover values (VAT as well as Service Tax) which had distorted the turnover value. The Respondents have also submitted that the taxable turnover had been inflated by Rs. 25,90,50,575/- by the DGAP for the pre-GST period due to this error. Therefore, the said turnover in Table-C for the Pre-GST period should be re-calculated and ratio should be revised accordingly. 30. The Respondents have further submitted that the area sold relevant to taxable turnover mentioned in Table-C of the DGAP's Report was not correct as the DGAP had re-calibrated the CENVAT/ITC availed by the Respondents in proportion to the total area sold relevant to the taxable turnover in comparison to the total saleable area of the project. In the Pre-GST era, the Respondents had availed CENVAT credit of Rs. 4,72,55,526/- with a total saleable area of 1,98,929 sq. ft. However, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not be considered as 'profiteering'. Therefore, they have claimed that Table-D of the DGAP's Report should be revised accordingly. 32. The Respondents have also argued that the DGAP in para 19 and Table-D of the Report had considered Post-GST rate of tax as 12% and had taken the rate of tax in the Pre-GST regime as Service Tax and VAT to be 4.5% and 1% respectively. They have further argued that the DGAP had taken that this tax rate was applicable on the entire agreement value but as per Section 9 of the CGST Act, 2017 the tax was to be levied on supply of goods or services on the value to be determined under Section 15 of the Act and at such rates as might be notified by the Government, thus, the notified rate must be considered as 'tax rate'. Accordingly, they have claimed that the DGAP in Table-D of the Report had stated that the increase in the tax rate was only 6.5% [12% GST - (4.5% service tax + 1% VAT)], however, the DGAP had not given any findings on such increase in the rate of tax. The Respondents have further claimed that in the Post-GST period, the rate of tax on construction service was specified under Entry No. 3 of Notification No. 11/2017-CT (Rate) dated 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondents. It was further submitted by the Respondents that they had relied upon the Order No. 3/2018 dated 04.05.2018 passed by this Authority in the case of Kumar Gandharv v. KRBL Ltd. = 2018 (5) TMI 760 - NATIONAL ANTI-PROFITEERING AUTHORITY wherein it was held that if the increase in the tax rate was more than the increase in the credit amount, no benefit had accrued to the Respondents. The relevant extract of the same was quoted as follows:- "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 w.e.f. 22.09.201Z The Respondent was also made eligible to avail ITC w.e.f. the above date. However, 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 ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above Applicant was only Rs. 98,430/- as compared to Rs. 1,88,717/- as claimed by the DGAP in his Report. 35. The Respondents have further submitted that the credit figures appearing in the Post-GST period in Table-D might be reduced once the Completion Certificate of the project would be received. The Respondents have also quoted Schedule-Ill "Sale of land and subject to clause (b) of para 5 of Schedule-Il, sale of building" which is neither supply of goods nor supply of service. Para 5 (b) of Schedule-II reads as follows: (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. On the basis of the above provisions the Respondents have claimed that once the Completion Certificate was received, the sale of flats would not be subject to GST. They have also quoted the following provision of Section 17 (3) of the above Act as under:- (3) "The value of exempt supply under sub-section (2) sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Respondent with the amount collected from home buyers. This was because the Respondents were paying VAT @ 1% under Composition Scheme without any credit of VAT on inputs and were not collecting the same from the home buyers. The value shown in the VAT returns was the total agreement value of the flats booked in the return period and was not related to the actual amount collected from the home buyers. Therefore, the VAT turnover had not been considered for computation of the ITC ratio to taxable turnover for the Pre-GST period. 39. The DGAP after examination of the documents submitted by the Respondents during the hearing held on 10.01.2019 and to him, has claimed to have re-examined his Report dated 28.11.2018 and stated that after considering the revised details of the area sold relevant to the taxable turnover by the Respondent as per the home-buyers list and the details of other charges collected in the Pre-GST period, the taxable turnover of the Respondents during the period from April, 2016 to June, 2017 (i.e. Pre-GST) and during July, 2017 to August, 2018 (i.e. Post-GST), the ratios of CENVAT/ITC and the taxable turnover, Pre-GST & Post-GST, were as per the below Table ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2% 7,77,17,240 11. Total Demand collected J=H+I 72,53,60,904 12. Recalibrated Basic Price K=H*(1-E) or 97.38% of H 63,06,75,400 13. GST@12% L=K-12% 7,56,81,048 14. Commensurate demand price M=K+L 70,63,56,448 15. Excess Collection of Demand or Profiteering Amount N=J-M 1,90,04,456 41. The DGAP has submitted from the above Table that the additional ITC of 2.62% of the taxable turnover should have resulted in commensurate reduction in the base price. Therefore, in terms of Section 171 of the CGST Tax Act, 2017, the benefit of the additional ITC that had accrued to the Respondents was required to be passed on to the recipients. 42. The DGAP has also stated that on the basis of the aforesaid CENVAT/ITC availability Pre and Post-GST and the details of the amount collected by the Respondents from the above Applicant and the other home buyers during the period from 01.07.2017 to 31.08.2018, the amount of benefit of ITC which had not been passed on by the Respondents to the recipients or in other words, the profiteered amount came to Rs. 1,90,04,456/- which included GST @ 12% on the base profiteered amount of Rs. 1,69,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Benefit passed on. List Attached as Annex-21 4 Other Than Applicant 74 67,902 - 0 1,29,33,148 (1,29,33,148) No Consideration Paid Post-GST, However, Respondent passed on benefit. List Attached as Annex-22 5 Other Than Applicant 46 42,927 - - - - Unsold Units as on 31.08.2018 Total 212 1,98,929 64,76,43664 1,90,04,456 3,06,25,327 (1,17,74,122) - 45. The DGAP has also submitted from the above Table that the benefit claimed to have been passed on by the Respondents was less than what they should have passed on in respect of 31 cases (Sr. 2 of the above Table) amounting to Rs. 1,00,18,637/-. The details of these amounts are given in Annex-20 (Revised DGAP Report). The benefit claimed to have been passed on by the Respondents was higher as compared to what they should have passed on in respect of 61 recipients of residential flats including the Applicant (Sr. 1 & 3 of above table) amounting to Rs. 88,59,611/- (Rs. 1,53,251 + Rs. 87,06,360). The details of this excess benefit claimed to have been passed on are given in Annex-21 of the Revised DGAP Report. Further, the Respondents have also claimed to have passed on benefit amounting to Rs. 1,29,33,14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount as compared to his earlier Report dated 08.11.2018. Since, the Respondents had asked for adjournment of the hearing scheduled on 06.02.2019, it was decided to accord next hearing on 11.02.2019. During the hearing, the Respondents have filed submissions dated 11.02.2019 on the DGAP's revised Investigation Report. 48. It is observed that most of the objections raised by the Respondents vide their submissions dated 11.02.2019 are those which have already been taken on record. However, in addition the Respondents have contended that they had not done profiteering as was evident from Table-C of para 9 of the revised DGAP Report which stated that the profiteered amount arrived at by the DGAP on overall basis was negative which implied that the Respondents had passed on more benefit to the customers than determined by the DGAP. They have further contended that they were required to pass on benefit of Rs. 1,69,68,264/- to 92 customers as per the DGAP, whereas they had already passed on overall benefit of Rs. 1,76,92,179 to 92 customers and Rs. 3,06,25,327/- to 166 customers. Therefore, it was submitted that the Respondents had not profiteered and violated the provisions of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly intimation of such adjustment stands made to the department. Even if it is not adhered to, at the most it is a procedural lapse and merely for this procedural lapse the excess amount paid could not be deviated and cannot be permitted to be retained by the Government. Section 13 of the General Clauses Act, 1897 provides that singular include the plural. Accordingly, month includes months. Further the case laws relied on by the appellants are squarely applicable to the facts of the present case. The issue stands settled against the Revenue and in favour of the appellant-assessee. In view of the above, I am of the considered view that the excess amount paid in the month of May, 2011 adjusted by the appellants in the subsequent months tax liability is absolutely in order. Therefore, invoking Section 73(1) for a non-existing 'short-payment' is not sustainable. Accordingly, the impugned order is set aside and the appeal is allowed with consequential relief, if any, in accordance with law." The Respondents have also submitted that the above situation had arisen due to the fact that they had distributed the benefit based on the area whereas the DGAP had computed the benefit based on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 MARQUISE 5,62,440 4,62,617 11,74,53,401 12 NEW CUFFE PARADE 23,17,658 13,52,851 17,35,65,114 13 PARKSIDE 5,30,482 4,68,802 3,53,12,760 14 TRUMP TOWER 5,99,193 3,98,824 3,74,90,040 15 UPPER THANE 12,46,824 8,32,828 11,11,93,353 16 VENEZIA 2,23,754 2,20,662 4,36,31,104 17 WORLD ONE 6,86,104 4,84,756 14,22,88,885 TOTAL 1,92,78,588 1,23,26,674 1,39,30,61,689 52. The submissions of the Respondents were forwarded to the DGAP on 22.02.2019 & 28.03.2019 and the DGAP vide his Reports dated 01.03.2019 & 05.04.2019 has submitted that:- i. On the issue of the details of the ITC benefit passed on in other projects:- The DGAP has stated that the project covered in the DGAP's investigation was "Lodha Eternis". The details submitted by the Respondents pertained to other projects which were not part of the investigation. ii. On the issue of Increase in ITC due to increase in rate of GST and cost of input material:- The DGAP has stated that the increase in the ITC as a percentage of total turnover availed by the Respondents Post-GST, had been mentioned earlier in his Reports. He has also stated that there should be no extra liability on the Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Post-GST period this ratio was 7.32% as per the Table-C mentioned above and therefore, the Respondents had benefited from the additional ITC to the tune of 5.75% (7.32%-1.57%) of the total turnover which they were required to pass on to the flat buyers of this project. He has also claimed that the Respondents had not reduced the basic prices of their flats by 5.75% due to additional benefit of ITC and by charging GST at the increased rate of 12% on the Pre-GST basic prices, they had contravened the provisions of Section 171 of the of the CGST Act, 2017. The DGAP vide his Report dated 28.11.2018 has further submitted that the amount of benefit of ITC which had not been passed on by the Respondents or the profiteered amount came to Rs. 4,17,18,502/- which included 12% GST on the basic profiteer amount of Rs. 3,72,48,662/-. The DGAP has also intimated that the above amount was inclusive of Rs. 81,364/- (including GST) which the Respondents had profiteered from the Applicant No. 1. He has also supplied the details of all the buyers who had purchased flats from the Respondents along with their unit numbers vide Annexure-19 attached with the Report in which the profiteered amount of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of Rule 133 (1) of the CGST Rules, 2017 is determined as Rs. 1,90,04,456/- which includes GST (@ 12% or 18%) on the base profiteered amount of Rs. 1,69,68,264/-. This amount is also inclusive of Rs. 37,065/- (including GST on the base amount of Rs. 33,093/-) which is the profiteered amount in respect of the Applicant No. 1. 58. The DGAP has also mentioned that the above computation of the profiteered amount was in respect of the 92 flat buyers whereas, the Respondents had booked 166 flats till 30.06.2018, out of which 74 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-CST. He has further mentioned that if the ITC in respect of these 74 units was calculated with reference to the 92 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 74 units should be calculated when the consideration would be received Post-GST by taking into account the proportionate taxable turnover in respect of thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved by the Respondents during the period from 01.07.2017 to 31.08.2018 had not been passed on to the Applicant No. 1 and the other buyers and the Respondents have realized an additional amount of Rs. 37,065/- from the Applicant No. 1 which includes both the profiteered amount @2.62% of the taxable amount (base price) and the GST on the said profiteered amount however, the Respondents have passed an amount of Rs. 1,90,316/- as benefit of ITC to him and hence an excess benefit of Rs. 1,53,251/- had been passed on to him. However, perusal of the credit note issued in favour of the above Applicant on 28.08.2018 shows that this amount has been paid as a discount which cannot be taken to be the benefit of ITC and hence no excess benefit of ITC has been passed on to him by the Respondents. Accordingly, the above Applicant is held entitled to an amount of Rs. 37,065/including the GST as benefit of ITC along with interest @18% from the date from which the above amount was realised by the Respondents from him. 61. The DGAP has also claimed that the investigation had revealed that the Respondents had profiteered an amount of Rs. 1,60,38,767/(Table G supra) which included both the profiteered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erests of the house buyers hence the contention of the Respondents is not justifiable and therefore, the GST collected by them on the additional realisation has rightly been included in the profiteered amount by the DGAP. 63. The Respondents have also raised objection on the methodology followed by the DGAP while calculating the profiteered amount however, it is not maintainable as profiteering in each case has to be determined on the basis of the facts of each case and no straight jacket formula can be fixed for calculating the same as the facts of each case differ. The methodology applied in the case where the rate of tax has been reduced and ITC disallowed cannot be applied in the case where the rate of tax has been increased and ITC allowed. Similarly the methodology applied in the case of Fast Moving Consumer Goods (FMCGs) cannot be applied in the case of construction services. Even the methodology applied in two cases of construction service may vary on account of the period taken for execution of the project, the area sold and the turnover realised. The Respondents have themselves admitted that the same methodology could not be applied in each case and hence they should hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hiravan Discount 05-10-2018 1,90,316 SGST & CGST Credit 28-01-2019 22,838 2,13,154 65. It is clear from the above Table that the Respondents vide their first credit notes dated 05.10.2018 had released discount to the above Applicant as well as to the other house buyers which cannot be considered as passing on of the benefit of additional ITC as the above discount has been given by the Respondents from their own profit margins and not on account of the benefit of ITC. The entry of "discount" made in the credit notes itself proves that this amount has not been paid on account of the ITC benefit. Accordingly, the discount of Rs. 1,90,316/- paid to the above Applicant can also not be considered as the benefit of ITC. Therefore, the finding of the DGAP that the Respondents had passed on the additional benefit of ITC as discount as has been mentioned in the revised Report dated 22.01.2019 is not correct and it cannot be accepted. The Respondents vide their subsequent credit notes dated 28.01.2019 have claimed that they have passed on the above benefit as SGST & CGST credit. This credit can also not be taken to be the passing on of the benefit of ITC as there is no evidence to sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyers cannot be adjusted against the benefit due to either other house buyers or against their future entitlement or against the total profiteered amount computed by the DGAP as the same is required to be passed on to each such recipient as per the provisions of Section 171 (1) of the above Act. Similarly the case of Larsen & Toubro supra also does not support the case of the Respondents as the DGAP has not included the value of land while calculating the Pre and Post-GST rates of tax levied on them. The DGAP has taken Service Tax, VAT (Total 5.5%) during the Pre-GST period and GST @12% during the Post-GST period and correctly arrived at the figure of 6.5% as the increase in the rate of tax vide Table-B of his revised Report dated 22.01.2019. Accordingly, the claim of the Respondents that there was increase of 9.79% in the rate of tax Post-GST cannot be accepted. 68. The Respondents have also claimed that the DGAP had included that income also in the Pre-GST taxable turnover like maintenance charges for which service had been provided previously, cheque bounce charges and cancellation charges which should not have been included. Perusal of Table-A of the revised Report dated 22. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... just the amount of discount or the SGST & CGST credit offered by them out of their own profit margins on account of the reduction in the cost or due to slow down in the market against the ITC benefit to be paid to the house buyers. The DGAP shall accordingly, re-compute the amount to be passed on to all the eligible house buyers and convey the same to the Respondents and the Commissioners SGST and CGST as well as this Authority. 71. The Respondents have also claimed that the DGAP had wrongly taken area sold in the Post-GST period as sq. ft. in Table-C of his Report dated 28.11.2018 whereas actually an area of 88,100.00 sq. ft. had been sold during the above period and in case this area was considered the relevant ITC figures would also change which would result in lowering the ratio of ITC to total turnover. In this connection it is apparent from the revised Report dated 22.01.019 that the above area has been revised to 88,100.00 sq. ft. and the ratio of ITC to turnover has also been re-computed. Hence, the contention of the Respondents appears to be correct. 72. The Respondent has also cited the definitions of Profiteering given in the dictionaries to claim that he had not taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Completion Certificate as per Schedule-III subject to clause (b) of para 5 of Schedule-II as well as Section 17(3) of the above Act. As the Completion Certificate has not been obtained by the Respondents therefore, the above provisions are not applicable in their case. 76. 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 Respondents as they have profiteered an amount of Rs. 1,90,04,456/- inclusive of GST @ 12% on the base profiteered amount of Rs. 1,69,68,264/-. The Respondents have also realized an additional amount to the tune of Rs. 37,065/- from the Applicant No. 1 which includes both the profiteered amount @2.62% of the taxable amount (base price) and the GST on the said profiteered amount. Accordingly, the above amounts shall be paid to the above Applicant and the other eligible house buyers by the Respondents along with interest @18% from the date from which these amounts were realised from them till they are paid as per the provisions of Rule 133 (3) (b) of the CGST Rules, 2017. 77. In view of the above facts this Authority under Rule 133 (3) (a) of the CGST Rules, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,89,86,319 9 KIARA 4,71,553 1,78,701 2,66,50,188 10 LAKESHORE GREENS 35,23,094 24,69,894 10,31,77,787 11 MARQUISE 5,62,440 4,62,617 11,74,53,401 12 NEW CUFFE PARADE 23,17,658 13,52,851 17,35,65,114 13 PARKSIDE 5,30,482 4,68,802 3,53,12,760 14 TRUMP TOWER 5,99,193 3,98,824 3,74,90,040 15 UPPER THANE 12,46,824 8,32,828 11,11,93,353 16 VENEZIA 2,23,754 2,20,662 4,36,31,104 17 WORLD ONE 6,86,104 4,84,756 14,22,88,885 TOTAL 1,92,78,588 1,23,26,674 1,39,30,61,689 Keeping in view the self-admission of the Respondents in which they have admitted that they are liable to pass on the benefit of additional ITC as per the provisions of Section 171 of the above Act, the above admission of the Respondent is required to be investigated as there are sufficient reasons to believe that the Respondents are required to pass on the benefit of additional ITC to the eligible house buyers, accordingly, the DGAP is directed to investigate the issue of passing on the benefit of additional ITC in respect of the above seventeen projects and submit his Report in terms of Rule 133 (5) of the CGST Rules, 2017 which reads as under:- "(5)(a) Notwithstandi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01/- for the Total Taxable Turnover, in Col. No. 7 the figures taken are 88,100 sq. ft. for the area sold, In Col. No. 9 the ratio has been calculated as 1.51% for the Pre-GST period and 4.13% for the Post-GST period resulting in additional benefit of ITC of 2.62%. The profiteered amount has also been revised to Rs. 1,90,04,456/-. Perusal of para 3 of the revised Report shows that the above figures have been changed on the basis of the claims made by the Respondents in their submissions made before this Authority as well as the DGAP on 10.01.2019 after considering the revised details of the area sold relevant to the taxable turnover as per the home buyers list and the details of the other charges collected during the Pre-GST period. The above contention of the DGAP shows that the team of his office which had investigated the present case had been careless and negligent while examining the returns and the list of the house buyers and had failed to verify and collect correct figures from the Respondents. It is also revealed from the perusal of Column L of Annexure-19 of the revised Report dated 22.01.2019 that the profiteered amount has been computed by applying the additional benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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