Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home List
← Previous Next →

2019 (10) TMI 197

..... osition of penalty - HELD THAT:- The provisions of Section 171 of CGST Act, 2017 have been contravened by the respondents as they have profiteered an amount of ₹ 1,90,04,456/- inclusive of GST @ 12% on the base profiteered amount of ₹ 1,69,68,264/-. The respondents have also realised an additional amount to the tune of ₹ 37,065/- form the applicant no. 1 which includes both 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 alongwith 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 CGST Rules, 2017. It is also evident that respondents have denied benefit of ITC to the buyers of the flats being constructed by them in their Lodha Eternis Project in contravention of the provisions of section 171(1) of CGST Act, 2017 and thus resorted to profiteering. Hence they have committed an offence u/s 171(3A) of CGST Act, 2017 and therefore they are apparently liable for imposition of penalty under the provisions o .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... has stated in his Report that the above flat was booked by the Applicant No. 1 on 21.04.2015 before the GST had come in to force w.e.f. 01.07.2019 and the following demands had been raised on him by the Respondents as per the Table-A given below:- Table-A (Amounts in Rs.) Particulars BSP Other Charges Service Tax GST Total Agreement Value (A) 2,52,62,127 0 11,36,796 0 2,76,32,656 Paid in Pre-GST era (B) 2,39,73,758 0 10,37,112 0 2,50,39,694 Balance to be paid Post GST (C)=(A)-(B) 12,88,370 12,71,629 99,684 0 25,59,683 Amount Demanded by Respondents during 01.07.2017 to 31.08.2018 (D) 12,63,107 0 0 1,51,573 14, 14,680 Amount to be demanded by Respondent (E) 25,263 12,71 ,629 0 1,36,828 14,33,720 Total Amount demanded post GST (F)=(D)+(E) 12,88,370 12,71 ,629 0 2,88,401 28,48,400 3. The DGAP has also stated that the Applicant No. 1 had submitted the following documents along with his complaint:- (a) Duly filled in Form APAF-1. (b) Copy of Allotment letter from the Respondents. (c) Copies of Payment Schedule Pre-GST & Post-GST. (d) Copy of agreement dated 21.04.2015. Copies of e-mails requesting for passing on the benefit of ITC. (f) Copy of final demand letter alongwith amount. ( .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... vide his email dated 17.06.2017 had intimated the above Applicant that the available GST benefits would be passed on to him III. That the Respondents vide their email dated 06.09.2017 had clearly informed the above Applicant that the benefit of ITC would be passed on at the time of possession. IV. That the possession of Flat no. 704 was yet to be handed over to the above Applicant by the Respondents. 6. The DGAP has further intimated that the Respondent No. 2 had also submitted the following documents:- (a) Copies of GSTR-1 returns for July, 2017 to August, 2018 in r/o the Respondent No. 2. (b) Copies of GSTR-3B returns for July, 2017 to August, 2018 in r/o the Respondent No. 2. (c) Copies of Tran-1 statements for the transitional credit availed by the Respondent No. 2. (d) Copies of VAT & ST-3 returns for April, 2016 to June, 2017 in r/o the Respondent No. 2. (e) Copy of Electronic Credit Ledger for the period July, 2017 to August, 2018 in r/o the Respondent No. 2. (f) Copies of all demand letters and sale agreement/contract and construction agreement dated 21.04.2015 in the name of the above Applicant Sh. Mohit Arora. (g) Tax rates Pre-GST and Post-GST in r/o the Respondent .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ments:- (a) Copies of GSTR-1 returns for March, 2018, to August, 2018 in r/o M/s. Lodha Developers Ltd. (b) Copies of GSTR-3B returns for March, 2018, to August, 2018 in r/o M/s. Lodha Developers Ltd. (c) Copy of Electronic Credit Ledger for the period from March, 2018 to August, 2018 in r/o M/S Lodha Developers Ltd. (d) Computation of GST benefit to be passed on. (e) copy of Balance Sheet for FY 2016-17 & 2017-18 in r/o M/s. Lodha Developers Ltd. (f) Details of taxable turnover and ITC for the project Lodha Eternis. 9. The DGAP after investigation has stated that the main issue for determination was whether there was benefits of reduction in the rate of tax or additional ITC on the supply of construction service provided by the Respondents after coming in to force of the GST w.e.f. 01.07.2017 and whether the Respondents had passed on the above benefits to the recipients in terms of Section 171 of the CGST Act, 2017 or not. The DGAP has also stated that the Applicant No. 1 had submitted correspondence dated 18.08.2018 received from the Respondents revising the payment schedule. The details of the amounts and taxes paid by the Applicant No. 1 to the Respondent No. 1 were as unde .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... etion certificate from the competent authority therefore, in respect of any unsold units, corresponding ITC would have to be reversed once the completion certificate was obtained as ITC in respect of such units had been claimed in the relevant months when inward supplies were received by the Respondents. The DGAP has also contended that his above submission was supported by para 5 of Schedule-III of the CGST Act, 2017 and Clause (b) of Paragraph 5 of Schedule II of the CGST Act, 2017, therefore, the ITC pertaining to the units which were under construction but not sold was provisional ITC which might be required to be reversed by the Respondents in terms of Section 17 (2) & Section 17 (3) of the CGST Act, 2017. Therefore, the DGAP has claimed that the ITC pertaining to the unsold units was outside the scope of this investigation and the Respondents were required to recalibrate the selling price of such units to be sold to prospective buyers by considering net benefit of additional ITC available to them Post-GST. 12. The DGAP has also intimated that another claim made by the Respondents was that the above Applicant had withdrawn his complaint and hence, the investigation should .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... C)=(A+B) 3,89,87,822 82,67,704 4,72,55,526 - 4. Input Tax Credit of GST Availed as per GST Return (D) - 2,92,01,655 3,12,45,551 6,04,47,206 5. Total Taxable Turnover as per Return (E) 1,26,02,62,634 54,81,63,800 1,80,84,26,434 39,67,04,816 25,09,38,848 64,76,43,664 6. Total Saleable Area of Villas in the project (Sqaure ft) (F) 1,98,364.00 1,98,929.00 7. Area Sold relevant to Taxable turnover as per returns (G) 1,19,364.00 1,56,002.00 8 Relevant CENVAT/lnput Tax Credit (H)=[(C)*(G)/(F)] or[(D)*(G)/(F)] 2,83,54,883 4,74,03,270 9. Ratio of CENVAT/ Input Tax Credit to Taxable Turnover [(I)=(H)/(E) 1.57% 7.32% 14. On the basis of the above Table the DGAP has argued that the ITC as a percentage of the total turnover that was available to the Respondents during the Pre-GST period from April, 2016 to June, 2017 was 1.57% and during the Post-GST period from July, 2017 to August, 2018, was 7.32% which confirmed that Post-GST, the Respondents had benefited from the additional ITC to the tune of 5.75% (7.32%-1.57%) of the total turnover. Accordingly, the DGAP has assessed the amount of profiteering by comparing the applicable tax rates and the ITC available during the Pre-GST period (April, 2 .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ey had contravened the provisions of Section 171 of the of the CGST Act, 2017. 16. The DGAP has also computed the extent of profiteering or the benefit not passed on by the Respondents, after taking into account the CENVAT/ITC availability Pre and Post-GST and the details of the amount collected from the home buyers during the period from 01.07.2017 to 31.08.2018 and claimed that the amount of benefit of ITC which had not been passed on or in other words, the profiteered amount came to ₹ 4,17,18,502/- which included 12% GST on the base profiteered amount of ₹ 3,72,48,662/-. He has also supplied the home buyer and unit no. wise break-up of this amount as per Annexure-19 of his Report. He has also claimed that as per Sr. No. 24 of Annexure-19, the total benefit to be passed on to the Applicant No. 1 amounted to ₹ 81,364/-, however, the Respondents had already passed on the benefit of ₹ 1,90,316/-, vide their possession demand letters dated 18.08.2018 & 13.09.2018 to him but the excess amount passed on by the Respondents to the above Applicant could not be adjusted against the profiteered amount to be passed on to other customers. It was also submitted by t .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... pted by them and the DGAP were different which had led to the difference in the amount calculated by the Respondents and the DGAP. They have further submitted that the amount payable to/receivable from the different customers due to difference in the methodologies would be set off internally by the Respondents. 20. The Respondents have also pleaded that the method of calculation adopted by the DGAP in computing the profiteered amount in Table-C of his Report was incorrect as the DGAP had computed the profiteered amount by taking the ratio of CENVAT credit to the turnover which had led to the wrong calculation of the amount of profiteering. To support their pleadings the Respondents have submitted:- a) That in the construction industry, the credit might accrue in a particular period but the tax liability might not arise in the same period as the construction took place gradually. The builder could raise the demand only when milestone was achieved but ITC would accrue to him continuously. The Respondents have also added that the milestone-based payment schedule was the general policy adopted by them due to which the demand for recovery of the instalments based on the milestones could .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... the calculation of the anti-profiteering benefit to the recipients. The Respondents have further furnished data in the tabular form to show the timelines of demands raised and the milestones to contend that the CENVAT credit considered by the DGAP in Table-C of his Report was accordingly required to be taken as ₹ 1,62,17,670/- for the Pre-GST period and ₹ 4,70,64,956/- for the Post-GST period. 23. The Respondents have also averred that under the Pre-GST regime, services were subject to tax at the rate of 15% but under the GST regime most of the services were taxable at 18% and therefore, there was an increase of 3% of the ITC available to them due to increase in the rate of tax which was more than the pre-GST regime and hence, impact of the additional ITC @3% for services should have been considered by the DGAP. The Respondents have further averred that due to the increase in the rate of tax on services the additional ITC available to him for the period from July-2017 to August-2018 was, as follows, which had not resulted in additional benefit to them as they were already getting it in the pre-GST period:- Sr.No. Particular Amount (Rs.) 1 Taxable Value of Input Service .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... of procurement of the materials and not on account of any additional benefit due to the advent of GST as has been shown in following table:- Name of Material Taxable Value of Procurements Total ITC availed Average Increase in Price Increase in ITC due to Increase in Price Granite 41,58,094 8,44,507 2.54% 20,919 Marble 1,86,22,322 42,80,624 2.54% 1,06,035 RMC 2,72,11,845 48,98,133 5.18% 2,41,228 Steel 1,39,41,299 25,09,434 21.60% 4,45,755 Total 6,39,33,560 1,25,32,698 8,13,937 27. The Respondents have further submitted that despite increase in the cost of construction, they had reduced the price of flats as the average selling price per sq. ft. during the period from April 2016 to June 2017 was ₹ 23,485/- whereas during the period from July 2017 to August 2018 it was ₹ 23,286/-. The Respondents have also claimed that reduction in the price itself demonstrated that they had already passed on the ITC benefit to all the new customers by commensurate reduction in the selling prices. 28. The Respondents have also stated that the turnover considered by the DGAP for the Post-GST era pertained only to the sale of flats made by the Respondents, however, the pre-GST turnover incl .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ave also claimed that the DGAP had considered the area pertaining to total sales even if no demand was raised for the same during July-17 to Aug-18. The Respondents have submitted the following details demonstrating the impact of change in sold area as follows:- Particular Pre-GST Post-GST Cenvat/ITC 3,10,37,856 1,13,24,684 Turnover 1,54,72,73,098 64,76,43,664 Total Saleable Area 1,98,929 1,98,929 Area Sold Relevant to Turnover 1,19,364 88,100 Relevant Cenvat/ITC 1,86,23,743 50,15,381 Ratio 1.20% 0.77% 31. The Respondents have further submitted that the amount collected as GST should not be considered as a benefit to the Respondents as the excess collection had duly been deposited with the Government and the Respondents had not retained the same. The Respondents have further added that the term profiteering was described in various dictionaries as follows:- Black s Law Dictionary - Taking advantage of unusual or exceptional circumstances to make excessive profits Law Lexicon - To seek or obtain excessive profits, one who is given to making excessive profits Shorter Oxford English Dictionary - Make or seek to make an excessive profit Mount v. Welsh - Any conduct or practice involvin .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... T Act, 2017. They have further pleaded that the rate of tax was always applied on the taxable value which was also required to be declared in the ST-3 returns under the Service Tax regime and GSTR-3B returns under the GST regime. The Respondents have also stated that the rate of tax on sale of flats during the Post-GST period on 67% of the agreement value was 18% as per Sr. No. 3 of Notification No. 11/2017-CT (Rate) dated 28.06.2017. Therefore, in order to make the rates in the Pre and Post GST period comparable, the rate of tax in the Pre-GST period needed to be determined on the same basis i.e. after permitting abatement of 33% from the total value. The abatement of 70% from the total value was permitted under Notification No. 26/2012-ST dated 20.6.2012, thus, tax at the rate of 15% was payable on 30% of the total value and therefore, Service Tax of ₹ 4.5 (15% on ₹ 30) was payable on ₹ 100/- which included value of land. If the value of land was excluded the rate of Service Tax would be 6.72%. (4.5/67 x 100). They have also stated that the rate of VAT was 1% in Maharashtra, therefore, to determine the rate of VAT after abatement of 33% (by reducing value of lan .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... he buyers of the flats was ₹ 4.17 Crores which included ₹ 81,364/- to be passed on to the Applicant No. 1. They have further contended that in Table-A of the Report the balance Service Tax to be collected was ₹ 99,684/- whereas the total GST payable was ₹ 2,88,401/-, thus, on the advent of GST, the excess tax to be borne by the above Applicant was ₹ 1,88,717/-, however, the DGAP had not correctly computed the same as he had not considered the VAT paid by the Respondents by charging the said amount to the above Applicant. The DGAP had also failed to mention the Service Tax amount to be borne by the above Applicant on the Other Charges . They have also claimed that the amount of GST to be paid as had been mentioned by the DGAP in Table-A was also incorrect. The Respondents have submitted the revised Table-A as under:- Particulars BSP Other Charges Service Tax VAT GST Total Agreement Value (A) 2,52,62,127 12,71,629 12,50,343 2,63,158 - 2,80,47,257 Paid in Pre-GST era (B) 2,39,73,758 - 10,37,112 2,63,158 - 2,52,74,028 Balance to be paid Post GST (C) = (A) - (B) 12,88,369 12,71,629 2,13,231 - 27,73,229 Amount demanded by Respondents during 01.07.2017 to 31. .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... n respect of the above project being executed by the Respondents. 38. The submissions dated 10.01.2019 filed by the Respondents were forwarded to the DGAP for his report. The DGAP has submitted revised investigation Report dated 22.01.2019, the brief facts of which are as follows:- a. On the issue of incorrect method adopted to quantify the demand: The DGAP has submitted that the Respondents had argued that the total area sold by them upto August, 2018 was 1,56,002 Sq. ft. but during the period from 01.07.2017 to 31.08.2018 (period under investigation Post-GST), they had raised demands only in respect of 88,100 Sq. ft. area (92 home buyers) and no demand letter was issued to the other buyers of area totalling 67,902 Sq. ft. (74 home buyers), which was also evident from the home buyer s list submitted by them. b. On the Issue of the turnover having no relevance to CENVAT Credit during the period should not be considered: The DGAP has stated that the Respondents have submitted that other charges collected in the Pre-GST period towards cancellation of flat bookings and other miscellaneous services should not be considered during the computation of turnover for the Pre-GST period as it .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... Taxable turnover (G) 1,19,364.00 - 88,100.00 8. Relevant CENVAT/Input Tax Credit (H)=[(C)*(G)/(F)] or [D)*(G)/F)] 2,83,54,883 - 2,67,70,349 9. Ratio of CENVAT/Input Tax Credit to Taxable Turnover [(I)=(H)/(E)] 1.51% - 4.13% 40. The DGAP has also stated that the ITC as a percentage of the total turnover that was available to the Respondents during the Pre-GST period (April, 2016 to June, 2017) was 1.51% and during the Post-GST period (July, 2017 to August, 2018), it was 4.13% which clearly confirmed that Post-GST, the Respondents had benefited from additional ITC to the tune of 2.62% [4.13% (-) 1.51%] of the taxable turnover. On the basis of revised details of the comparative figures of ITC availed/available during the Pre-GST period and the post-GST period, the DGAP has computed the excess collection or the profiteered amount as under:- Table-F (Amount in Rs.) S. No. Particulars Pre-GST Post- GST 1. Period A April, 2016 to June, 2017 July, 2017 to August, 2018 2. Output tax rate (%) B 5.50% 12.00% 3. Ratio of CENVAT/ Input Tax Credit to Taxable Turnover as per Table - A above (%) C 1.51% 4.13% 4. Increase in tax rate post-GST (%) D=12% less 5.5% - 6.50% 5. Increase in input tax cr .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... he ITC as a percentage of taxable turnover would be distorted and erroneous. Therefore, he has stated that the benefit of ITC in respect of these 74 units should be calculated when the consideration was received Post-GST by taking into account the proportionate taxable turnover in respect of these 74 Units. 44. The DGAP has further stated that on the basis of the details of outward supplies of the construction service submitted by the Respondents, it was clear that the service was supplied in the State of Maharashtra only. He has also added that the Respondents had submitted vide their letter dated 10.01.2019 that they had passed on the benefit of ₹ 3,06,25,327/- to 166 home buyers who had booked their flats upto 31.08.2018, the details of which were enclosed as Annex-19 to the Report dated 28.11.2018. A summary of category-wise profiteering & the benefit passed on was furnished by the DGAP as follows:- Table-G (Amount in Rs.) S. No. Category of Customers No. of Units Area (in sqf) Amount Received Post GST Profiteering Amt. as per Annex-19 claimed to have been Passed on by the Respondent Difference Remark A B C D E F G H=F-G I 1 Applicant 1 971 12,63,107 37,065 1,90,316 ( .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ve Applicant and other recipients and the Respondents had realized an additional amount to the tune of ₹ 37,065/-, from the above Applicant which included both the profiteered amount @2.62% of the taxable amount (base price) and GST on the said profiteered amount. The DGAP has also claimed that the Respondent had passed on ₹ 1,90,316/- to the above Applicant, therefore, the Respondents had passed on excess amount of ₹ 1,53,251/- (₹ 1,90,316/- (-) ₹ 37,065/-) which may be adjusted against the further demands from the applicant. The DGAP has further claimed that the investigation revealed that the Respondents had realized an additional amount of ₹ 1,90,04,456/- as has been mentioned in Table- F of his revised Report which included both the profiteered amount @2.62% of the taxable amount (base price) and GST on the said profiteered amount from 91 other recipients who were not Applicants in the present proceedings. These recipients were identifiable as per the documents on record and therefore, this additional amount of ₹ 1,90,04,456/was required to be returned to such eligible recipients, he has contended. 47. The revised Report dated 22.01.20 .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... o adjust excess amount paid by him against his service tax liability for the succeeding month or quarter . The Department had disputed that the succeeding month or quarter meant immediately following the month or the quarter, however, the Appellate Tribunal based on the provisions of the General Clause Act, 1897 had interpreted that the term month has to be read as months . The relevant extract of the said order has been quoted by the them as follows:- 4. Heard both sides and perused the records. The short issue to be decided is whether the appellant has short paid the service tax during the month of July, 2011 by wrongly adjusting the service tax excess paid by them in the month of May, 2011 or otherwise. Both the authorities below have observed that as per Rule 6(4A) of STR, 1994, it is a wrong adjustment since Rule says that the assessee may adjust such excess amount paid by him against his service tax liability for the succeeding month or quarter and not in the subsequent months. The contention of the appellant is that the benefit of the same should be extended to the subsequent months after the succeeding month. It is a well-settled legal principle that the statute should be i .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... no demand was raised during the above period as per Annexure-B. During the hearing held on 25.02.2019, the Respondents have filed written submissions dated 25.02.2019 and also filed further written submissions on 18.03.2019. 50. The Respondents have submitted in their above submissions that the DGAP had not filed reply on the following objections raised by them: i. The increase in credit due to increase in rates of GST. ii. The increase in credit due to increase in cost of input material. iii. In the calculation, non-construction related turnover was also considered, which should be excluded. 51. The Respondents have further submitted a list of 17 (Seventeen) other projects in which they have claimed that they had themselves passed on the ITC benefit to the flat buyers. The list of the Projects is as under:- Sr.No. PROJECT NAME TOTAL AREA (SFT) AREA SOLD GST BENEFIT (SGT) GST BENEFIT AMOUNT PASSED (RS.) 1 ALLURA 5,47,688 4,30,623 10,40,11,177 2 ALTAMOUNT 1,27,430 51,120 1,13,75,867 3 AMARA 25,22,222 20,36,427 23,53,62,303 4 AZZURO 2,64,228 66,913 2,95,06,203 5 BELMONDO 8,18,387 2,43,207 62,45,252 6 CENTRAL PARK / DOWN TOWN/ CODENAME EPIC 39,65,260 22,56,421 13,69,12,008 7 CODENAME .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... already supplied the required information and explanation regarding the Pre-GST and the Post-GST data/figures from time to time and the matter may be decided in view of their previous submissions. 54. We have carefully considered all the Reports filed by the DGAP, the submissions made by the Respondents and the other material placed on record and find that the Applicant No. 1 had booked Flat No. 704 on 21.04.2015 with the Respondents in their Lodha Eternis project located in Andheri East, Mumbai for total consideration of ₹ 2,52,62,127/- as per the details furnished by the DGAP in Table-A of his Report. It is also revealed from the record that the above Applicant vide his complaint dated 30.05.2018 had alleged that the Respondents were not passing on the benefit of ITC to him in spite of the fact that they were availing ITC on the purchase of inputs at higher rates of GST which had resulted in benefit of additional ITC to them and were also charging GST from him @12%. The above complaint was examined by the Standing Committee in its meetings held on 07.08.2018 & 08.08.2018 and was forwarded to the DGAP for investigation who vide his Report dated 28.11.2018 has found that .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... tional ITC to the tune of 2.62% [4.13% (-) 1.51%] of the taxable turnover which was required to be passed on to the buyers by the Respondents. The revised ratio calculated by the DGAP has not been challenged by the Respondents, moreover the same is based on the information supplied by the Respondents which has been duly verified by the DGAP and therefore, the same is being treated to be correct. 57. The DGAP has also re-computed the profiteered amount after taking in to account the CENVAT/ITC availability Pre and Post-GST and the details of the instalments received by the Respondents from the Applicant No. 1 and the other home buyers during the period from 01.07.2017 to 31.08.2018 and stated that the amount of benefit of ITC which has not been passed on by the Respondents to their customers or the profiteered amount came to ₹ 1,90,04,456/- which included GST (@ 12% or 18%) on the base profiteered amount of ₹ 1 and which also included an amount of ₹ 37,065/(including GST on the base amount of ₹ 33,093/-) which was profiteered by the Respondents from the above Applicant. No objection has been raised by the Respondents against the above amounts. On the basis of .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... Respondents was higher (Annexure-21 of the revised Report) as compared to what they should have passed on in respect of the 60 recipients of the flats (Sr. 3 of Table G mentioned above) amounting to ₹ 87,06,360/-. He has further contended that the Respondents have also stated to have passed on the benefit amounting to ₹ 1 ,29,33,148/- in respect of 74 buyers of the flats who had not paid any consideration Post-GST. The above claims made by the DGAP do not appear to be correct as he has taken in to account the amount of discounts which the Respondents have paid to the buyers. By no stretch of imagination the discounts given by the Respondents out of their own profit margins can be construed to have been given as the benefit of additional ITC. Therefore, the amount of discount cannot be adjusted against the ITC benefit. Accordingly, the findings recorded by the DGAP vide Table-G cannot be accepted and it is held that the Respondents have not passed any excess benefit to the above house buyers. 60. The DGAP has also found that the additional ITC benefit of 2.62% of the taxable turnover which has accrued to the Respondents was required to be passed on to the Applicant No. 1 .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... as been mentioned as discount by the Respondents in their submissions and the credit notes shall also not be considered as such benefit as it has been given by the above Respondents from their own profit margins and shall not be adjusted against the benefit of ITC which may accrue to them in future. 62. The Respondents have also contended that they were not in agreement with the computation of the profiteered amount made by the DGAP as it included the GST which had been deposited by them in the Govt. account. The plea taken by the Respondents on this ground is fallacious as by forcing the flat buyers to pay more price by not releasing the benefit of additional ITC and by collecting tax @12% on this additional realisation they had denied the benefit of additional ITC to them by not reducing the prices of the flats commensurately. Had they not collected the additional GST the buyers would have paid less price and by doing so they have denied them the benefit of additional ITC which amounts to violation of Section 171 of the above Act. Both the Central as well as the State Government had no intention of collecting the additional GST as they had sacrificed their revenue in favour of th .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ivolous and without legal force. 64. The Respondents have also submitted copies of the credit notes and the ledger account of the above Applicant and other house buyers vide their submissions dated 20.02.2019 to whom they have claimed to have passed on the additional benefit of ITC. The details of these house buyers are as under:- Sr.No. Name Sh./Smt. Details of Credit Note 1 Details of Credit Note 2 Total Amount (In Rs.) Entry Date Amount (in Rs.) Entry Date Amount (In Rs.) 1 Mohit Arora Applicant No. 1 Discount 28-08-2018 1,90,316 SGST & CGST Credit 28-01-2019 22,838 2,13,154 2 Sudhir Sonavane Discount 05-10-2018 2,68,550 SGST & CGST Credit 28-01-2019 32,226 3,00,776 3 Asha Kharga Discount 05-10-2018 2,37,595 SGST & CGST Credit 28-01-2019 28,510 2,66,105 4 Subin K George Discount 05-10-2018 2,37,595 SGST & CGST Credit 28-01-2019 28,510 2,66,105 5 Ashwini Kumar Discount 05-10-2018 1,62,503 SGST & CGST Credit 28-01-2019 19,500 1,82,003 6 Rajdeep Saha Discount 05-10-2018 1,99,316 SGST & CGST Credit 28-01-2019 22,838 2,22,154 7 Vivek Sharma Discount 05-10-2018 1,62,503 SGST & CGST Credit 28-01-2019 19,500 1,82,003 8 Pravin D. Discount 05-10-2018 1,90,316 S .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ccrued to the Respondents and hence they are liable to pass on the benefit of additional ITC to the house buyers. Increase in the cost of inputs has no connection with passing on of the above benefit as it is the benefit of additional ITC only which has been given to the Respondents by the Central as well as the State Govt. out of their own revenue which is required to be paid to the house buyers. Moreover, the Respondents have also been given the benefit of lower prices while making purchases by their suppliers who have availed the benefit of ITC themselves. The Respondents have failed to establish that their ITC had increased due to increase in the cost and hence the claim made by them cannot be relied upon. Accordingly, the above order does not help the Respondents. 67. The claim of adjustment of the excess amount paid by the Respondents as ITC benefit against the profiteered amount as per the order passed in the case of M/s. Schwing Stetter (India) Pvt. Ltd. supra can also not come to the aid of the Respondents as facts of both the cases are different as in the above case the Appellants were requesting for adjustment of the extra tax paid by them whereas the present case pertai .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... and therefore, this contention of the Respondents cannot be given credence. 70. The computation of benefit made by the DGAP vide Table-G of his revised Report dated 22.01.2019 has been carefully considered by us and we find that by no stretch of imagination the amount passed as discount can be considered as the benefit of additional ITC and hence the same cannot be adjusted against the profiteered amount/benefit. Similarly the amount passed as credit of SGST & CGST also cannot be taken as the benefit of ITC. It is 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 benefit @2.56% whereas it should have been calculated by applying factor of 2.62% as has been stated by the DGAP in his Report. Accordingly, an amount of ₹ 1,90,04,456/- computed by applying the additional benefit @2.62% is determined as the profiteered amount including the GST as per the provisions of Rule 133 (1) of the above Rules. The Applicant No. 1 shall be entitled to the ITC benefit of ₹ 37,065/- including the GST and rest of the house buyers would be eligible to get ITC benefit of S .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... to 12% GST in the Post-GST period and hence total increase of 6.5% was considered by him in the tax rate whereas it should have been calculated on the rate of tax applied as per Section 9 of the Act. Perusal of the tax rates shows that the additional value of tax calculated by the DGAP is correct as per the relevant Notifications issued by the Central as well as the State Govt. and hence the claim made by the Respondents is not relevant. The rates of tax prevalent during the Pre and the Post-GST period can also not be made comparable as both are different and hence the increase in the tax rate cannot be taken as 9.79% as has been argued by the Respondents. As discussed supra the order passed in the case of KRBL is based on entirely different set of facts and hence the same cannot support the case of the Respondents as there is additional benefit of ITC of 2.62% Post-GST to the Respondents which is required to be passed on by them. 74. The Respondents have also submitted that the computation of the Service Tax and the GST to be paid by the Applicant No. 1 in Table-A of the Report dated 28.11.2018 was wrong. Since, the DGAP has revised the profiteered amount to be paid to the above A .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ave thus resorted to profiteering. Hence, they have committed an offence under section 171 (3A) of the CGST Act, 2017 and therefore, they are apparently liable for imposition of penalty under the provisions of the above Section. Accordingly, a Show Cause Notice be issued to them directing them to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on them. 79. The Respondents have themselves admitted that they have passed on the additional ITC benefit of ₹ 139,30,61,689/- in respect of 17 other projects being executed by the Respondents. They have also admitted the same before the DGAP vide Annexure-12 attached with the Report dated 08.11.2018. The details of all these projects and respective ITC benefit claimed to have been passed on by the Respondents are as under:- Sr.No. PROJECT NAME TOTAL AREA (SFT) AREA SOLD GST BENEFIT (SGT) GST BENEFIT AMOUNT PASSED (RS.) 1 ALLURA 5,47,688 4,30,623 10,40,11,177 2 ALTAMOUNT 1,27,430 51,120 1,13,75,867 3 AMARA 25,22,222 20,36,427 23,53,62,303 4 AZZURO 2,64,228 66,913 2,95,06,203 5 BELMONDO 8,18,387 2,43,207 62,45,252 6 CENTRAL PARK / DOWN TOW .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... 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 through the DGAP from the date of receipt of this order. 81. It is also revealed from the Report dated 28.11.2018 that the DGAP vide Col. No. 5 of Table-C had taken the Total Taxable Turnover as per returns (E) for the Pre-GST period from 01.04.2017 to 30.06.017 as ₹ 180,84,6,434/-, vide Col. No. 7 Area sold relevant to Taxable Turnover as per returns (G) as 1,56,002.00 sq. ft. for the Post-GST period w.e.f. 01.07.2017 to 31.08.018, vide Col. No. 8 the Relevant CENVAT/ITC (H)=[(C*(G)/(F) or [(D)*(G/F) was taken as ₹ 4,74,03,270/- and vide Col. No. 9 the Ratio of CENVAT/ITC to Taxable Turnover [(I)=(H)/(E) was calculated as 1.57% for the Pre-GST Period and ratio of 7.3% was calculated for the Post-GST period thereby stating that the Respondents had got additional benefit of . ITC of 5.75% (7.32%-1.57%) of the total turnover which they were required to pass on to the house buyers. Accordingly, the DGAP had intimated that the Respondents had profiteered an amount of ₹ 4,17,18,502/-. Whereas in the revised Report dated 22.01.019 .....

X X X X X X X

Full Text of the Document

X X X X X X X

 

 

← Previous Next →

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Blog || Site Map - Recent || Site Map ||