TMI Blog2019 (10) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... n the benefit as computed by the DGAP in his Report dated 24.04.2019, which is ₹ 2,13,468/- within due period as was mentioned in the Report. This Authority under Rule 133 (3) (a) of the CGST Rules, 20170rders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by them as has been detailed above. Since the present investigation is only up to 31.10.2018 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondents - The concerned CGST or SGST Commissioner shall take necessary action to ensure that the benefit of additional ITC is passed on to the eligible house buyers in future. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his River View Heights Project in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus resorted to profiteering. Hence, he has committed an offence under section 171 (3A) of the CGST Act, 2017 and therefore, he is apparently liable for imposition of penalty under the provisions of the above Section - a SCN be issued to him di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xactly quantify the total amount of benefit of input tax credit which was to be passed on to the above Applicant, and thus, submission of the above Applicant that the project was completed in March 2018 was factually wrong. In support of this fact, the Respondent also submitted RERA registration certificate. The Respondent has also stated to the DGAP that the above Applicant had paid the total consideration for both the units post-GST and not in the pre-GST era. 6. The DGAP on completion of his investigation has stated that the Respondent has submitted copies of the two sale agreements dated 15.03.2018, for the sale of flat nos. H/1/702 and H/1/802, to the above Applicant in his project River View Heights , each measuring 228.09 square meters, at the basic sale prices of ₹ 25713/- per square meter. The details of amounts and taxes paid by the above Applicant to the Respondent are furnished in the table given below:- Table (Amount in Rs.) S. No. Payment Stages Demand Date BSP Service Tax GST Total 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies Section 17 (3) The value of exempt supply under sub-section (2) shall be such as may be prescribed, and shall include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building . Therefore, the DGAP has mentioned that the input tax credit pertaining to unsold units might not fall within the ambit of his investigation and the Respondent was required to recalibrate the selling price of such units to be sold to prospective buyers by considering net benefit of additional input tax credit available to them post-GST. 8. The DGAP has also mentioned that prior to 01.07.2017, i.e., in the pre-GST era, the Respondent was eligible to avail CENVAT credit of Service Tax paid on input services only (no credit was available in respect of Central Excise Duty paid on inputs and VAT paid on inputs). However, post-GST, the Respondent could avail input tax c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18,02,418 9. Ratio of CENVAT/Input Credit to Turnover [(I)=(H)/(E)]*100 2.37% 2.65% 9. The DGAP has concluded in his report that the input tax credit as a percentage of the total turnover that was available to the Respondent during the pre-GST period (April, 2016 to June, 2017) was 2.37% and during the post-GST period (July, 2017 to October, 2018), was 2.65% which confirmed that post-GST, the Respondent has benefited from additional input tax credit to the tune of 0.28% (2.65%-2.37%) of the total turnover. Further, the DGAP has stated that the profiteering has been examined by comparing the applicable tax and input tax credit available for the pre-GST period (April,2016 to June, 2017) when Service Tax @4.5% and VAT@I% was payable (total tax rate of 5.5%) with the post-GST period (July, 2017 to October, 2018) when the effective GST rate was 12% (GST @18% along with 1/3rd abatement on value) on construction service, which was fixed vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. On the basis of this the DGAP has summarized t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on to the recipients or in other words, the profiteered amount came to ₹ 2,13,468/- which included 12% GST on the base profiteering amount of ₹ 1,90,596/-, and the computation of profiteering was in respect of 26 home buyers from whom payments had been received by the Respondent during the post-GST period from 01.07.2017 to 31.10.2018. The DGAP has also observed that construction service has been supplied by the Respondent in the State of Gujarat only. 11. After perusal of the DGAP's report, the Authority in its sitting held on 25.04.2019 decided to hear the Applicants and the Respondent on 09.05.2019 and accordingly notice was issued to them. But none appeared on behalf of the Applicant No. 1 as well as the Respondent. But, in his mail dated 08.05.2019, the Respondent stated that he did not require any personal hearings and agreed with the profiteered amount as calculated by the DGAP in his report. However, during the course of the hearing of the case, the Respondent was called to furnish some additional documents vide Order dated 13.08.2019, which were received vide his submissions dated 11.09.2019. 12. In his submissions dated 11.09.2019; the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyers. The Respondent shall not adjust the amount of discount or the SGST CGST credit offered by him 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 Commissioner SGST and CGST as well as this Authority. 16. In view of the above facts this Authority under Rule 133 (3) (a) of the CGST Rules, 20170rders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by them as has been detailed above. Since the present investigation is only up to 31.10.2018 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondents. In case this benefit is not passed on the above Applicant or any other buyer, he shall be at liberty to approach the State Screening Committee Gujarat for initiating fresh proceedings under Section 171 of the above Act against the Respondent. The concerned CGST or SGST Commissioner shall take necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of section 171 in respect of goods or services or both other than those covered in the said report, it may, for reasons to be recorded in writing, within the time limit specified in sub-rule (1), direct the Director General of Anti-profiteering to cause investigation or inquiry with regard to such other goods or services or both, in accordance with the provisions of the Act and these rules. (b) The investigation or enquiry under clause (a) shall be deemed to be a new investigation or enquiry and all the provisions of rule 129 shall mutatis mutandis apply to such investigation or enquiry. 19. The Authority as per Rule 136 of the CGST Rules 2017 directs the Commissioners of CGST/SGST Gujarat to monitor this order under the supervision of the DGAP by ensuring that the amount profiteered by the Respondent as ordered by the Authority is passed on to all the eligible buyers. A report in compliance of this order shall be submitted to this Authority by the Commissioners CGST /SGST within a period of 4 months through the DGAP from the date of receipt of this order. 20. A copy each of this order be supplied to both the Applicants, the Respondents, Commissioners CGST ..... X X X X Extracts X X X X X X X X Extracts X X X X
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