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2019 (11) TMI 466

..... by way of commensurate reduction in the price of the above flat - contravention of provisions of section 171 of CGST Act - HELD THAT:- The Applicant is not entitled to the benefit of additional ITC as his allotment has been cancelled by the Respondent on his own request. Therefore, the relationship of recipient and supplier stands terminated between the Applicant and the Respondent w.e.f. 24.11.2018 and therefore, he is not entitled to the benefit of additional ITC as per the provisions of Section 171 of the CGST Act, 2017 - He has further not paid the amount which he was required to pay in the pre and post GST period as per the terms of his allotment to become eligible for passing on of the benefit of ITC and therefore also he is not entitled to the above benefit. This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him - Since the present investigation is only up to 30.09.2018 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondent. Penalty - HELD THAT:- It is also evident from the ab .....

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..... e Standing Committee on Anti-profiteering for further action, in terms of Rule 128 (2) of the above Rules. The aforesaid reference was considered by the Standing Committee on Anti-profiteering, in its meeting held on 06.09.2018, wherein it was decided to forward the same to the DGAP to conduct detailed investigation in the complaint according to Rule 129 (1) of the CGST Rules, 2017. 2. The Applicant had furnished the following documents along with his application:- a) Duly filled in Form APAF-1. b) Detailed Comparison of Cost, Pre & Post GST vide Annexure-1. c) Cost Sheet. d) Booking Form. e) Revised Quote. f) Receipt of amounts paid. g) Copy of Aadhar Card as proof of identity. 3. The DGAP has stated that on examination of the complaint it was found that the Applicant had booked a flat in the project One Park Avenue , promoted by the Respondent on 25.02.2017 during the pre GST period. The above Applicant had also submitted before the DGAP that the sale agreement was supposed to be registered on the payment of 20% of the agreement value. The details of the demands raised on the above Applicant by the Respondent on account of the purchase of the above flat, were furnished by the .....

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..... ob, Authorised Representative of the Respondent had appeared before the Superintendent of the DGAP on 26.11.2018 and submitted the documents. 7. The DGAP has further stated that the Respondent had submitted replies vide his letters/emails dated 06.11.2018, 13.11.2018, 16.11.2018, 22.11.2018, 24.11.2018, 26.11.2018, 27.11.2018, 29.11.2018, 24.01.2019, 12.03.2019 and 29.03.2019. The submissions of the Respondent were summed up by the DGAP as under:- a) That the above Applicant had not made any payment in the post GST regime and had also defaulted on payment of demands raised in the pre GST regime. Out of the demand of 20% of the agreement value, raised on 04.03.2017 for payment of ₹ 18,36,215/- plus applicable taxes, the above Applicant had paid only ₹ 4,62,622/-, and an amount of ₹ 14,74,585/- had remained unpaid and the Respondent had himself paid the Service Tax and the Value Added Tax (VAT) on the demanded amount. b) That as per the statutory provisions made under the Real Estate (Regulation & Development) Act, 2016 (RERA), the total carpet area of the flat booked by the above Applicant was revised from 656 Sq. ft. to 665 Sq. ft. and hence, there was an upwa .....

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..... ancellation request, further discount on account of GST @ 3% was offered vide email dated 27.11.2017, which was again not accepted by the above Applicant. f) That the above Applicant had approached the Maharashtra Real Estate Regulation Authority constituted under the RERA which vide its order dated 17.04.2018 had directed him to execute the agreement for sale, as per the provisions of Section 13 of RERA, within 30 days of the order. However, without complying with the above order, the Applicant No. 1 had complained to the GST/Anti-Profiteering authorities in October, 2018. Even after filing the complaint, the above Applicant had requested for cancellation of his booking, vide email dated 22.11.2018. The Respondent had cancelled the booking of the above Applicant which was communicated to him vide letter dated 24.11.2018. The details of the communications were furnished by the Respondent in his reply dated 12.03.2019. g) That the Respondent had provided the reconciliation of home buyers list with the GSTR and ST-3 Returns, to claim that no demand had been raised on the above Applicant in the post GST period. Therefore, the allegation of the Applicant that no ITC benefit had been pa .....

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..... .11.2018 and 29.11.2018 had supplied the sale agreement/contract and payment plan in respect of the above Applicant, the details of which are mentioned in Table- C below:- Table- C Payment Schedule Stages Percent of Agreement Value Before registration of agreement 9.90% Immediately after execution and registration of agreement 20.10% On Initiation of Plinth 7.5% On Completion of Plinth 7.5% On Completion of 1st floor Slab 5% On Completion of 6th floor Slab 5% On Completion of 11th floor Slab 5% On Completion of 16th floor Slab 5% On Completion of 25th floor Slab 5% On Completion of Walls of the Apartment 2.5% On Completion of Internal Plaster, flooring, doors and windows of the Apartment upto____floor 2.5% On Completion of staircases, lift wells and lobbies upto___floor 2.5% On Completion of sanitary fitting upto the____floor 2.5% On Completion of elevation of the Apartment s building and completion of lifts of the Apartment s building 5.00% On Completion of water pump, electrical fitting, electro mechanical and environment requirements, entrance lobby/s, Plinth protection 5.00% On Completion of paving of areas appertain and on other requirements as may be prescribed in this agreem .....

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..... which were under construction but not sold was provisional which might be required to be reversed by the Respondent, if such units remained unsold at the time of issue of the Completion Certificate, in terms of Section 17 (2) & Section 17 (3) of the above Act which read as under: Section 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 Act or under the Integrated Goods and Services Tax Act and partly 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, he has argued that the ITC pertaining to the unsold units was outside the scope of his investigation and the Respondent was required to recalibrate the selling .....

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..... to June, 2017 and post GST period from July, 2017 to September, 2018 periods was as per the Table-E below:- Table E (Amount in Rs.) S.No. Particulars April, 2016 to March, 2017 April, 2017 to June, 2017 Total July, 2017 to March, 2018 April, 2018 to Sep, 2018 Total (Pre-GST) (Post-GST) 1 2 3 4 (5)=(3)+(4) 6 7 (8)=(6)+(7) 1. CENVAT of Service Tax Paid on Input Services (A) 63,88,078 56,40,799 1,20,28,877 - 2. Credit of VAT Paid on Purchase of Inputs (B) 0 0 0 - 3. Input Tax Credit of GST Availed (C) - 3,41,65,547 1,51,21,014 4,92,86,561 4. Total CENVATNAT/Input Tax Credit Available (D)= (A)+(B) or (C) 63,88,078 56,40,799 1,20,28,877 3,41,65,547 1,51,21,014 4,92,86,561 5. Total Turnover as per Home Buyers List (Flats sold upto 30.09.2018) (E) 27,83,31,886 18,19,61,336 6. Total Saleable Area (in sq. ft.) (F) 2,82,936 2,82,936 7. Area Sold relevant to Turnover as per Home buyers List (Flats sold upto 30.09.2018) (G) 1,37,948 84,643 8. Relevant CENVAT/INPUT TAX CREDIT (I)= [(E)*(H)/(G)] 58,64,788 1,47,44,544 9. Ratio of CENVAT/ Input Tax Credit to Turnover [(J)=(I)/(F)] 2.11% 8.10% 16. The DGAP has claimed from the Table- E mentioned above that the ITC as a percentage of the total turn .....

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..... assed on to the home buyers. He has also pleaded that by not reducing the pre GST base prices by 5.99% on account of additional benefit of ITC and charging GST @ 12% on such higher base prices, the Respondent had contravened the provisions of the above Section. However, as no demand had been raised on the above Applicant in the post GST period, no benefit of additional ITC was required to be passed on to him. 18. The DGAP has also contended that on the basis of the aforesaid CENVAT/ITC availability in the pre and post GST periods and the demands raised by the Respondent on the above Applicant and other home buyers on account of value of construction on which GST liability @ 12% was discharged by the Respondent during the period from 01.07.2017 to 30.09.2018, the amount of benefit of ITC not passed on to the recipients or in other words, the profiteered amount came to ₹ 1,27,84,694/- which included GST on the base profiteered amount of ₹ 1,14,14,905/-. The names of the home buyers of flats sold up to 30.09.2018 and unit no. wise break-up of the profiteered amount has been given in Annexure-18 of the DGAP s Report. The DGAP has further contended that since no demand was r .....

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..... represented by Smt. Neelam Kapur, Superintendent and the Respondent was represented by Sh. Rohit Mansukhani, Head (Finance) and Sh. S. S. Gupta, CA. The Respondent has filed his written submissions on 09.05.2019, 17.05.2019, 30.05.2019 and 23.07.2019 and the above Applicant has filed written submissions on 25.04.2019, 30.04.2019, 08.05.2019 and 30.05.2019. The main issues raised by the above Applicant and the Respondent vide their submissions are mentioned in the subsequent paras. 22. The Applicant No. 1 vide his submissions dated 25.04.2019 has raised objections against the Report of the DGAP and stated that the Respondent had deposited an amount of ₹ 16,072/- only in cash against the total output GST liability of ₹ 2,25,17,438/- during the investigation period from 01.07.2017 to 30.09.2018, as per GSTR-3B returns filed by him from July 2017 to August 2018, as per the Annexure-1 attached by the Applicant. He has also stated that based on the above amount of ITC claimed by the Respondent and his total taxable value, the profiteering was 11.99% of the turnover. He has further stated that after commensurate reduction in the prices of the flats, the actual amount of profi .....

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..... lls. He has also claimed that since the RERA had included the area covered by the internal walls in its definition, the carpet area would always be marginally higher than the pre RERA carpet area even though the entire dimensions of the building had remained the same. Therefore, he has alleged that the Respondent had wrongly increased the area of his flat by 9 sq. ft. (1.37%) than the earlier carpet area by including area of the internal walls and also increased the base price by 3.22% (₹ 92,27,211/- ₹ 89,39,548/- =₹ 2,87,663/-) although there was no change in the approved plan of the flat and hence the price should not have been increased. He has also alleged that even if it was assumed that there was increase in the size of the flat by 1.37% the overall increase in the base price was 3.22%. 25. The above Applicant has also submitted that he had received the cost sheets pre GST and post GST periods in which GST discount @ 3% had been allowed (Annexure-5) which showed that the Respondent had increased the basic price by 3.2% and allowed GST discount @ 3%. He has further submitted that the revised agreement value I base price demanded by the Respondent with the rev .....

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..... entioned in the cancellation letter sent in November, 2018 only (Annexure-8 of the Applicant). He has also contended that the Respondent had clearly mentioned in the above letter that there has been revision in the cost of the flat post implementation of the GST. 27. With regard to para 12 (f) of the DGAP s Report regarding approaching the Maharashtra Real Estate Regulatory Authority, the above Applicant has averred that he had done so due to arbitrary increase in the total cost of the flat. He has further averred that the above Authority vide its order dated 17.04.2018 (Annexure-9) had directed the Respondent to provide revised cost sheet enabling him to make an informed decision. It was also mentioned by the above Authority that the Applicant could also approach the concerned authorities of GST in case the benefit of ITC had not been passed on to him. Accordingly, the Respondent had provided a fresh quote on 25.05 2018 (Annexure-10) which did not pass any ITC benefit and on the contrary increased the overall base price illegally. 28. The above Applicant has also claimed that he had sought an appointment with the Respondent to discuss the matter but his request was ignored and hen .....

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..... le for set off, on monthly basis, till the Occupancy Certificate (OC) was issued. He has further pleaded that the un-utilized ITC could be reversed only when the OC was received and at that point of time, the builder had the right to determine the price independently and the above Section which was essentially for bifurcating the ITC for different types of inputs having different tax rates / were Zero rated or Exempted from tax could not be applied to the construction service, in which the nature of tax applicability got changed at the relevant point of time and thus, for the purpose of calculating profiteering, overall ITC utilized needed to be taken into consideration. 32. The Applicant has also claimed that the entire saleable area must have been sold at different rates as per the normal practice where there was no ceiling fixed by the regulatory authorities and hence, any consideration of ITC based on the sq. ft. area would not be justified and the best way would be to allow ITC benefit based on the amount, as the GST was also charged on the amount and not on the sq. ft. area. The above Applicant has also stated that the Respondent had shown lesser amount of GST payable in the .....

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..... nd the actual profiteering of ₹ 2,07,64,080/- should be determined without reduction of 12% GST. 34. The above Applicant has also argued that the benefit of ITC could not be appropriated by the Respondent as it was a concession given by the Government from its own tax revenue and hence the Respondent was legally bound to pass on its benefit. He has further argued that the Govt. had repeatedly clarified that with effect from 01.07.2017, under the GST, full ITC was available for offsetting the headline rate of 12% and hence, the input taxes embedded in the flat should not form part of the cost of the flat. He has also claimed that with effect from 25.01.2018, the Govt. has again clarified that the builders shall not be required to pay GST on the construction service of flats etc. in cash but would have enough ITC to pay the output GST and they should not recover any GST payable on the flats from the buyers. They could recover GST from the buyers only if they recalibrated the prices of the flats after factoring in the full ITC available in the GST regime and reduced the ex-GST prices of flats. He has further claimed that the Respondent has been persistently demanding GST @ 12% d .....

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..... graph 5 of Schedule II of the Act, the value of E/F for a tax period shall be calculated for each project separately, taking value of E and F as under:- E= aggregate carpet area of the apartments, construction of which is exempt from tax plus aggregate carpet area of the apartments, construction of which is not exempt from tax, but are identified by the promoter to be sold after issue of completion certificate or first occupation, whichever is earlier; F= aggregate carpet area of the apartments in the project; Explanation 1: In the tax period in which the issuance of completion certificate or first occupation of the project to takes place, value of E shall also include aggregate carpet area of the apartments, which have not been booked till the date of issuance of completion certificate or first occupation of the project, whichever is earlier; Explanation 2: Carpet area of apartments, tax on construction of which is paid or payable at the rates specified for items (i), (ia), (ib), (ic) or (id), against serial number 3 of the Table in the notification No. 11/2017-Central Tax (Rate), published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated 28th June .....

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..... mand price (total of turnover+GST) (I=G+H) 18,93,98,714 11. Profiteering Amount / Excess collection of demand (J=A+B-I) 2,07,64,080 The above Applicant has also claimed that the total amount of profiteering during the tax period from 1 Jul 2017 to 30 Sep 2018 worked out to ₹ 20,764,080/- as against ₹ 12,784,694/- as has been mentioned in Table F of DGAP s Report. 40. The Applicant No. 1 in his submissions dated 08.05.2019 in response to the Report dated 03.05.2019 furnished by the DGAP has stated that the above Report has been prepared on the basis of the documents and evidence submitted by the Respondent which was not correct and was misleading. He has also stated that he had rebutted each and every point mentioned in the DGAP s first Report dated 03.04.2019 along with evidence on the basis of which further investigation was required to be carried out. He has further stated that the method used for the calculation of profiteering was inconsistent with provisions of Section 17 (2) and (3) and Rule 42 & 43. The above Applicant has also claimed that the contents of para 12 (b) of the above Report which stated that the increase in the agreement value from ₹ 89,39 .....

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..... aimed to have passed discount. As per the above Table the Respondent has given discount of ₹ 2,21,7301- only as against the increase in cost of the flat by ₹ 2,87,663/-(₹ 92,27,211/- ₹ 89,39,5481-). He has further alleged that even after the discount the increase in cost was to the tune of ₹ 65,933/- in addition to the GST of ₹ 8,60,312/- on which no ITC benefit was offered by the Respondent although he was claiming ITC benefits since July, 2017. He has therefore contended that the total increase in the price of the flat was ₹ 9,26,245/-(₹ 65,9331-+₹ 8,60,3120 and even if an amount of ₹ 3,19,650/- being the Service Tax @ 4.5% was reduced, the net increase in the cost of the flat was ₹ 6,06,595/- (₹ 9,26,245 - ₹ 3,19,650/-). The above Applicant has also claimed that the Respondent had initially increased the price citing RERA by about 4% and later reduced the price by claiming to have provided discount of 2-3% arbitrarily which was not uniform. He has further claimed that the base value had increased post GST as no ITC Benefit was allowed to any buyer and the discount offered was only to adjust the increas .....

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..... application. 43. The Applicant has also claimed that the construction supply was different from the supply of goods or services as in the case of construction supply the transactions of sale were spread over a long period of time which covered multiple assessment tax periods and the cost and the revenue were misaligned which led to anomaly in the calculation of exempt ITC at a particular point of time. He has further claimed that for each tax period, the Respondent was not required to reverse the ITC pertaining to the unsold inventory and he had right to completely avail the available input tax credit and hence in order to calculate the correct amount of profiteering, the above amendments should be taken into consideration. 44. The Respondent in his submissions dated 09.05.2019 has stated that in order to execute the projects, he was incurring various costs on inputs which on the advent of GST were presumed to go down due to reduction in cascading effect of taxes which were a cost in the pre-GST regime. He has also stated that as the law was at the developing stage and no basis to determine any such benefit had been prescribed in the provisions of the GST, he, based on the taxes a .....

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..... it opted by him and the DGAP was different. He has also stated that the amount payable/receivable by different customers due to difference in the mechanism of distribution shall be set off internally and the proceedings against him should be dropped. 46. The Respondent has also stated that the above Applicant has already cancelled the flat booked with him and hence he did not have any locus standi in the matter which was also clear from Para 12 (f) of the DGAP s Report. He has further stated that the Applicant was also not the recipient of the service and hence he was not entitled to maintain the present proceedings. He has also claimed that this Authority has prescribed Procedure & Methodology in exercise of Rule 126 of CGST Rules, 2017 and vide its para 9, it has been provided that the Authority may inquire into an alleged contravention on receipt of information from an interested party . He has also stated that the term interested party has been defined in Explanation (c) of Chapter XV as follows:- (c) interested party includes- a. suppliers of goods or services under the proceedings; and b. recipients of goods or services under the proceedings; c. any other person alleging, .....

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..... period which has resulted in profiteering of ₹ 1.27 Crores as per Table F. Raising objections against the above computation of the profiteered amount the Respondent has argued that in the construction industry, the credit might accumulate in a particular period but the tax liability with respect to the same might arise in a different period. He has further argued that the construction activity might go on gradually which results into accrual of CENVAT credit, however, demand notices were raised as per the milestones mentioned in the agreement and unless the milestone was achieved, the Respondent could not raise demand on the customers. He has also submitted that as per the agreement with the buyers, the milestones specified after applicability of the RERA were as per the Table C given in the Report of the DGAP. He has further submitted that the milestones specified prior to applicability of the RERA were as follows:- Stage Description Percentage 1 Token Plus Booking Amount 19.90 2 On Initiation of Basement 10 3 On Initiation of Plinth 10 4 On initiation of Podium Slab 4 5 On initiation of 1st Slab 3 6 On initiation of 3rd Slab 3 7 On initiation of 5th Slab 3 8 On initiation .....

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..... ,61,336 3 Total saleable area (C) 2,82,936 2,82,936 2,82,936 4 Area sold relevant to turnover (D) 84,643 84,643 84,643 5 Relevant Credit - (E) = A*D/C 1,02,20,949 45,23,595 1,47,44,544 6 Ratio of Input Tax Credit Post GST (F=E/B) 24.37% 3.23% 8.10% On the basis of the above the Respondent has contended that the ratio of availment of the ITC to the taxable turnover for the period from July-2017 to March-2018 was 24.37% and for the period from April-2018 to September-2018 was 3.23% and the average percentage of availment which has been shown in Table- E was 8.10%. Thus, he has further contended that the variation in the utilization of credit between the two periods both falling under the GST regime itself substantiated that there was no synchronization between the accrual of credit and raising of demand. He has also stated that in the present case, only excavation and basement work was started in the pre GST regime and the CENVAT credit of ₹ 1.20 Crore mainly pertained to the services like marketing and legal etc., however, demands of ₹ 27.83 Crore have been raised on the customers which were not construction linked. He has further stated that the demand was only of 20-30 .....

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..... or the services availed by him during the period from July 2017 till September 2018 as per the following Table:- Sr. No. Particular Amount 1. Taxable Value of Input Services (pure service contracts) A 15,10,53,932 2. ITC availed on these services (18%) B 2,68,83,251 3. Service Tax if leviable - 15% C = A * 15% 2,24,02,709 4. Additional input tax credit D = (B - C) 44,80,542 He has also submitted that this amount of ₹ 44,80,542/- was not an additional benefit thus the same must be reduced from the post GST period for calculation as given in Table E of the DGAP report. 51. The Respondent has also pleaded that in the pre GST era, he has availed CENVAT credit of ₹ 1,20,28,877/- for total saleable area of 2,82,936 sq. ft. and the area sold relevant to the taxable turnover of that period was 1,37,948 sq. ft. and therefore, the DGAP has considered proportionate CENVAT credit of ₹ 58,64,788/-, similarly, for the GST period, the DGAP has worked out the proportionate ITC to be ₹ 1,47,44,544/-. However, he has submitted that area considered by the DGAP as 1,37,948 sq. ft. in Table E as area sold in the pre GST regime was not correct. As stated in the Annexure-18 of the .....

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..... port as the basic profiteered amount has been shown as 1,08,99,4841-. He has further claimed that the DGAP has wrongly mentioned that the base profiteered amount was ₹ 1,14,14,905/- as the balance amount of 18,85,2101- was towards the GST and hence, the excess collection made by him was only 1.08 Crore as the excess GST collected has duly been deposited with the Government, therefore, the same could not be considered as the profiteered amount to be passed on to the customers. He has also relied on the following definitions of profiteering to support his case:- Black s Law Dictionary - The 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 vs Welsh - Any conduct or practice involving the acquisition of excessive profit Islamic Academy of Education vs State of Karnataka - Profiteering would mean taking advantage of unusual or exceptional circumstances to make excessive profits. On the basis of the above definitions he has argued that only that amount which has been collect .....

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..... d to be excluded to arrive at the taxable value under section 15 of the CGST Act, 2017. He has also claimed 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 and hence, the rate of tax must be determined based on the rate applicable on the taxable value. Therefore, in order to make the rates in the pre and post GST comparable, rate of tax in the pre GST period needed to be determined on the same basis i.e. after permitting abatement of 33% from total value. He has also submitted that 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 total value due to which Service Tax of ₹ 4.5 (15% on ₹ 30) was payable on ₹ 100/- which included value of land and if the value of land was excluded the rate of Service Tax would be 6.72%. (4.5/67 x 100). Similarly, the rate of VAT was 1% in Maharashtra and therefore, to determine the rate of VAT after abatement of 33% (for value of land) from total value, VAT rate would be 1.49% [1/67 x 100]. T .....

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..... the above that the other charges were payable in addition as had been mentioned in the application form. He has further claimed that the above Applicant has paid ₹ 4,62,622/- within a month of booking which roughly amounted to 5% of the basic flat cost of ₹ 92,27,211/-. Thus, the Applicant had also considered the basic flat cost without other charges as ₹ 92,27,211/- otherwise the applicant would have only paid 5% of ₹ 89,39,548/-. Therefore, he has claimed that the agreed amount without other charges was ₹ 92,27,211/- on which 2% GST discount was offered by him to the above Applicant as per his email dated 10.10.2017. He has further claimed that the GST was made effective w.e.f. 01.07.2017 and due to incorporation of Section 171, he has offered the discount which was nothing but the GST discount and not normal business discount . He has also stated that during the initial phase of introduction of GST, its impact on the cost of input and input services was difficult to be assumed therefore, on adhoc basis, he had decided to pass on 2% GST discount. However, many customers had approached him again therefore, in such cases he had increased the discount t .....

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..... which could be ascertained from the email dated 10.10.2017 sent by him to the Applicant intimating that on account of RERA the price would increase only by ₹ 1,26,593/- and in the same mail itself it has been mentioned that the Respondent was not charging for the increased area which could be substantiated by the revised cost sheet in the same mail wherein 2% discount has been given. The Respondent has also claimed that the above Applicant has stated that he had held discussions with many other home buyers who had objected to the increase in the price and only then the Respondent had given discount of 2-3% which was also not acceptable to them. The Respondent has pleaded that since no other home buyer had lodged any complaint the claim made by the above Applicant on this behalf was not correct. 57. The Respondent has also claimed the profiteered amount could not be computed on the value of the flats sold as the cost of consideration could rightly be apportioned based on the area. He has further claimed that the above view was also affirmed by introduction of new mechanism of reversal of ITC under Rule 42 of the CGST Rules, 2017 brought into effect from 01.04.2019 vide Notific .....

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..... was attached as Annexure-2. 60. The Respondent has also alleged that the DGAP has calculated the profiteered amount in respect of the five buyers on whom no demand has been raised in the post GST period, the details of which have been attached as Annexure-3 and therefore, the profiteered amount should be reduced by ₹ 3,32,326/- as the Respondent was required to pass on ITC benefit of 2.09% which amounted to ₹ 38,02,991/- (18,19,61,336 * 2.09%) only. 61. He has also submitted details of the project as follows:- a) Total number of flats in the project was 429 having total area of 2,82,936 sq. ft. b) Total number of flats sold in the pre GST period was 153 which were having total area of 1,22,050 sq. ft. which was wrongly taken by DGAP as 1,37,948 sq. ft. c) Flats booked in the pre GST period and cancelled up to date were 51 having total area of 43,005 sq. ft. d) Number of flats on which demands were raised in the post GST period up to September 2018 was 61 which were having total area of 44,901 sq. ft. 62. The Respondent has further submitted the details of the project as on 01.04.2019 as under:- i) 95 flats having total area measuring 70,287 sq. ft. were sold. ii) 334 f .....

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..... correct. He has also claimed that Section 17 (2) and 17 (3) of the CGST Act, 2017 applied on the reversal of ITC only in the case of, completion of the projects and could not be applied during the construction phase of the project. 67. The submissions of the Applicant No. 1 were forwarded to the DGAP on 25.04.2019 for his Report. The DGAP vide his Report dated 03.05.2019 has stated that the issues raised by the Applicant No. 1 have already been addressed in his detailed Investigation Report dated 03.04.2019. 68. We have carefully considered all the submissions filed by the Applicant No. 1, the Respondent and the other material placed on record and find that the Applicant No. 1 along with his wife Mrs. Reshmi Nair had filled Application Form on 12.02.2017 vide Application No. OPA1108 for the allotment of Flat No. 1605, 16th Floor, Avenue-6 of the One Park Avenue project situated in Thane, Maharashtra floated by the Respondent (Annexure-1 of the DGAP Report). He had also made payment of ₹ 1,00,000/- vide cheques No. 000027 dated 14.02.2017 drawn on the HDFC Bank by way of earnest money for booking of the above flat and had agreed to pay the balance price fixed by the Responden .....

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..... r the profiteered amount came to ₹ 1,27,84,694/- which included 12% GST on the basic profiteered amount of ₹ 1,14,14,905/-. The DGAP has also intimated that there was no demand raised on the Applicant No. 1 in the post GST era therefore, the amount of profiteering in case of the Applicant No. 1 was nil. He has also supplied the details of all the buyers who have purchased flats from the Respondent along with their unit numbers and the profiteered amount vide Annexure-18 attached with the Report. 70. The Applicant No. 1 has stated in his submissions that the Respondent has paid only ₹ 16,072/- in cash and utilised ₹ 2,25,17,438/- from the ITC to discharge his output tax liability and hence the profiteering was 11.99% of his turnover and not 5.99%. However, the claim made by the above Applicant is not correct as he has taken the whole amount of ITC which the Respondent has utilised for payment of his output tax liability whereas for calculation of profiteered amount only the relevant ITC proportionate to the sold area is to be taken for computation of the profiteered amount as is clear from Table E supra of the Report wherein relevant ITC of ₹ 1,47,44,54 .....

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..... e cost sheet submitted by the Respondent which has been mentioned in para 41 supra, on the ground that there was increase in the carpet area as well as due to implementation of the GST. Perusal of Annexure-4 submitted by the Respondent on 09.05.2019 shows that he has also increased the price in respect of other buyers also on the above grounds in the months of November/December 2017, which he could not have done as he was required to reduce the price commensurately as per the benefit of ITC which he had started receiving after coming in to force of the GST w.e.f. 01.07.2017 and hence the allegation made by the above Applicant in this regard is correct. 73. The above Applicant has also contended that the Respondent has wrongly increased the gross price of his flat by ₹ 6,57,290/- from ₹ 1,03,18,340/- to ₹ 1,09,75,630/-. He has similarly increased the prices of the flats which he has sold to the other buyers. The above contention of the Applicant is correct as is apparent from Table A of the Report of the DGAP which states that the Respondent has infact increased the gross price of the flat bought by the Applicant as well as the other buyers. However, the claim made .....

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..... computed on the basis of the amount charged for the flat. However, this contention of the Applicant is seriously flawed as the ITC benefit has to be calculated on the basis of the area purchased by each buyer and the amount paid by him post GST. 80. The above Applicant has also claimed that the Respondent has paid less GST of ₹ 1,02,508/- during the month of November, 2017 and the description of ITC mentioned in column No. 4 of Table E as ITC availed was required to be shown as the ITC available. He has further claimed that the figure of turnover given in column No. 6 of Table E should be ₹ 18,76,45,356/- and not ₹ 18,19,61,3361-. The Applicant has further claimed that the figures given in column No. 6 of Table F supra were not correct. He has also submitted that the profiteered amount ought to be ₹ 2,07,64,080/- instead of ₹ 1,27,84,694/- and this amount was also not correct as GST had been added twice in it. However, the above contentions of the Applicant have not been admitted by the DGAP vide his Report dated 03.05.2019 and he has maintained that the Report submitted by him was correct as it was based on the returns filed by the Respondent. Perusal .....

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..... iscount of ₹ 2,21,730/- @ 3% which clearly showed that the above discount had been given to cover the enhanced price and no benefit of ITC was given to him. The above contention of the Applicant has merit as the Respondent has increased the base price of the flat due to the provisions of RERA and coming in to force of the GST and hence the same is correct. It is abundantly clear from the perusal of letter dated 24.11.2018 (Annexure-8 submitted by the Applicant), written by the Respondent to the above Applicant in which he had claimed that there has been revision in the cost of his flat due to implementation of the GST (Bullet Point No. 4) and he had offered him discount of 2% due to this increase which was subsequently increased to 3% vide his email dated 18.11.2018 (Annexure-7 of the Applicant). This statement of the Respondent is completely incorrect as there was bound to be commensurate reduction in the price of the flat due to the additional ITC w.e.f. 01.07.2017 and not increase. As per Table given in para 41 supra the increase has been shown on account of increase in the area of the flat due to coming in to force of the RERA. Therefore, the Respondent has made contradic .....

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..... to be mentioned in the notification itself. Therefore, the above judgements cited by the Applicant do not further his cause. The Order No. 7/2018 passed on 18.09.2018 by this Authority in the case of Sukhbir Rohilla & others v. M/s Pyramid Infratech Pvt. Ltd.= 2018 (12) TMI 707 - NATIONAL ANTI-PROFITEERING AUTHORITY is also of no help to him as the relevant ITC has been calculated after taking in to account the unsold area in that case also. 85. The above Applicant has also claimed that the Respondent was not required to reverse the ITC on the unsold houses. The above claim is contrary to the provisions of Section 17 and clause (b) of para 5 of Schedule II of the CGST Act, 2017 and hence the same cannot be accepted. 86. The Respondent has claimed that he has passed on the GST benefit of 2-3% to his customers as he was not able to compute the exact benefit. However, this claim of the Respondent is incorrect as firstly he has increased the prices of the flats on the ground that their area had increased due to the RERA provisions and secondly he has given different discounts to different buyers. The Respondent has submitted copy of the email (Annexure-2) addressed to one Sh. Shai .....

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..... e time of filing of the complaint. Otherwise also any other person can file complaint for violation of the provisions of Section 171 of the above Act as per Rule 128 (1) of the above Rules and therefore, the above Applicant is fully entitled to file the present complaint. Accordingly, the above contention of the Respondent cannot be accepted. 89. The Respondent has also contended that there was no correlation between the accrual of the ITC and the demand raised and hence the methodology adopted by the DGAP to calculate the profiteered amount was incorrect. However, perusal of the methodology applied by the DGAP shows that the ratio of additional benefit which was required to be passed on by the Respondent has correctly been taken in to account as otherwise the benefit cannot be computed for the various home buyers who have purchased flats having different area and paid different amounts on demand. Mere accumulation of ITC in a particular period and accrual of tax liability in a different period cannot result in wrong computation of the ITC benefit. Perusal of the Table mentioned in para 49 supra clearly shows that the ratio of ITC post GST period has been computed by the Respondent .....

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..... lacious 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 he has denied the benefit of additional ITC to them by not reducing the prices of the flats commensurately. Had he not collected additional GST the buyers would have paid less price and by doing so he has 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 forfeited their revenue in favour of the flat buyers to provide them accommodation at affordable prices and by compelling the buyers to pay the same the Respondent has not only defeated the intention of the above Governments but has also acted against the interests of the house buyers hence the contention of the Respondent is not justified and therefore, the GST collected by him on the additional realisation has rightly been included in the profiteered amount by the DGAP and there is no question of reducing an amount of ₹ 18,85,210/- from the profiteered amount which has been forcibly collected by him from t .....

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..... e charged extra from the allotees and the above Applicant has also deposited ₹ 4,62,622/- being 5% of the price of ₹ 92,27,211/- of the flat and hence he had accepted that other charges would be levied extra. The claim made by the Respondent is based on the contents of paras 9 and 10 of the application form which the above Applicant has himself filled and accepted and hence the contention of the above Applicant that the above price included the extra charges is not correct. However, the contention of the Respondent that he had offered GST discount to the above Applicant is not correct as the same was offered due to increase in the price of the flat which amounted to normal business discount and by no stretch of imagination it can be held to have been passed on account of benefit of ITC. Further claim of the Respondent that he has given adhoc 2% discount as it was difficult to compute the benefit initially is also not correct as the same has been given to offset the cost which he has increased due to increase in the area of the flats or due to implementation of GST. He has also offered 3% discount to only those flat buyers who had declined to accept his offer of 2%. Pass .....

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..... date of investigation and nothing needed to be reversed. However, the above claim of the Applicant is not correct as the ITC is required to be reversed when flats would be sold after receipt of the OC and hence the above argument of the Applicant cannot be accepted. 98. The Respondent has also claimed that he was not required to pass on the benefit of ITC to the buyers who had purchased the flats after coming in to force of the GST. However, it is made clear that the Respondent is required to recalibrate the prices of the flats which he would sell post GST keeping in view the availability of ITC. 99. The Respondent has also submitted the details of the discount amounting to ₹ 1,11,61,090/- which he has claimed to have passed on to the 65 buyers as per Annexure-6 of his submissions dated 09.05.2019. He has also claimed that the DGAP has wrongly computed the profiteered amount in respect of 5 flat buyers on whom no demand was raised post GST and hence the above amount should be reduced by ₹ 3,32,326/-. The claim made by the Respondent is not correct as the above discount has been passed to set off the price increase made by the Respondent by increasing area of the flats .....

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..... the Respondent has realized an additional amount of ₹ 1,27,84,694/- which includes both the profiteered amount ©5.99% of the taxable amount (base price) and GST on the said profiteered amount from the flat buyers who were not Applicants in the present proceedings as per Annexure-18 of the Report. These buyers are identifiable as per the documents placed on record and therefore, the Respondent is directed to pass on this amount of ₹ 1,27,84,694/- along with interest ©18% per annum to these flat buyers from the dates from which the above amount was collected by him from these buyers till the payment is made, within a period of 3 months from the date of passing of this order. The above amount shall be paid as has been mentioned in Column No. 21 of Annexure-18 without taking in to account the discount mentioned in Column No. 24 of the above Annexure. The Respondent has submitted details of the discounts amounting to ₹ 1,11,61,090/- which he has claimed to have paid to the 65 home buyers as per Annexure-1 submitted by him on 30.05.2019 however it cannot be considered as passing on of the benefit of additional ITC as the above discount has been given by the Re .....

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