9911796707
TMI Blog2019 (12) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... d 19.06.2019 have been received from the Applicant No. 7 i.e. the Director General of Anti-Profiteering (DGAP) after detailed investigation under Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules, 2017. The brief facts of the case are that the Applicant No. 1 had booked a flat in the Respondent's project "Nirala Greenshire" situated at GH-03, Sector-02, Greater Noida West (Uttar Pradesh) and alleged that the Respondent had increased the price of the flat after introduction of GST w.e.f. 01.07.2017 and had not passed on the benefit of input tax credit by way of commensurate reduction in the price to him. The Uttar Pradesh State Screening Committee on Anti-profiteering on prima facie having satisfied itself that the Respondent had not passed on the commensurate benefit of input tax credit to the Applicant No. 1, as the input tax credit available to Respondent was to be apportioned against the instalments towards the price of the flat, had forwarded the said application with its recommendation, to the Standing Committee on Anti-profiteering on 28.07.2018 for further action, in terms of Rule 128 (2) of the above Rules. 2. The above references was examined by the the Standin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt No. 3 2. Shri Anil Singh G8, 1708 Nirala Greenshire, Gh-03, Sector-2, Greater Noida West, Uttar Pradesh-201306 G8-1708 24.11.2018 3 Applicant No. 4 3. Shri Lalit Kumar G8, 1903 Nirala Greenshire, Gh-03, Sector-2, Greater Noida West, Uttar Pradesh-201306 G8-1903 20.11.2018 8 Applicant No. 5 4. Shri Rishi Ranjan G8, 1508 Nirala Greenshire, Gh-03, Sector-2, Greater Noida West, Uttar Pradesh-201306 G8-1508 24.11.2018 9 Applicant No. 6 7. The DGAP upon receiving of the application of the Applicant No. 1 from the Standing Committee on Anti-profiteering on 25.10.2018, had issued a Notice dated 02.11.2018 under Rule 129 (3) of the CGST Rules, 2017, calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the Applicant No. 1 by way of commensurate reduction in price and if so, to suo moto determine the quantum thereof and indicate the same in his reply to the Notice as well as furnish all the supporting documents. The DGAP vide his notice dated 02.11.2018 had also given the Respondent an opportunity to inspect the non-confidential evidences/information submitted by the Applicant No. 1 during the period from 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to time like Common Society Park Partly provided in June, 2018), Car Parking (partly provided in September, 2018), Temporary Club (partly provided in August, 2018), external paint of building and finishing work (which was promised to be provided by December, 2018 but not provided till March, 2019), Main gate decoration/paint (partly provided in September, 2018) and Common Generator (purchased in September, 2018). It was also informed that the Respondent had not provided many major common amenities like Full Flash Club, Swimming Pool and Long Tennis Court etc. The Applicant No. 1 also submitted that an e-mail dated 30.06.2018 was received from the Respondent, vide which there was a confirmation that he had not provided all the facilities which were common and hence, the above Applicant requested for ITC benefit for the entire project instead of tower-wise benefit. 12. The DGAP had sought extension of time for completing the investigation which was extended by this Authority vide its order dated 15.01.2019 in terms of Rule 129 (6) of the CGST Rules, 2017. The period of the investigation is from 01.07.2017 to 31.12.2018. 13. In response to the Notice dated 02.11.2018 issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST and ITC of GST for the period July, 2017 to December, 2018 for the project "Nirala Greenshire". (k) List of home buyers in the project "Nirala Greenshire". (I) Project report submitted to the RERA along with RERA certificate. (m) Occupancy Certificate dated 21.12.2017 received from GNIDA. 15. The Respondent further requested that except the data which was readily available in public domain and on service portals, all other details/ information were to be treated as confidential, in terms of Rule 130 of the CGST Rules, 2017. 16. Based on the above mentioned documents filed by the Respondent, the DGAP submitted that the main issues for determination were whether there was any benefit of reduction in the rate of tax or input tax credit on the supply of construction service by the Respondent after implementation of GST w.e.f. 01.07.2017 and if so, whether such benefit was passed on to the Applicant No. 1, in terms of Section 171 of the CGST Act, 2017. 17. The DGAP also submitted that the Respondent, vide letter dated 16.11.2018, had submitted a copy of allotment letter dated 29.10.2013 and demand letters for the sale of flat to the Applicant No. 1, measuring 1,280 square ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re also fully eligible for the benefit of input tax credit on the consideration paid post-GST. 20. The DGAP also observed that para 5 of Schedule-III of the Central Goods and Services Tax Act, 2017 which states as (Activities or Transactions which shall be treated neither as a supply of goods nor a supply of services) reads as "Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building". Further, clause (b) of Paragraph 5 of Schedule II of the Central Goods and Services Tax Act, 2017 reads as "(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier". Thus, the ITC pertaining to the residential units which are under construction but not sold was provisional input tax credit which might be required to be reversed by the Respondent if such units remained unsold at the time of issue of completion certificate, in terms of Section 17 (2) & Section 17(3) of the CGST Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST, had to be taken into account for determining the benefit of ITC required to be passed on. 22. The DGAP further observed that prior to 01.07.2017, the Respondent was eligible to avail CENVAT credit of Service Tax paid on input services and credit of VAT paid on the purchase of inputs. However, the CENVAT credit of Central Excise Duty paid on inputs was not admissible as per the CENVAT Credit Rules, 2004, which were in force at the material time and it was observed by the DGAP that the Respondent had not been collecting VAT from his customers and was discharging his output VAT liability on the deemed 10% value addition to the purchase value of the inputs paid in cash and there was no direct relation between the turnover reported in the VAT returns filed by the Respondent for the period April, 2016 to June, 2017 with the actual amount collected from the home buyers. Therefore, the credit of VAT paid on the purchase of inputs and the VAT turnover had not been considered for computation of the ratio of ITC to the turnover for the pre-GST period. Further post-GST, the Respondent could avail input tax credit of GST paid on inputs and input services including the sub-contracts. The DG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication No, 11/2017-Central Tax (Rate) dated 28.06.2017. Accordingly, the profiteering had been examined by comparing the applicable tax and input tax credit available for the pre-GST period (April, 2016 to June, 2017) when effective Service Tax @ 4.5% was payable on construction service with the post-GST period (July, 2017 to December, 2018) when the effective GST rate was 12% on construction service. On the basis of the above Table, the comparative figures of tax rate, input tax credit availed/available in the pre-GST and post-GST periods as well as the turnover, the recalibrated base price and the excess realization (Profiteering) during the post-GST period, has been tabulated by the DGAP in the Table-F below:- Table- F (Amount in Rs.) S.No. Particulars Pre-GST Post-GST 1. Period A April, 2016 to June, 2017 July,2017 to December, 2018 2. Output tax rate (%) B 4.50 12 3. Ratio of CENVAT credit/ Input Tax Credit to Total Turnover as per table- 'E' above (%) C 1.47 6.89 4. Increase in input tax credit availed post-GST (%) D=6.89% less 1.47% - 5.42 5. Analysis of Increase in input tax credit: 6. Total Base Price excludin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 1,18,895 4. Sh. Anil Kumar Singh G8-1708 642 20,05,578 1,24,747 5. Sh. Lalit Singh G8-1903 350 27,57,960 1,67,419 6. Sh. Rishi Ranjan G8,-1508 646 17,86,266 1,08,433 Total 1,26,70,829 7,69,170 26. The DGAP has also observed that the Respondent had supplied the service in the State of Uttar Pradesh only. 27. The DGAP has also submitted that the above computation of profiteering was with respect to 418 home buyers, whereas the Respondent had booked 692 units till 31.12.2018 (excluding 53 flats booked in Tower-G7, G8, G9 and G10 after receiving the Occupancy Certificate on which the GST was not charged) out of which 274 customers had booked the flats in the pre-GST period and also paid the booking amount in the pre-GST period but they had not paid any consideration during the post-GST period 01.07.2017 to 31.12.2018 (period under investigation). Therefore, if the ITC in respect of those 274 units was calculated in respect of 418 units where payments had been received after GST, the ITC as a percentage of taxable turnover would have been distorted and erroneous. Therefore, the benefit of ITC in respect of these 274 units should be calculated when the conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 of the CGST Act, 2017 should not be fixed along with imposition of penalty as per the provisions of Sections 122-127 of the above Act read with Rule 133 of the CGST Rules, 2017 and his registration under the above Act should also not be cancelled. 31. Four personal hearings were accorded to the parties on 17.05.2019, 29.05.2019. 11.06.2019 and 24.06.2019. During the course of the hearing. Sh. Suresh Kumar Gupta, the Applicant No. 1, Sh. Shakti Anand, the Applicant No. 2, Sh. Abhishek Kumar Singh, the Applicant No. 3, Sh. Anil Kumar Singh, the Applicant No. 4, Sh. Lalit Kumar, the Applicant No. 5, Sh. Rishi Ranjan, the Applicant No. 6 were present in person, the Applicant No. 7 was represented by Sh. Amit Srivastava, Superintendent and Sh. Shivendu Pandey, Superintendent and the Respondent was represented by Sh. Gaurav Gupta, Authorised Representative, Sh. Rakesh Mahajan, Director, Sh. Neeraj Verma, GM (Accounts); Sh. Girish Chand Rajput CA and Sh. Yudhister Mehtani, CA. 32. The Respondent filed his first written submissions on 17.05.2019 in which he stated that the intent of the law as per the provisions Section 171 of the CGST Act, 2017 was to stop the inflationary tendency po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibute the benefit of input tax credit to the limited extent of such Input tax credit as was attributable to tax payable in respect of such credits. Thus, the attribution of ITC if given equally as a percentage to the buyers whose building was almost complete and whose only last instalment was receivable would be incorrect and shall lead to unnecessary cost of such benefit on the value of other flats which were still under construction or whose value of output was yet to be received. He further submitted that there were costs which were not attributable towards the old flats which had been sold and thus, ITC on such costs should have been attributable to only those flats to which they related to such as brokerage charges commission paid on the flats sold after 01.07.2017 and the advertisement expenses incurred which related to the flats which were unsold as on 1.7.2017 etc. Thus, giving benefit of ITC to all flats would channelize benefits of other buyers to those buyers who were not part of such costs. 34. The Respondent further submitted that he had passed more benefit to the customers whose construction had been done post 01.07.2017, while customers whose construction had been d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to his completion and thus, while, ITC was attributable to only 11% of its pending construction cost, the demands were to be raised for 26% of total consideration. He also furnished the working of construction completion and pending receipts of the four towers (G-7 to 10) as on 30.06.2017. 37. The Respondent has also submitted the revised computation of the profiteered amount as per his own calculations and the same is furnished in Table-H below:- Table-H (Amount in Rs.) S.No. Particulars April, 2012 to June, 2017 (Pre- GST) July, 2017 to March, 2018 April, 2018 to December, 2018 Total (Post-GST) (1) (2) (3) (4) (5) (6)=(4)+(5) 1. CENVAT credit of Service Tax Paid on Input Services (A) 7,83,99,689 - - - 2. Input Tax credit of GST Availed (B) - 4,65,48,236 2,94,91,755 7,60,39,991 3. Less: Reversal of CENVAT credit/ITC for unsold units on the date of receiving OC for Tower-G7, G8, G9 & G10 (C) 60,13,833 16,92,066 - 16,92,066 4. NET CENVAT credit/ Input Tax Credit Available (D)= (A)-(C) or (B)-(C) 7,23,85,856 4,48,56,170 2,94,91,755 7,43,47,925 5. Total Turnover as per Home Buyers List (E) 1,85,94,87,094 37,81,91,586 9,69,57,033 47 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the summary of VAT as has been availed by him in different years which is given below:- Financial Year Amount of Purchases VAT Credit availed 2012-13 28,582 1,148 2013-14 4,08,63,325 22,84,654 2014-15 13,79,70,179 90,46,689 2015-16 19,94,89,537 1,18,49,414 2016-17 26.70,61,999 1,94,52.495 2017-18 1,49,43,518 16.47,675 Total 4,42,82,075 The Respondent has also submitted that the argument given by the DGAP in his report dated 26.04.2019 that there was no direct relation between the turnover reported in the VAT returns filed by the Respondent for the period April, 2016 to June, 2017 with the actual amount collected from the home buyers was incorrect and the DGAP had failed to appreciate the fact that the VAT output liability had existed on the Respondent in the pre GST regime and in absence of the ITC of VAT, such cost of VAT would have increased the price of the flats sold to the buyers in pre GST regime itself. He further furnished the calculation of profiteered amount by considering the VAT input and the same has been given in a Table-J below:- Table J (Basic) (With VAT Inputs) (Amount in Rs.) S.No. Particulars April, 2012 to June, 2017 (Pre- GS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 04.05.2018 in the matter of Kumar Gandharv v. KRBL Ltd. = 2018 (5) TMI 760 - NATIONAL ANTI-PROFITEERING AUTHORITY, by this Authority vide which the Respondent has claimed that when the prices were increased partially due to the rise in the prices of paddy crops the Authority had accepted the contention of the Respondent in that case. Thus, in present case also, there was increase in costs and thus, benefit of entire ITC could not be attributed to fall in cost of the supplier. He further submitted that the major components of cost of construction on which ITC was availed post 30.06.2017 were as under:- Nature of Cost Amount in Rs. Steel 9,09,02,615 Cement 1,48,94,089 RMC 2,23,35,438 Contractors 12,27,81,950 CP Sanitary Fittings 97,36,486 Aluminium Works 1,98,98,689 Marketing Costs 1,18,62,736 Security Services 47,09.911 Admin Costs 70,44,847 Payment to Greater Noida Authority 2,21,32,669 Finance Costs 2,78,32,285 RCM 20,90,685 Others 5,99,05,866 The Respondent has also submitted that amongst the above costs, no cost benefit had accrued to the Respondent on account of Marketing Costs, Admin Costs, Payment to Greater Noida Authority, Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of the above rate worked on their total cost of Rs. 9,88,54,538/- amounted to Rs. 49,42,7271-. 42. He has further furnished the summary of the overall benefit of decrease in costs on account of ITC as under:- Nature of Cost Cost Benefit post GST Steel (2,11,81,609) Cement 200,184 RMC 18,38,672 Contractors 49,42,727 CP sanitary Fittings 13,14,425 Total Benefit on account of increased ITC 1,28,85,601 Total demand issued post 30.06.2017 47,51,48,619 Benefit to be passed to customers as% 2.71% Already given (minimum considered) 3% To be given / (Excess given) (5.71)% Thus, he has contended that the effective benefit in cost due to change in tax rate post GST was negative. In case of steel, the effective cost of the Respondent had increased and thus, no benefit of reduction of cost could be passed on to the buyers. He also submitted that despite increase in costs of certain materials, he had passed on the benefit of at least 3% to his buyers which was more than the worked out benefit. 43. The Respondent further contended that the distribution of major portion of ITC over a particular area was wrong. The DGAP had divided the ITC between 01. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .07.2017 to 31.12.2018 Total Demand Raised From 01.07.2017 to 31.12.2018 Area of Taxable Units Sold (a) 8,12,740 8,12,740 36,055 8,48,795 Total Consideration of Flats Sold (Basic) (b) 2,65,10,37,104 2,65,10,37,104 11,76,99,605 2,76,87,36,709 Demand Raised (Basic) (c) 1,85,94,87,094 39,66,04,906 7,85,43,713 47,51,48,619 % of Involve Raised (d) =(c)/(b)*100 70.14% 14.96% 66.73% 17.16% Weightage Area in relation of Demand (e) = (a)*(d) 5,70,071 1,21,589 24,060 1,45,663 Thus, he has submitted that the effective ITC benefit had reduced and there was no unpassed benefit of ITC which remained to be given by him. 44. The Respondent further stated that the Applicant No. 1 had mentioned in his complaint that no benefit of ITC had been given to him and total tax had been collected from him. The Respondent has also claimed that If that would have been the case, he should have paid tax of Rs. 1,64,490/- on the last instalment of Rs. 13,38,105/- paid by him. He has further claimed that it was evident that the benefit of Rs. 40,142/- was given to the above Applicant and with the reduced amount of tax of Rs. 1,24,348/- he had paid total amount of Rs. 14,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09 (9) TMI 861 - CESTAT AHMEDABAD, CCE Chandigarh v. Krishi Rasyan Export Pvt. Ltd. 2009 (240) E.L.T. 468 (Tri.- Del.) = 2009 (3) TMI 675 - CESTAT, NEW DELHI in his support. He has also cited the judgement passed in the case of CCE Ludhiana v. FAS Kusum (spat (P) Ltd. 2009 (240) E.L.T. 13 (P & H) = 2009 (2) TMI 220 - PUNJAB & HARYANA HIGH COURT wherein it was held that in the case of shortage of inputs, mens rea - intention to evade payment of duty is absent, no penalty can be imposed. 46. The Respondent has further cited the judgements given in the cases of Smitha Shetty v. CCE, 2004 (156) ELT 84 = 2003 (6) TMI 4 - CESTAT, BANGALORE which was approved by the Hon'ble High Court in the case of CCE v. Sunitha Shetty 2004 (174) ELT 313 (SC) = 2004 (9) TMI 1 - KARNATAKA HIGH COURT wherein it was held that in the absence of any mens rea penalty should not be levied. He has also quoted the judgement passed by the Hon'ble Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa = 1969 (8) TMI 31 - SUPREME COURT, in which it was held that:- "The discretion to impose penalty must be exercised judicially. Penalty will ordinarily be imposed in case the party acts deliberately i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Director General of GST Intelligence and the above mentioned reversal was arrived at Rs. 25,10,391/- in respect of the four towers viz., G7 to 10 by him. He has also furnished a copy of reply submitted by him for final approval of the Director General (DG). He has also acknowledged that the above mentioned amount had been duly deposited and the final order from the DG was awaited. He has also furnished copies of monthly returns (GSTR 3B) of GST for the period from July 2017 to December 2018. He has also submitted copies of the acknowledged receipts of the above Applicants showing ITC benefit of 3% which was reduced from the amounts payable by the Applicants during the period from July 2017 to December 2018. He has also furnished copies of acknowledgement receipts of buyers of towers to whom benefit of ITC had been given by way of reduction in their instalments. He has further furnished the sample copies of Credit Ledger of 6 Applicants and 4 other customers. He has also claimed that all the customers were given the benefit by way of reduction in the prices payable by them towards their flats and thus, the ITC benefit was given as reduction in the amount payable by the cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Home Buyers List (J) 812,740 528,210 11. Relevant CENVAT/ Input Tax Credit to Turnover [(K)=[(E)*(J)/(I)] 81,379,557 32,721,871 12. Ratio of CENVAT/ Input Tax Credit to Taxable Turnover [(L)=(K)/(F)*100] 4.18% 6.32% 13. Increase/Decrease in input tax credit availed post-GST (%) (M) (M) =(6.32%-4.18%) 2.14% Based upon the above working, the Respondent has claimed that the net ITC benefit to be passed on to the buyers should have been 2.14% while the Respondent had already passed on the benefit to the tune of minimum 3% to all his customers and thus, no effective demand remained against the Respondent. 51. He has further stated that since the entire figures were not considered for the purpose of determining profiteering, the profiteering had to be computed for the project as a whole. This methodology if worked upon after one year would have given different results. For example, if there was no major expenditure in the next one year but amounts were being recovered from the buyers, the ratio of ITC available to total value would fall and would reduce the ratio of profiteering for the supplier. Thus, the methodology was vague and could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and provided to the taxpayers, thus, the taxpayer had been left to determine such methodology at a future date while he was expected to pass the benefit as computed using such methodology at the advent of GST. He also stated that a mechanism which had never been provided to a supplier could not be determined later to the detriment of the taxpayer. 53. The Respondent has also filed submissions on 24.06.2019 vide which he has submitted:- i) Comparison of computation of the profiteered amount as per the formulae provided by the DGAP stating the reasons for variation of figures with those adopted by the DGAP. ii) Working of his basis of estimated calculation of the 3% ITC benefits which was passed to the Applicants. The same is give below in a table:- Calculation of ITC benefit to be passed on to Customers under Anti Profiteering Total Estimated Cost Estimated Cost to be incurred in GST regime VAT/Service Tax Rate GST Rate % of ITC benefit passed Additional ITC Budgeted Cost for Project STRUCTURE Steel 52,44,36,570 14,73,00,240 4.00 18.00 14.00 2,06,22,034 Cem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; 2,43,79,718 % of ITC benefit to be passed (Relevant ITC/Demand to be raised) (g)=[(f)/(e)] 2.83% The Respondent has also submitted that no ITC benefit existed in case (especially services) where such input tax credit was received on increase in cash flow. The Respondent was paying less tax and was getting full credit in the earlier regime. Presently, he was getting full credit for tax paid, and thus, no ITC was available as additional benefit to him. Further, the cost related to unsold units was not considered. 54. Clarifications were also sought from the DGAP on the Respondent's submissions dated 28.05.2019 and 10.06.2019. The DGAP vide his Reports dated 07.06.2019 and 19.06.2019 has submitted that all the facts/ queries raised by the Respondent had been explained in his report dated 24.04.2019. 55. We have carefully considered all the Reports filed by the DGAP, submissions of the Respondent and the Applicant No. 1 and other material placed on record and find that the Applicant No.1 had booked Flat No. G-9 705 on 09.09.2013 with the Respondent in his "Nirala Greenshire" project located in Greater Noida West (Uttar Pradesh). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual or exceptional circumstance to make excessive profit. However, Section 171 (3A) of the CGST Act, 2017 defines the profiteered amount as:- "(3A) Where the Authority referred to in sub-section (2), after holding examination as required under the said sub-section comes to the conclusion that any registered person has profiteered under sub-section (1), such person shall be liable to pay penalty equivalent to ten per cent. of the amount so profiteered: Provided that no penalty shall be leviable if the profiteered amount is deposited within thirty days of the date of passing of the order by the Authority. Explanation.-For the purposes of this section, the expression "profiteered" shall mean the amount determined on account of not passing the benefit of reduction in rate of tax on supply of goods or services or both or the benefit of input tax credit to the recipient by way of commensurate reduction in the price of the goods or services or both." Therefore, it is clear that the definition of profiteering given by the Respondent is not correct and the profiteered amount has to be calculated as per the Explanation attached to the above Sub-Section. 57. The Respondent has further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been passed less benefit. In this connection it would be worthwhile to state that the benefit has to be passed on for the entire project commensurate to the amount paid by a buyer in the post-GST period on the additional ITC availed by the Respondent which has no connection with the stage of construction. There is also no equating of the benefit to all the customers as the benefit would depend on the area and the amount paid by each customer. The DGAP has also correctly taken in to account the ITC w.e.f. April 2017 to June 2017 for the pre GST period to make comparison with the equivalent period in the post GST period and hence the above period is not required to be considered from 2012. Therefore, the above claims of the Respondent are not correct. 59. The Respondent has also submitted that there was no match between the cost incurred by him and the demands raised by him as per the Chart submitted by him. However, it is mentioned that there cannot be correlation between the demands raised and the costs incurred as both depend on different parameters. However, the benefit has to be passed on periodically by him on the basis of the additional ITC availed by the Respondent and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and cogent evidence which he has failed to produce. Accordingly, the above ratio of 4.25% cannot be relied upon. 62. The Respondent has also calculated ratio of additional ITC benefit as (-) 0.05% as per the Table prepared by him. The Respondent has claimed that the area to which the ITC was being attributed should have been considered on a weighted average basis and not in absolute terms as the weights would align the future liability against the credits. However, it would be pertinent to mention here that the benefit of additional ITC has to be passed on as per the area purchased by each buyer as well as on the amount of instalments paid by him during the post GST period and has no relation with the stage of construction of the project. Hence, the above ratio of -0.05% computed by the Respondent cannot be taken in to account as by no stretch of imagination it can be argued that the Respondent has not availed benefit of additional ITC post GST implementation. 63. While computing the additional benefit of ITC for the post GST period the Respondent has arrived at the ratio of 2.14% on the ground that the DGAP in Table E of his Report dated 24.04.2019 had wrongly taken CENVAT Cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el, Cement, RMC, Sanitary fittings and Aluminium Works. He has also claimed that no benefit had accrued to him on the service supplied by the contractors as well as on marketing, security, administrative, payments made to NOIDA Authority and the Financial costs. Accordingly, he has contended that the net benefit of cost due to tax rate change was (-) 5.71%. However, the above claim of the Respondent is not correct as he is entitled to receive ITC on all his purchase of inputs and input services in the post GST period. Benefit of reduction in prices has also been passed on to him by his suppliers as they have become entitled to the ITC post implementation of the GST. The data used by the Respondent while preparing the above Tables has also not been verified by any agency or the DGAP. Hence, his above claim is incorrect and cannot be accepted. 68. The Respondent vide his submissions dated 28.05.2019 has claimed that he has made provision of CENVAT Credit reversal to the tune of Rs. 60,13,8331-, however, his Service Tax liability was being scrutinised by the Director General GST (Intelligence) and the above mentioned reversal has been determined as Rs. 25,10,391/-. Therefore, the DGA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame as the facts of each case are different. The mathematical methodology applied in the case where the rate of tax has been reduced and ITC disallowed cannot be applied in the case where the rate of tax has been reduced and ITC allowed. Similarly, the mathematical methodology applied in the case of Fast Moving Consumer Goods (FMCGs) cannot be applied in the case of construction services. Even the mathematical methodology applied in two cases of construction service may vary on account of the period taken for execution of the project, the area sold and the turnover realised. It would also be appropriate to mention here that this Authority has power to 'determine' the methodology and not to 'prescribe' it as per the provisions of the above Rule and therefore, no set prescription can be laid while computing profiteering. It would be further relevant to mention that the power under Rule 126 has been granted to this Authority by the Central Govt., as per the provisions of Section 164 of the above Act which has approval of the Parliament. Rule 126 has further been framed on the recommendation of the GST Council which is a constitutional body created under the Constitution (One Hundred a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks is not a part of manufacturing process. However, the same question is not involved in the present case. Hence, it is respectfully submitted that the above case also does not help the Respondent. 76. He has also relied upon the case of Metal Forgings v. Union of India 2002 (146) E.L.T. 241 = 2002 (11) TMI 90 - SUPREME COURT in which the issue was related to whether the products manufactured by the appellant fall under Tariff Item 68 and whether the demand of the revenue was bared by limitation. However, the same is not the issue in the present case. Hence, it is respectfully submitted that the above case also does not help the Respondent. 77. He has also placed reliance on the judgements passed in the cases of Nashik Strips P. Ltd. 2011 (264) E.L.T. 576 (Tri.-Mumbai) = 2010 (7) TMI 523 - CESTAT, MUMBAI, Satia & Company 2010 (262) E.L.T. 530 (Tri.-Ahmd.) = 2009 (9) TMI 861 - CESTAT AHMEDABAD, CCE, Chandigarh v. Krishi Rasyan Export Pvt. Ltd. 2009 (240) E.L.T. 468 (Tri.-DeI.) = 2009 (3) TMI 675 - CESTAT, NEW DELHI, CCE Ludhiana v. FAS Kusum Ispat (P) Ltd. 2009 (240) E.L.T. 13 (P & H) = 2009 (2) TMI 220 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH, Smitha Shetty v. CCE, 2004 (15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ening Committee Uttar Pradesh. 80. In view of the above facts, 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 as has been detailed above. 81. The Applicants No. 1, 2 and 5 vide their submissions dated 17.05.2019 have admitted that they have received 3% benefit of ITC, therefore, the above Applicants shall be passed benefit by reducing the above amount from the amount as has been computed by the DGAP vide Annexure-21 of his Report. 82. It is also evident from the above narration of facts that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his present project in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section. Accordingly, a Show Cause Notice be issued to him directing him to explain as to why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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