TMI Blog2019 (12) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... a complete reading of Section 171 of the Act ibid, it is amply clear that the total quantum of profiteering by an entity/registrant is the sum total of all the benefits that stood denied to each of the recipients/consumers individually. The intent of the words commensurate reduction is also clearly explained by the words by reduction in price . The Authority hereby determines the profiteered amount as ₹ 2,88,43,422/- as per the provisions of Rule 133 (1) of the above Rules. The above amount shall be paid by the Respondent to the eligible buyers as per the details given in Annexure-21 of the DGAP s above Report within a period of 3 months from the date of passing of this order along with interest @18% per annum from the date from which the above amount was collected by him from the buyers till the payment is made failing which it shall be recovered by the concerned Commissioner CGST/SGST and paid to the concerned eligible buyers - 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. Penalty - HELD THAT:- It is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 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 Standing Committee on Anti-profiteering and vide minutes of its meeting dated 08.10.2018 it had forwarded the same to the DGAP for detailed investigation 3. The Applicant No. 1 had also submitted documents viz. duly filled in form APAF-1, copies of intimation letters receipts and copies of the demand letters along with his application. 4. The DGAP upon perusal of the application had found that the Applicant No. 1 had booked a flat with the Respondent on 09.09.2013, i.e. in the pre-GST era. The details of the demands made on the Applicant No. 1 on account of the purchase of the flat have been furnished in table A below:- Table- A (Amount in Rs.) Particulars Basic Sale Price including PLC Other Charges IFMS @ 20/- per sq.ft. Service Tax including Cess GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, Uttar Pradesh-201306 G9-106 20.11.2018 2 Applicant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before giving possession. He further informed the DGAP that at the time of receiving the part occupancy certificate, the flats were in raw shape without sanitary fittings, electric fittings, internal paints and finishing work which were completed in March/April, 2018. Further, the possession of flats was given 4/5 months after the issue of the part occupancy certificate. He also informed that there were many other common works pending for the society as a whole, which were partly provided from time 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 confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The Respondent further submitted that he had passed on ITC/Anti-profiteering benefit to his customers @ 3% and Applicants should invariably understand that benefit of ITC was available only to those buyers who had made their bookings before 01.07.2017 which were valid till date. The eligible customers were those whose bookings were valid on implementation of the GST Act. The Respondent further submitted a letter dated 06.01.2018 of the Applicant No. 1 addressed to the Director of the Respondent, informing him about the withdrawal of all pending complaints with the undertaking not to file any complaint in future before any forum. The Respondent also furnished the following documents/information:- (a) Copies of GSTR-1 Returns for the period July, 2017 to December, 2018. (b) Copies of GSTR-3B Returns for the period July, 2017 to December, 2018. (c) Copies of Tran-1 Returns for transitional credit. (d) Copies of VAT ST-3 Returns for the period April, 2016 to June, 2017. (e) Copies of all demand letters, sale agreement along with allotment letter, settlement deed, and payment details issued in the name of the Applicants. (f) Details of applicable tax ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 99 - - 6,92,752 2. On 2nd Instalment 19.10.2013 11,15,088 - - 39,499 - - 11,54,587 3. On Casting 17 th On Casting 17th 22.06.2017 13,38,106 - - 67,069 - - 14,05,175 4. At the time of offer of possession/offer of possession for fit-out period 24.10.2017 13,38,105 56,500 25,600 - 1,74,660 (41,837) 15,53,028 Total 44,60,352 56,500 25,600 1,30,267 1,74,660 41,837 48,05,542 18. The DGAP fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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, 2017, which read as under: 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 . 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 . The DGAP thus mentioned that the ITC pertaining to the unsold units might not fall within the ambit of this investigat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 DGAP further submitted that from the information submitted by the Respondent for the period April, 2016 to December, 2018, the details of the input tax credit availed by him, his turnover from the present project, the ratio of ITC to turnover, during the pre-GST (April, 2016 to June, 2017) and post-GST (July, 2017 to December, 2018) periods, had been furnished in Table-E below:- Table-E (Amount in Rs.) S.No. Particulars April, 2016 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 Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent had benefited from additional input tax credit to the tune of 5.42% [6.89% (-) 1.47%] of the turnover. 23. The DGAP also observed that the Central Government, on the recommendation of the GST Council, had levied 18% GST (effective rate was 12% in view of 1/3rd abatement on value) on construction service, vide Notification 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contested that any such benefit would eventually had to be passed on to the recipients and in fact, the Respondent had submitted that he had passed on an amount of ₹ 41,838/- (i.e. 3% of the amount collected post-GST) to the Applicant No. 1, which had been duly verified from the demand letter dated 04.10.2017 submitted by the Respondent. 25. The DGAP further submitted that on the basis of the aforesaid CENVAT credit/input tax credit availability pre and post-GST and the details of the amounts collected by the Respondent from the Applicants and other home buyers during the period 01.07.2017 to 31.12.2018, the amount of benefit of input tax credit not passed on to the recipients or in other words, the profiteered amount had come out to be ₹ 2,88,43,422/- which included GST @ 12% on the base profiteered amount of ₹ 2,57,53,055/-. This amount was also inclusive of ₹ 7,76,266/- (including GST on the base amount of ₹ 6,93,094/-) which was the profiteered amount in respect of the Applicants and the details of the same had been given in Table G below:- Table-G (Amount in Rs.) SI.No. Name of Applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nits. 28. The DGAP thus concluded that the benefit of additional ITC to the tune of 5.42% of the turnover had accrued to the Respondent post GST and the same was required to be passed on to the above Applicants and other recipients. The DGAP also mentioned that the provisions of Section 171 of the CGST Act, 2017 were contravened by the Respondent, in as much as the additional benefit of ITC @5.42% of the base price received by the Respondent during the period 01.07.2017 to 31.12.2018, had not been passed on to the Applicants and the other recipients and on this account, the Respondent had realized an additional amount to the tune of ₹ 7,69,170/- from the above Applicants as per the Table-E given in para 25 of his report which included both the profiteered amount @5.42 /0 of the base price and GST on the said profiteered amount. Further, the DGAP s investigation has revealed that the Respondent had also realized an additional amount of ₹ 2,80,74,252/- which included both the profiteered amount @5.42% of the base price and GST on the said profiteered amount, from other recipients as well who were not Applicants in the present proceedings. Those recipients were identifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Black s Law Dictionary - Profiteering was taking advantage of unusual or exceptional circumstances to make excessive profit and thus, anti profiteering should mean a measure to curb this tendency of making excessive profits and in the present case, when such profits arose on account of taxes. Thus, the intent of the legislature was not to curb the profits of a supplier which he was making in his normal course of business prior to GST but to curb his tendency to pocket any net profit which arose post GST on account of taxes (i.e. net of any cost increase so that he could retain his normal profits). This Section provided that any output tax reduction benefit or benefit because of ITC which had accrued to the supplier and which was related to the supply, should be passed on to the buyer. Thus, it was only the effective tax (output tax minus ITC available against such output) which was to be collected from the recipient. He further submitted that in case of benefit of ITC, it was to be worked out as to how much of the ITC which was inbuilt in costs of the supplier prior to GST, was made available to such Supplier post GST and thus, such benefit should have been passed to the buy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stomers would be injustice to the customers who were eligible for benefits arising out of their part of construction. The Respondent further submitted that while his working of benefit has considered the period upto 31.12.2018, only part period had been considered for ITC availed prior to GST while the project had started in 2012, which was liable to give skewed results. 35. The Respondent also stated that the present project was started in FY 2011-12 and the project land acquisitions, drawings and ground plans, approvals from the authorities and other similar works had been started in the FY 2012-13 and thus, while the costs were initiated since the FY 2012-13, the bookings had come later. Similarly, the construction costs had started even without all flats being booked and thus, constructions costs were heavy as compared to the receipts against such flats. The cost of construction and the demands made from the buyers in different year were as under:- Particular 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 Tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 47,51,48,619 6. Total Saleable Area (in sq. ft.) (F) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng July, 2017 to December, 2018 E 47,51,48,619 7. GST raised @ 12% over Base Price F= E*12% 5,70,17,834 8. Total Demand raised G=E+F 53,21,66,453 9. Recalibrated Base Price H= E*(1-D) or 95.75% of E 45,49,54,803 10. GST @12% I = H*12% 5,45,94,576 11. Commensurate demand price J = H+I 50,95,49,379 12. Excess Collection of Demand or Profiteering Amount K=G-J 2,26,17,073 Thus, he has contended that the profiteered amount should be reduced to ₹ 2,26,17,073/- out of which the the benefit of ₹ 1,96,62,371/- on account of reduced cost had already bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5) (6)=(4)+(5) 1. CENVAT credit of Service Tax Paid on Input Services (A) 7,83,99,689 - - - 2. VAT Input available (B) 4,42,82,075 3. Input Tax Credit GST Availed (C) - 4,65,48,236 2,94,91,755 7,60,39,991 4. Less: Reversal of CENVAT credit/ITC for unsold units on the date of receiving OC for Tower-G7,G8,G9 G10 (D) 60,13,833 16,92,066 - 16,92,066 5. NET CENVAT Credit/Input Tax Credit Available (E)=(A+B)-(D) or (C)-(D) 11,66,67,931 4,48,56,170 2,94,91,755 7,43,47,925 6. Total Turnover as per Home Buyers List (F) 1,85,94,87,094 37,81,91 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. = 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 Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent 211.44 208.65 Increase in Cost (2.80) Net Benefit accruing to Respondent 2.80 Total Value of Steel Purchased 1,90,93,994 Net Benefit as available to Respondent 2,00,184 C. RMC Particular Before GST Post GST Average Purchase price 5,257.26 5,028.85 Rate of Tax 14.00 18.00 Tax credit as available to Respondent 645.63 767.11 Effective Cost to Respondent 4,611.62 4,261.74 Increase in Cost (349.89) Net Benefit accruing to Respondent 349.89 Total Value of Steel Purchased 2,64,26.602 Net Benefit as available to Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 01.07.2017 to 31.12.2018 with the area of customers whose consideration had been received during such period without appreciating that the correlation of such ITC should have been made on the basis of stage of completion of flats of such customers and not on their absolute area. He also contended that while for towers G6 to G10. most of the construction had already been completed, the ITC of only finishing services and common area could have been attributed to them, while for other towers the entire cost could have been attributed. Further, in case the ITC was distributed to the current customer demands only, less ITC would have been attributed to the future customers or future demands of sold flats. He also suggested that the area to which ITC was being attributed should have been considered on a weighted average basis and not absolute area as the weighted average shall align the future liability against such credits. He has also submitted the following work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p to 30.06.2017 Units Sold after 30.06.2017 Total Demand Raised up to 30.06.2017 Demand Raised From 01.07.2017 to 31.12.2018 Demand Raised From 01.07.2017 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 24,06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CCE 2004 (169) ELT 219 (Tri.-Del.) = 2004 (3) TMI 177 - CESTAT, NEW DELHI , wherein the Hon ble Tribunal deleted the penalty by holding that:- The penalties have to be imposed on the ground of suppression, of information regarding clearance of scrap. In the SCN, we have not come across any specific allegation that the party had suppressed any such information. Accordingly, penalties imposed have been set aside. He also referred to the judgements passed in the cases of CCE v. H.M.M. Ltd. (76) E.L.T. 497 = 1995 (1) TMI 70 - SUPREME COURT , Metal Forgings v. Union of India 2002 (146) E.L.T. 241 = 2002 (11) TMI 90 - SUPREME COURT , 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.- 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 ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven full GST benefit to only some of the buyers, but since the present project was a common project, the benefit should be passed on to the each and every buyer. 48. The Respondent has filed further written submissions on 28.05.2019 vide which he has submitted the details of total number of flats in 8 towers, sold and unsold during the pre and post GST periods as on 31.12.2018 and the methodology for credit reversal used by the Respondent. He has also claimed that his Auditor had made provision of CENVAT Credit reversal to the tune of ₹ 60,13,833/- which had been reflected in Schedule 24 of the Audited Financial Statement for the FY 2017-18. He also stated that the figures reflected in the Financial statements were also considered by the DGAP in his Report dated 24.04.2019. However, his Service Tax liability was being scrutinised by the Director General of GST Intelligence and the above mentioned reversal was arrived at ₹ 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 deposite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. VAT Input available (B) 44,282,075 3. Input Tax Credit GST Availed (C) - 46,548,236 29,491,755 76,039,991 4. Less: Reversal of CENVAT credit/ITC for unsold units on the date of receiving OC for Tower-G7,G8,G9 G10 (D) 2,510,391 1,692,066 - 1,692,066 5. NET CENVAT Credit/Input Tax Credit Available (E)=(A+B)-(D) or (C)-(D) 120,171,373 44,856,170 29,491,755 74,347,925 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er there was a change in the period. The Respondent has also mentioned that the common works which belonged to the entire project and whose credit was attributable to the entire project had been divided only on the area of 8 towers of Phase I and thus, the attribution was in itself wrong which left no space of giving benefit of such ITC to the future flat buyers. He had also furnished the list of common facilities which had been given below:- Facilities Already Constructed in Phase-I Consisting of 8 Towers (Tower G6, G7, G8, G9, G10, G11, G12 G14) Facilities to be Constructed in Phase-II (Which is yet to be launched) 1. STP 1. Tennis Court 2. Under Ground Water Tank 2. Club Building 3. Electric Sub-station including Transformer DG Set 3. Swimming Pool 4. Electric Meter Room (NPCL) 4. Main Entry Gate 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.50 15,96,111 Paint 4,56,03,180 2,89,39,100 14.50 18.00 3.50 10,12,869 Doors Windows 9,12,06,360 5,78,78,200 14.50 18.00 3.50 20,25,737 Sanitary/ CP Fitting Chinaware 4,56,03,180 4,03,39,895 14.50 18.00 3.50 14,11,896 Electrification (LS) 6,84,04,770 2,98,13,325 14.50 18.00 3.50 10,43,466 Plumbing (LS) 2,28,01,590 1,22,75,020 14.50 18.00 3.50 4,29,626 Labour Charges 68,40,47,700 19,62,44,127 15.00 18.00 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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). It is also found that the Applicants No. 2 to 6 had also booked their flats bearing No. G7-2003, G9-106. G8-1708, G8-1903 and G-8-1508 respectively with the Respondent in the above project. It is also revealed from the record that the Applicant No. 1 vide his complaint dated 28.02.2018 had 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 price. Applicant No. 2 to 6 had also filed complaints and had all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 contended that he has duly passed on the benefit of minimum 3% which amounts to ₹ 1,96,62,371/- to his customers during the period from 01.07.2017 to 31.12.2018 and thus, this amount needs to be reduced from the total demand. He has also stated that the DGAP s Report dated 24.04.2019 had not factored the benefit which has been passed by him to his buyers. He has also claimed that the benefit was given by way of reduction of basic price and then GST was charged on such reduced price. The Respondent in this r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .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 the turnover received by him. The Respondent cannot ask the flat buyers to wait till the construction is completed. 60. The Respondent has also raised objection on the methodology followed by the DGAP while considering the ITC period post GST and he has himself computed three different ratios of additional input tax credit. While computing the ratio of additional benefit of ITC of 2.64% availed by him during the post GST period in the Table submitted by him the Respondent has claimed that the DGAP h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Credit for the period from April 1, 2016 to June 30, 2017, whereas he should have taken it for the entire five years. However, the period considered by the DGAP for the pre-GST period matches with the period taken for the post GST period and in case the entire period of 5 years is taken then the above ratio would be distorted and hence the DGAP has rightly taken the above period for calculation of the additional benefit. Accordingly, the above ratio of 2.14% cannot be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase 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 ₹ 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 ₹ 25,10,391/-. Therefore, the DGAP has wrongly considered the reversal as ₹ 60,13,833/-, against Sr. No. 3 of Table E and therefore the ratio of CENVAT/ITC to turnover computed for the pre GST period was incorrect. In this connection it would be appropriate to state that the reversal ordered by the DG GST (Intelligence) has not attained finality yet and in case the above amount is finally confirmed the Respondent can adjust it accordingly in the future while passing on the be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 and First Amendment) Act, 2016. Therefore, the above power has both legislative sanction as well as incorporation in the CGST Act, 2017 and the CGST Rules, 2017. The delegation provided to this Authority under the above Rule is clear, precise, unambiguous and necessary and is well within the provisions of the Constitution and therefore it has been rightly conferred on this Authority. Hence, the objections raised by the Respondent in this rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (156) ELT 84 = 2003 (6) TMI 4 - CESTAT, BANGALORE , CCE v. Sunitha Shetty, 2004 (174) ELT 313 (SC) = 2004 (9) TMI 1 - KARNATAKA HIGH COURT and Hindustan Steel Ltd. v. State of Orissa = 1969 (8) TMI 31 - SUPREME COURT in his support but all these cases also do not come to the rescue of the Respondent since the present proceedings and the computation are strictly in accordance with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .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 the CGST Rules, 2017 should not be imposed on him. Accordingly, the notice dated 01.05.2019 vide which it was proposed to impose penalty under Section 29, 122-127 of the above Act read with Rule 21 and 133 of the CGST Rules, 2017 is withdrawn to that extent. 83. This Authority as per Rule 136 of the CGST Rules 2017 directs the Commissioners of CGST/SGST Uttar Prade ..... X X X X Extracts X X X X X X X X Extracts X X X X
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