TMI Blog2019 (12) TMI 1264X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the post-GST period from July, 2017 to December, 2018, it was 15.40% as per Table B supra and hence it is established that the Respondent has benefited from the additional ITC to the extent of 10.65% [15.40% (-) 4.75%] of the turnover. Since, the above computations made in Table B have been done on the basis of the records, information and returns furnished by the Respondent himself, the same can be relied upon. It is also clear from the records that the Central Government, on the recommendation of the GST Council, had levied 18% GST with effective rate of 12% in view of 1/3rd abatement on value on the construction service, vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 which was reduced in the case of affordable housing from 12% to 8%, vide Notification No. 1/2018-Central Tax (Rate) dated 25.01.2018. Accordingly, the DGAP has computed the profiteering by comparing the applicable tax rate and ITC available in the pre-GST period when only VAT@ 4.50% was payable with (1) the post-GST period from 01.07.2017 to 24.01.2018, when the effective GST rate was 12% and (2) with the GST period from 25.01.2018 to 31.12.2018, when the effective GST rate was 8% - This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods Service Tax (CGST) Rules, 2017. The brief facts of the case are that the Applicant No. 1 had filed an application before the Haryana State Screening Committee on Anti-profiteering, under Rule 128 of the Central Goods and Services Tax Rules, 2017 and submitted that he had purchased a flat in the Respondent s project Andour Heights , Sector-71, Gurgaon and alleged that the Respondent had not passed on the benefit of input tax credit to him by way of commensurate reduction in price, in terms of Section 171 of the Central Goods and Services Tax Act, 2017. While filing his application, he had sought anonymity. The Haryana State Screening Committee on Anti-profiteering conducted prima facie verification of the application and after having satisfied itself that the Respondent did not appear to have passed on the benefit of ITC, forwarded the said application with its recommendation to the Standing Committee on Anti-profiteering for further action, in terms of Rule 128 of the above Rules. 2. The Standing Committee on Anti-profiteering examined the aforesaid reference, in its meeting held on 13.12.2018 and it forwarded the same to the DGAP for detailed investigation. 3. The DGA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... units/ fiats was fixed at ₹ 4,000/- per square feet of carpet area and ₹ 500/- per square feet of balcony area. The Respondent was developing two BHK one BHK apartments. As per applicable Rules, the Respondent raised demands on the buyers to the extent of 62.50% of total cost of the flat before 30.06.2017, under the erstwhile VAT/Service Tax regime with applicable taxes. After implementation of GST, the Respondent raised demand of the balance amount (37.50% of the total cost of the flat) with applicable GST. 9. The Respondent further submitted that he was not directly engaged in the construction activity and all the work related to the project was assigned to various sub-contractors, who procured all the required materials on their own except Steel, Cement and RMC which were supplied by the Respondent on free of charge basis. However, the project was executed under the supervision of the staff employed by the Respondent. 10. The Respondent also informed the DGAP that in the pre-GST regime, under the provisions of Haryana Value Added Tax Act, 2003, Under-Construction Properties were covered under the definition of Works Contract and subjected to Haryana VAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ITC, if any, was relevant for the purposes of determination of profiteering. 13. The Respondent further mentioned before the DGAP that he was only procuring Cement, Steel and RMC on his own while all other raw materials used in construction were being procured directly by his various sub-contractors after due payment of Central Excise Duty or GST. In order to comply with the provisions of Section 171 of the CGST Act, 2017, he (Respondent) had himself calculated the additional benefit of ITC (provisionally) available under the GST regime and the same had been credited to his homebuyers. 14. The Respondent requested for disposal of the application filed by the Applicant No. 1 by way of a speaking order, before proceeding further under Section 171 of the CGST Act, 2017, citing the decision of the Hon ble Supreme Court in the case of M/s. GKN Driveshafts (India) Ltd. [2002] 1 SCC 72 = 2002 (11) TMI 7 - SUPREME COURT . He also contended that the issues relevant to be addressed vide a speaking order before proceeding further in the matter were as follows: - (i) Whether on the facts circumstances of the case, there was any reduction in the rate of tax on the supply of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent also submitted sample copies of some builder - buyer agreements pertaining to his project, sample copies of intimation-cum-demand letters issued to homebuyers and the payment plans for his homebuyers, which are given in the Table-A below :- Table- A (Amount in Rs.) S. No. Payment Stage % of total cost 1. At the time of Application 5% of total cost 2. At the time of Allotment 20% of total cost 3. Within 6 months of Allotment 12.5% of total cost 4. Within 12 months of Allotment 12.5% of total cost 5. Within 18 months of Allotment 12.5% of total cost 6. Within 24 months of Allotment 12.5% of total cost 7. Within 30 months of Allotment 12.5% of total cost 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of land and, subject to clause (b) of paragraph 5 of Schedule Il, sale of building and clause (b) of Paragraph 5 of Schedule II of the CGST Act, 2017 which 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 had been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever was earlier , the ITC pertaining to the residential units which were 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 the completion certificate, in terms of Section 17(2) Section 17(3) of the CGST Act, 2017, which read as under:- Section 17 (2) Where the goods or services or both was 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... April, 2016 to March, 2017 April, 2017 to June, 2017 Total (Pre-GST) 01.07.2017 to 24.01.2018 (GST @ 12%) 25.01.2018 to 31.12.2018 (GST @ 8%) Total (Post-GST) (1) (2) (3) (4) (5) = (3)+(4) (6) (7) (8) = (6)+(7) 1. Credit of Service Tax Paid on Input Services used for commercial shops (A) 32,15,703 3,91,056 36,06,759 - - - 2. Input Tax Credit of VAT Paid on Purchase of Inputs (B) 2,21,17,260 31,90,875 2,53,08,135 - - - 3. Rebate of VAT(WCT) Paid to sub-contractor (C) 1,10,82,389 29,67,221 1,40,49,610 - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the turnover that was available to the Respondent during the pre-GST period (April, 2016 to June, 2017) was 4.75% and during the post-GST period (July, 2017 to December, 2018), it was 15.40% which evidenced that in the post-GST period, the Respondent had benefited from input tax credit to the tune of 10.65% [15.40% (-) 4.75%] of the turnover. 26. The DGAP also stated in his Report that the Central Government, on the recommendation of the GST Council, had levied 18% GST (effective rate was 12% in view of 113rd abatement for land value) on construction service, vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (Annex-12). The effective GST rate on construction service in respect of affordable and low-cost houses upto a carpet area of 60 square metres per house had further been reduced from 12% to 8%, vide Notification No. 1/2018-Central Tax (Rate) dated 25.01.2018 (Annex-13). In view of the change in the GST rate after 01.07.2017, the DGAP had examined the issue of profiteering in two parts, i.e., by comparing the applicable tax rate and input tax credit available in the pre-GST period (April, 2016 to June, 2017) when only VAT@ 4.50% was payable with (1) the po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. Recalibrated Base Price H=E*(1-D) or 89.35% of E 21,64,70,235 4,55,07,955 50,21,77,828 76,41,56,018 10. GST @ 12% or 8% I=H*B 2,59,76,428 54,60,955 4,01,74,226 7,16,11,609 11. Commensurate demand price J=H+I 24,24,46,663 5,09,68,909 54,23,52,054 83,57,67,627 12. Excess Collection of Demand or Profiteered Amount K=G-J 2,88,98,321 60,75,197 6,46,45,208 9,96,18,637 27. From the Table given above, it was clear that the additional input tax credit of 10.65% of the turnover, which was the benefit to the Respondent, should have resulted in the commensurate reduction in the base prices as well as cum-tax prices of the units. 28. On the basis of the aforesaid CENVAT/input tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,31,95,722 Further Benefit to be passed on as per Annex-15 Total Residential (A) 980 4,77,069 79,32,51,649 9,22,24,790 3,90,29,068 2. Commercial Shop Buyers 59 17,536 6,19,87,319 79,93,847 14,87,736 59,06,111 Further Benefit to be passed on as per Annex-16 3. Commercial Shop Buyers 11 3,582 - - 3,03,872 (3,03872) No Consideration paid Post-GST. However, Respondent passed on benefit. List Attached as Annex-17 4. Commercial Shop Buyers 5 2,652 - - - - Unsold Units as on 31.12.2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt investigation covered the period from 01.07.2017 to 31.12.2018, profiteering, if any, for the period post December, 2018, had not been examined since the quantum of ITC that would be available to the Respondent in future could not be determined at this stage in as much as the construction of the project was yet to be completed. 34. The above Report was considered by this Authority in its meeting held on 02.07.2019 and it was decided to hear the Applicants and the Respondent on 17.07.2019. 35. Eight personal hearings were accorded to the parties on 17.07.2019, 02.08.2019, 20.08.2019, 05.09.2019, 12.09.2019, 24.09.2019, 14.10.2019, 06.11.2019 out of which 4 hearings were attended by the Respondent. During the course of the hearings, Shri Sushil Kumar Jain, the Applicant No. 1 appeared in person, none appeared for Applicant No. 2 and the Respondent was represented by Sh. Rakesh Kataria, Advocate and Sh. Manish Garg, CFO. 36. The Applicant No. 1 who had sought anonymity until the investigation stage, requested this Authority vide his letter dated 17.07.2019 that he be permitted to take part in the proceedings. The Authority allowed his above mentioned request. 37. The Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tial documents to the Applicant No. 1 in order to prevent the usage of confidential documents in a manner prejudicial to the business interests of the Respondent. 41. The above mentioned submissions of the Respondent were carefully considered by the Authority and it was found that the records/ returns and other documents sought by the Applicant No. 1 contained sensitive business related information pertaining to various facets of the business of the Respondent and sharing of such information could be detrimental to the business interests of the Respondent. It was also felt that certain records/ documents requested by the Applicant No. 1 pertained to third parties such as Respondent s vendors, contractors, suppliers and homebuyers, which should remain confidential from others. Therefore, after seriously considering the facts of the case and the provisions of Rule 130 of the CGST Rules, this Authority decided to not share the confidential documents/ records/ returns of the Respondent with the Applicant No. 1. 42. Thereafter, Applicant No. 1 filed his written submissions dated 20.08.2019 vide which he submitted that he had paid a total tax of ₹ 2,00,601/-to the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Actual due of payment 1. Application money 5 1,31,275 - - - 13.03.2015 28.02.2015 2. Application money 20 5,48,073 - 22,973 - 04.09.2015 31.08.2015 3. Within 6 months of Allotment 12.5 3,28,188 - - - 16.09.2016 13.09.2016 4. VAT Payable - 59,077 59,077 - - 20.02.2017 20.02.2017 5. Within 12 months of allotment 12.5 3,28,188 - - - 13.03.2017 20.02.2017 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereby declare that the information furnished above is true to the best of my knowledge and that I have exercised due diligence in submitting such information. I understand that providing incomplete or incorrect information will make the application invalid . Citing the above, the Respondent contended that the Applicant No. 1 had made a false declaration while filing the application, which should render the application as void. 44. The Respondent also submitted that the initial complaint of the Applicant No. 1 dated 13.11.2018, was followed by another complaint filed before this Authority on 20.08.2019, which was titled Input Tax Credit not yet passed . The Respondent submitted that the contents of the application/ submission filed by the Applicant No. 1 dated 20.08.2019 were false since it had been claimed therein that a total tax component of ₹ 2,00,601/- had been paid by him to the Respondent on various dates, whereas the Applicant No. 1 had not paid tax amounting to ₹ 52,916/- as claimed and the details of the said amount claimed to have been paid but not paid were as under:- 15.03.2018 ₹ 26,256/- 15.03.2019 ₹ 26,256/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1 s) interests adversely and hence he claimed full right to have all the relevant records/ documents/ returns in order to get to know the leakages which might remain hidden from the authorities such as the DGAP. He further contended that no provisions of law stated that the complainant could not defend his suit. The Applicant No. 1 also claimed that in a similar case of Shruti Garg Ors v/s Signature Builders Pvt. Ltd. = 2019 (12) TMI 834 - NATIONAL ANTI-PROFITEERING AUTHORITY (Solera-l), this Authority vide order dated 08.08.2019 had made available the necessary documents to the applicant and thus, he should also get the documents/information of the Respondent. 49. This apart, Applicant No. 1 contended that the ledger account pertaining to him, maintained by the Respondent, clearly showed that full and final payment of ₹ 28,31,181/- (including all taxes) had been received from him (the Applicant No. 1) but the Respondent s submissions before the Authority were different from this truth and were hence untrue. 50. The Applicant No. 1 further averred that the Respondent had misreported before this Authority that the benefit of ITC to the Applicant No. 1 was @ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST period to the extent of 4.90%. The Respondent further claimed that he had issued credit notes dated 01.08.2018 to his buyers/customers for passing on the benefit on his own accord and as per his own calculations@ ₹ 75.75 per sq. ft. He further added that the receipt of credit notes issued by him had been acknowledged by the complainant as also other customers and that the Applicant No. 1 had also admitted to have received the credit note. 53. The Respondent further submitted that the benefit on account of additional input tax credit to the tune of 10.65% of the turnover has been miscomputed by the DGAP by arbitrarily applying the average method without any proper mechanism. 54. The Respondent also submitted that vide his submissions dated 10.04.2019 made. before the DGAP, he had furnished an undertaking to reverse an amount of Rs. (Rupee seven crore and ninety one only) representing input tax credit unavailed by him as per the provisions of Section 18 (4) read with Rule 42 of the CGST Act Rules. The Respondent further mentioned that the said reversal of ITC was effected in his GST returns (Form GSTR-3B) filed for the month of March 2019. The filing of the said Retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the annexures was only filed on 13.11.2018. Hence, the conclusion drawn in the DGAP s Report relating to the date of filing of the complaint by Applicant No. 1 was incorrect. The Respondent also reiterated that the Applicant was in full knowledge of the Respondent having issued credit notes for passing on the benefit of ITC in the post GST period and that Applicant No. 1 s letter dated 07.08.2018 was an admission of receipt of ITC credit at the rate of 75.75 per sq. ft. 57. The Respondent further mentioned that the DGAP, in his Report had alleged profiteering by him of 10.65%. Hence, while accepting that benefit of ITC to the extent of 4.96%, amounting to ₹ 4,08,20,676/- had been passed on, the DGAP had found that the total amount of benefit that needed to be passed on to the fiat owners aggregated to ₹ 9,96,18,637/-. On this issue, he drew reference to the study conducted by the State Level Screening Committee of Haryana on tax liability of builders/developers in the pre post GST periods which mentioned that on an average, the variance in the input tax credit in the post GST period as compared to the pre GST period worked out to approx. 4 to 5%. Further, he conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of ₹ 1,68,74,787.64 had already been passed on. 59. He further stated that it was trite law for taxing statutes to provide a mechanism for computation of value on which tax was to be paid and it had been held by several Courts including the Apex Court that in the absence of any computational machinery the charging provisions would be construed to have never included the transactions within its fold and no tax can be levied on such transactions. He further cited the judgements passed in the cases of B.C. Srinivasa setty (1981) 128 ITR 294 (SC) = 1981 (2) TMI 1 - SUPREME COURT , Palai Central Bank Ltd. (1984) 150 ITR 539 (SC) = 1984 (10) TMI 41 - SUPREME COURT and National Mineral Development Corporation (2004) 65 SCC 281 = 2004 (5) TMI 575 - SUPREME COURT . He also contended that the Hon ble Patna High Court has held in the case Larsen Toubro v State of Bihar 2004 (134) STC 354 (Pat.) = 2003 (11) TMI 565 - PATNA HIGH COURT which was affirmed by Supreme Court in the case of Voltas Ltd., (2007) 7 VST 317 (SC) = 2007 (5) TMI 18 - SUPREME COURT , that in absence of all exclusions which were to be prescribed for computation of tax, no tax was payabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He also furnished the Electronic Credit Ledger for the period 01.10.2018 to 14.08.2019 and copy of the letter dated 07.08.2018 issued by Applicant No. 1 to him as part of his submissions. 62. The Respondent again filed written submissions on 21.10.2019 vide which he reiterated his earlier submissions and also submitted copies of his GSTR 3B Returns for the period of January 2019 to March 2019. 63. Clarification was sought from the DGAP on the Respondent s submissions. The DGAP vide his Report dated 01.11.2019, reported that most of the issues raised by the Respondent in his submissions had been duly considered and incorporated in the DGAP s Report dated 14.06.2019: The DGAP has also reported that his mandate was to conduct investigation based on the recommendation of the Standing Committee on Anti-profiteering, The DGAP further stated that the investigation under Rule 129 of the CGST Rules, 2017 was a time bound matter. In the instant case, since the last date for submission of the Report was approaching, the Draft Report was prepared and put up for approval on 13.06.2019 which was approved and signed by the Director General of Anti-profiteering on 14.06.2019. Moreover, the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the pre GST period and in post GST period, such inputs suffered GST @ 5%. While computing Input GST, the amount of GST on such tax free items had also been considered by the DGAP which was to the detriment of the Respondent and the GST on such items which earlier were tax free had to be eliminated while computing possible profiteering. The DGAP mentioned that since certain inputs were exempted from VAT in pre-GST period, there was no credit/ ITC of the same in pre-GST period. However, these inputs suffered GST @ 5% in post-GST period and the ITC of the same was available in post-GST period. Therefore, the additional benefit of the said ITC was required to be passed on by him to his homebuyers in terms of Section 171 of the CGST Act, 2017. 68. The DGAP further clarified that the extent of profiteering would vary from case to case depending upon the facts and circumstances of each case and the nature of goods or services supplied. Therefore, the average profiteering arrived at by the Respondent from this Authority s orders and the average profiteering arrived at by the Haryana State Screening Committee on the basis of a comprehensive study could not be compared with an individu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djusted in the subsequent demand notes issued to the buyers. He also enclosed sample copies of the demand notes for evidencing that the credit notes have been adjusted in the subsequent demands. He also submitted details of the voluntary reversal of the unutilized Input Tax Credit affected by him in terms of first proviso of sub-section 4 of Section 18 of the CGST Act, 2017 amounting to ₹ 7,00,00,091/-(SGST - ₹ 3,04,61,609/- CGST - ₹ 3,04,61,609/- IGST- ₹ 90,76,873/- for the period 01.04.2018 to 31.12.2018 within the time limit prescribed under sub-section 9 of Section 39 of the CGST Act, 2017 in the GST return for the month of March 2019. He also drew reference to CBIC Circular No. 26/26/2017 dated 29/12/2017. The Respondent also submitted a copy of Electronic Credit Ledger showing unutilized Input Tax Credit of ₹ 7,19,46,200/- after discharge of liability upto the period till 31.12.2018 and a copy of his GST return for the month of March 2019, in which unutilized Input Tax Credit of ₹ 7,00,00,091/-for the period 01.04.2018 to 31.12.2018 (SGST - ₹ 3,04,61,609/-, CGST ₹ 3,04,61,609/- IGST of ₹ 90,76,873) has been shown as re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordingly, the hearing was closed vide Order of this Authority dated 18.12.2019. 74. We have carefully considered the Reports filed by the DGAP, submissions of the Respondent, the Applicant No. 1 and other material placed on record and it is revealed that the Respondent is executing his Andour Heights project under the Affordable Housing Scheme approved by the State of Haryana and is constructing both the residential and commercial units therein. Records also reveal that the Applicant No. 1 had filed an application before the Haryana State Screening Committee on Anti-profiteering and alleged that the Respondent had not passed on the benefit of input tax credit to him by way of commensurate reduction in price, in terms of Section 171 of the Central Goods and Services Tax Act, 2017. The Haryana State Screening Committee on Anti-profiteering conducted a prima facie verification of the application and after having satisfied itself that it was a case of profiteering in as much as the Respondent did not appear to have passed on the benefit of ITC, forwarded the said application with its recommendation to the Standing Committee on Anti-profiteering for further action, in terms of Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ethodology and Procedure vide its Notification dated 28.03.2018 under Rule 126 of the CGST Rules, 2017 which was also made available on its website for ready reference of the trade. As the facts of each case are different, no fixed mathematical methodology can be prescribed for each case separately but the principles for computation determined by this Authority have been followed in this case too. It is also pertinent that this methodology of computation is strictly in line with the provisions of Section 171 of the CGST Act, 2017. It is also worthwhile to note that this Authority has already determined the Methodology and Procedure under Rule 126 vide its Notification dated 28.03.2018 which is available on its website. However, the basis and the reasons for computing profiteering have been mentioned in Section 171 (1) of the above Act itself which require that any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices. Therefore, it is quite clear that both the above benefits are required to be passed on by commensurate reduction in the price on every product to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24.07.2018 whereas the respondent has claimed to have issued letters to his buyers on 18.07.2018 wherein he had informed them that he had already started passing on the benefit of ITC to them as per his own computation and that such benefit will be passed to the buyers till March 2019. From the above report of the DGAP, it is clear that at the time of filing of application, the Applicant No. 1 had not actually received the benefit, even if it was assumed that letters had been issued by the Respondent conveying his intent of passing on the benefit of ITC to his customers including the Applicant No. 1. In any case, the above claim of the Respondent does not have any bearing on the proceedings under Section 171 of the Act, ibid, since commensurate benefit of profiteering had, in any case, not been passed on to the buyers at the time of filing of the application or even during the period under investigation. Accordingly, the other contentions of the Respondent questioning the date of the application or inadequacies therein, also become irrelevant. We find it pertinent to mention that as a buyer/consumer, it is not expected of the Applicant No. 1 to have an immaculate knowledge of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght by the Applicant No. 1 contained sensitive business/commercial information relating to various third parties such as details of vendors, suppliers of materials, sub-contractors and home buyers and sharing the same could be prejudicial to the commercial interest of the Respondent. While deciding on this matter, it was also noted by the Authority that facts of this case were different from the facts of the case cited by the Applicant No. 1 and that the documents marked as confidential in the two cases were also different from each other. Hence it was decided to not share the records marked confidential with the Applicant No. 1. Thus, in terms of Rule 130 of the CGST Rules, 2017, the records that the Respondent had marked confidential were not provided to the Applicant No. 1. 80. We also observe that the Respondent, in his written submissions filed on 14.10.2019, has claimed that the DGAP s Report dated 14.06.2019, has recorded an incorrect finding whilst stating that the Respondent had benefited from additional ITC of 10.65% of the turnover, as this finding was based on the average method applied by the DGAP s on his own accord. In this regard, however, a perusal of the Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constituted to determine whether the above benefits have been passed on or not. Under Rule 123 Standing and Screening Committees on Anti-Profiteering have been constituted to prima facie look in to the complaints received from the complainants who have been denied the above benefits. Under Rule 129 office of DGAP has been created and empowered to investigate the complaints and under Rule 127 this Authority has been assigned the duty of determining whether these benefits have been passed on not. Under Rule 133 this Authority has been empowered to determine the above benefits, grant them to the eligible recipients and get the profiteered amount deposited. Under Section 171 (3A) of the CGST Act, 2017 read with Rule 133 (3) (d) of the above Rules, this Authority has been given power to impose penalty on the registered persons who do not pass on the above benefits. Under Rule 136 this Authority has been assigned power to get its orders monitored through the tax authorities of the Central or the State Governments. Hence, there is more than the adequate machinery required to implement the Anti-Profiteering measures and hence all the claims made by the Respondent on this ground are incorr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the profiteered amount has to be applied on case to case basis depending on the facts of each case and no fixed formula can be set for calculating the same 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. Even the 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. However, there can be no doubt that the above benefit has to be passed on as soon as the Respondent avails the benefit for discharging his output tax liability by utilising the ITC. Since, the Respondent is utilising the benefit of ITC every month through his GSTR-3B Returns he should also pass on the benefit by commensurate reduction in the price every month. The Respondent c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,00,00,091/-for the period 01.04.2018 to 31.12.2018 (SGST - ₹ 3,04,61,609/-, CGST ₹ 3,04,61,609/- IGST of ₹ 90,76,873/-) was reversed by him voluntarily. 88. In this context, It is pertinent to mention that the expression profiteering as explained under Section 171 of the CGST Act, means 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. The implication thereof, in respect of the instant case, is that the benefit of ITC which becomes available to the supplier, has to be passed on to the recipients, irrespective of whether the supplier utilizes the benefit or not. In other words, what is relevant to the computation of profiteering is the amount of ITC that became available to the supplier (i e. the Respondent) and the actual utilization/ reversal thereof is irrelevant for this purpose of the said computation. In other words, what is relevant for the purpose of computation of profiteering is the comparative availability of ITC in the pre-GST and post GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsal is effected only after the date on which completion/ occupancy certificate has been issued or from the date of first occupancy, whichever is earlier. In this case, however, the Respondent has effected the reversal much before the prescribed date and hence the said reversal by the respondent has to be viewed as an act that was carried out with the mala-fide intent of denying the passage of benefit of ITC to his customers/ homebuyers. Further, it is also a fact that the period of investigation by the DGAP in the instant case had ended on 31.12.2018 whereas the reversal was effected in March 2019 and reported in the GST return of March 2019, which was filed only in June 2019 by the Respondent. It is also a fact that at the time of reversal, a number of units were yet to be sold and occupancy certificate had not yet been received, which implies that the act of reversal was not only premature on the part of the Respondent but apparently also an afterthought aimed at hoodwinking the investigation with the sole mens-rea of avoiding the passing on of benefit of ITC to his customers/ homebuyers. The said reversal, having been done without the authority of law, effected much after the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determined on the basis of facts of each case, which include the stage of construction in the pre and post GST periods; the comparative accrual of ITC and the turnover (aggregate payments received from homebuyers/ customers) in the two periods; the instalments plans of the customers/ homebuyers; total area sold and the numbers of units sold and units that remain unsold and presence or otherwise of joint venture partners, etc. and hence the mathematical computation and result thereof differs from case to case within the real estate sector. Further, mathematical computation of profiteering in respect of supplies of other sectors, such as FMCG, services or cinema, are even more divergent as the facts in those cases are different from those of the real estate sector. Thus there cannot be any fixed mathematical formulation/methodology for determination of the quantum of benefit to be passed on and that each case has to be decided based on its specific facts. In this case profiteering has been computed by the DGAP on the basis of comparison of the ratios of Input Tax Credit to the total taxable turnover for the pre and post GST periods and we find no infirmity in the computation made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this provision has been given in the text of Section 171 of the CGST Act, 2017 itself. We also observe that the said provision clearly links profiteering to be a function of each supply of goods or services or both and hence, profiteering needs to be computed at the level of each tax invoice. From a plain reading of Section 171 (1) of the Act ibid, it is amply clear that the total quantum of profiteering by a registered person is the sum total of all the benefits that stood denied to each of the recipients/consumers individually. Therefore, we hold that the Respondent is under legal obligation to pass on the benefit of ITC to his buyers and he cannot be allowed to appropriate the same. 94. Based on the above facts it is clear that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period from April, 2016 to June, 2017 was 4.75% and during the post-GST period from July, 2017 to December, 2018, it was 15.40% as per Table B supra and hence it is established that the Respondent has benefited from the additional ITC to the extent of 10.65% [15.40% (-) 4.75%] of the turnover. Since, the above computations made in Table B have been done o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017. 96. 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 mentioned in detail of the preceding paras of this Order. As per the provisions of Rule 133 (1) (b) of the CGST Rules, 2017 it is further ordered that the Respondent shall refund the above profiteered amount to the flat buyers as per the details given by the DGAP in Annexure-14 without taking in to account the benefit which he has claimed to have passed on. The above amount shall be passed on by the Respondent along with interest @18% payable from the date from which the excess amount was collected by the Respondent from the buyers till the date of its payment within a period of 3 months from the date of this order failing which the same shall be recovered by the concerned Commissioner CGST/SGST and paid to the eligible house buyers as per their entitlement as per the provisions of CGST/SGST Acts. 97. Since, the DGAP has carried out the present investigation till 31.12.2018 only any further benefit of additional ITC which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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