TMI Blog2020 (6) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of Rule 129 (6) of the above Rules. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his above project in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus resorted to profiteering. Hence, he has committed an offence under Section 171 (3A) of the CGST Act, 2017 and therefore, he is apparently liable for imposition of penalty under the provisions of the above Section. Accordingly, a Show Cause Notice be issued to him directing him to explain 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. - Case No. 35/2020 - - - Dated:- 26-6-2020 - DR. B. N. SHARMA, CHAIRMAN, SH. J. C. CHAUHAN, TECHNICAL MEMBER, SH. AMAND SHAH, TECHNICAL MEMBER Present:- 1. None for the Applicants. 2. None for the Respondent. ORDER 1. The present Report dated 27.12.2019 has been received from the Applicant No. 2 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... informed the above Applicant over telephone and through e-mail regarding passing on the benefit of GST input tax credit and he had already passed on GST benefit of ₹ 23,575/- inclusive of GST to the above Applicant in the month of March-2019. The Respondent had further submitted that he had already passed on ITC benefit to all the eligible home buyers. 6. The Respondent had also submitted the following documents/information to the DGAP vide his above mentioned letters/e-mails during the course of the investigation:- (a) Copies of GSTR-1 Returns for the period from July, 2017 to June, 2019. (b) Copies of GSTR-3B Returns for the period from July, 2017 to June, 2019. (c) Copies of VAT Returns (including all annexures) ST-3 Returns for the period from April, 2016 to June, 2017. (d) Copies of all demand letters issued and sale agreement made with the Applicant. (e) Copies of Balance Sheets for FY 2016-17 and 2017-18. (f) Copy of Electronic Credit Ledger for the period from 01.07.2017 to 30.06.2019. (g) CENVAT/Input Tax Credit register for the FY 2016-17 and 2017-18 and 2018-19. (h) Details of VAT, Service Tax, ITC of VAT, CENVAT Credit f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,01,750 2. Within 15 days of the date of Issuance of Allotment Letter 12.05.2015 20.00% 3,94,800 12,199 4,06,999 3. Within 06 months of the date of Issuance of Allotment Letter 27.10.2015 12.50% 2,46,750 8,636 2,55,386 4. Within 12 months from the date of Issuance of Allotment Letter 27.04.0016 12.50% 2,46,750 2,46,750 5. Within 18 months from the date of Issuance of Allotment Letter 27.10.2016 12.50% 2,46,750 2,46,750 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Goods and Services Tax 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. Therefore, the DGAP has claimed that the ITC pertaining to the unsold units was outside the scope of this investigation and the Respondent was required to recalibrate the selling price of such units to be sold to the prospective buyers by considering the net benefit of additional ITC available to him post-GST. 11. The DGAP has further claimed that prior to 01.07.2017 i.e. before the GST was introd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,47,095 5. Turnover for Residential Flats as per Home Buyers List (E) 58,05,36,000 - - - 6. Turnover for Commercial Shops as per Home Buyers List (F) 4,50,45,463 - - - 7. Total Turnover (G)= (E)+(F) 62,55,81,463 22,06,62,493 19,35,12,000 41,41,74,493 8. Total Saleable Carpet Area (Excluding Balcony Area*)(in SQF)(H) 4,04,445 3,76,424 (Residential) 28,021 (Commercial) 4,04,445 9. Total Sold Carpet Area (Excluding Balcony Area*) (in SQF) relevant to turnover (I) 3,88,602 3,76,424 (Residential) 9,765 (Commercial) 3,86,189 10. Relevant ITC [(J)=(C)*(I)/(H)] or [(J)=(D)*(I)/(H)] 70,91,098 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017 to 30.06.2019 (Shops 01.07.2017 to 24.01.2018 (Flats) 25.01.2018 to 30.06.2019 Total 2. Output GST rate (%) B 12 12 8 3. Ratio of CENVAT credit/ Input Tax Credit to Total Turnover as per table - B above (%) C 11.72% 11.72% 11,72% 11.72% 4. Increase in input tax credit availed post-GST (%) D=11.72% less 10.59 1.13% 10.59 10.59 10.59 10.59 5. Analysis of Increase in input tax credit: 6. Base Price raised during July, 2017 to June, 2019 (Rs.) E 2,71,50,493 19,35,12,000 19,35,12,000 41,41,74,493 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the commercial shops sold by the Respondent during the period from 01.07.2017 to 30.06.2019, the benefit of input tax credit that needed to be passed on by the Respondent to the buyers of commercial shops came to ₹ 32,20,266/- which included 12% GST on the base amount of ₹ 28,75,237/-. Therefore, the total benefit of input tax credit that the Respondent was required to pass on during the period from 01.07.2017 to 31.03.2019 in respect of both the residential flats as well as the commercial shops, came to ₹ 4,83,04,691/- which included GST (@ 12% or 8%) on the base amount of ₹ 4,38,61,079/-. The home and commercial shop buyer and unit no. wise break-up of this amount has been given in Annexure-13 of the DGAP Report. This amount was inclusive of the profiteered amount in respect of the Applicant No. 1. It was also observed that the Respondent had supplied the construction services in the State of Haryana only. 16. The DGAP has further contended that the Respondent had submitted that he had passed on benefit of ₹ 1,85,25,5861- to the home buyers. A summary of category-wise input tax credit benefit required to be passed on and the benefit cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommercial Shop Buyers 36 10,118 - - - - Unsold as on 30.06.2019 7. Total Commercial (B) 112 28,021 2,71,50,493 32,20,266 9,37,648 22,82,618 Grand Total (C) = (A) + (B) 960 4,04,445 45,28,76,893 4,83,04,692 1,85,25,586 - 17. The DGAP has observed from the above Table-D that the benefit already passed on by the Respondent was less than what he ought to have passed on in case of 844 residential flats (Sr. 2 of Table-D), by an amount of ₹ 2,74,75,785/- and in case of 39 commercial shops (Sr. 4 of Table-D), by an amount of ₹ 22,82,618/-. The details of these amounts have been given in Annex-14 Annex-16 respectively of the DGAP s Report. Further, the DGAP has reported that the benefit already p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tial flats at Sr. 2 of Table-D involving amount of ₹ 2,74,75,7851- and (iii) 39 Commercial shops at Sr. No. 4 of Table-D involving amount of ₹ 22,82,6181-.The DGAP has further stated that the benefit already passed on by the Respondent to the buyers in column-G of Table-D has already been factored in the calculations and it was found that Section 171 of the Central Goods and Services Tax Act, 2017 appeared to have been contravened by the Respondent, inasmuch as the additional benefit of input tax credit @10.59% of the base price i.e. ₹ 2,97,92,134/- received by the Respondent during the period from 01.07.2017 to 30.06.2019, had not been passed on by the Respondent to 884 recipients (845 buyers of residential flats plus 39 buyers of commercial shops). These recipients were identifiable as per the documents provided by the Respondent, giving the names and addresses along with unit no. allotted to such recipients. Therefore, this additional amount of ₹ 2,97,92,134/- was required to be returned to such eligible recipients. 20. The DGAP has also stated that the present investigation has covered the period from 01.07.2017 to 30.06.2019. Profiteering, if any, fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as submitted the following information/ documents to this Authority during the hearings in respect of the other projects of the Respondent:- 1. Statement showing project-wise ITC/Cenvat credit availed and Turnover as per the Statutory Return (GST/ST/VAT Returns) for the period from 01.04.2016 to 30.06.2019:- (i) Turnover Summary and CENVAT Summary for 2016-17. (ii) Turnover Summary and CENVAT Summary for the period from April-2017 to June-2017. (iii) Turnover Summary and ITC summary for the period from July-2017 to March-2018. (iv) Turnover Summary and ITC Summary for the period from April-2018 to March-2019. 2. Project-wise list of all payments received from each of his buyers. 3. Balance Sheets for the year 2016-17, 2017-18 along with the Project-wise Trial Balance for the same period. 4. Summary of the Total number of apartment/flats/ commercial units/ residential units in the Project with total area of each flat. 5. Status of the project in terms of sold and unsold units as on 30.06.2019. d) That the interim ITC benefit has been passed on by him to the customers by way of credit notes and the same has been adjusted against their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t buyers of this project. The DGAP has also found that the Respondent has not reduced the basic prices of his flats/shops by 10.59% due to additional benefit of ITC and by charging GST at the increased rate of 12% on the pre-GST basic prices, he has contravened the provisions of Section 171 of the CGST Act, 2017. The DGAP has further submitted that the amount of benefit of ITC which has not been passed on by the Respondent or the profiteered amount came to ₹ 4,83,04,692/- which included 12% or 8% GST on the basic profiteered amount. The DGAP has also intimated that this amount of profiteering also included the profiteered amount of ₹ 57,488/- including 12% or 8% GST in respect of the Applicant No. 1. He has also supplied the details of all the buyers who have purchased flats/shops from the Respondent along with their unit numbers and the profiteered amount vide Annexures 14, 15 and 16 attached with the Report. 23. It is also revealed from the record that the Respondent has not raised any objection against the methodology adopted by the DGAP while arriving at the quantum of profiteered amount. The above methodology has also been approved by this Authority in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t required to be passed on and the benefit claimed to have been passed on by the Respondent have been given by the DGAP in Table- D supra. The DGAP has specifically admitted in his Report that for verification of the benefit already passed on by the Respondent he had summoned the credit notes and the payment ledger of the home buyers mentioned at Sr. No. 1 to 50, 201 to 250, 401 to 450 and 601 to 650 of the home buyers list which have been duly verified by him with the details submitted by the Respondent and found to be correct. In view of the above statement of the DGAP the Respondent is directed to return the ITC benefit of ₹ 33,731/- including the GST to the Applicant No. 1, ₹ 2,74,75,785/- including the GST to the 844 other flat buyers as per the details given in Annexure-14 and ₹ 22,82,618/- including the GST to the 39 commercial shop buyers mentioned in Annexure-16 as per the provisions of Rule 133 (3) (c) of the above Rules along with the interest @ 18% to be charged from the date when the above amounts were collected by the Respondent from the flat/shop buyers as all these buyers are identifiable as per the details furnished by the Respondent. However, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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