9911796707
TMI Blog2020 (7) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... The above Applicant had alleged in his application that the Respondent had resorted to profiteering, while he had sold flat No. F-1149 in his project "16th Park View", situated in Sector-19A Yamuna Express Way, Jaypee Green Sports City (East), Land Parcel, Mirzapur, Greater Noida to him. The above Applicant had also alleged that the Respondent had charged GST @ 12% from him on the consideration paid by him before the GST had come into force w.e.f. 01.07.2017. He had further alleged that he had paid the full amount for the purchased fiat on or before 30.06.2017 i.e. before the implementation of the GST and got the demand letter on 02.07.2017 in which no GST was charged on the consideration paid before 01.07.2017, but later on, in July 2017, the Respondent had raised demand for payment of GST @ 12% from him on the amount paid prior to the imposition of the GSL Along with the application, the Applicant had submitted the following documents:- (i) Duly filled in Form APAF-1. (ii) Clarification about applicability of GST on under construction and ready-to-move-in property issued by the CBEC (iii) Applicant's Ledger in the books of M/s. Gaursons. (iv) Correspondence of Applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Applicant could not be redressed through anti-profiteering provisions, However, this issue of charging of GST can be examined by the jurisdictional GST authorities." 4. The above Report was considered by this Authority in its sitting held on 30, 10.2018 and since the allegation of the above Applicant was not found to be maintainable by the DGAP it was decided to hear the Applicants on 29.11.2018. Sh. Shivam Agarwal the Applicant No. 1 was present in person along with his Counsel Sh. Prabhat Kaushik and the DGAP was represented by Smt, Gayatri, Deputy Commissioner. The Applicant No. I had stated during the hearing that the Respondent had not given the benefit of ITC to him which the Respondent had availed w.e.f. 01.07.2011 He had also submitted copy of the demand letter dated 17.07.2017 which showed that the Respondent had informed the above Applicant that his instalments were due on 21.07.2017 i.e. after coming in to force of the GST due to which it prima facie appeared that the above Applicant was entitled to the benefit of ITC. He had also submitted a copy of the letter dated 23.04.201B written by the Additional Commissioner, Commercial Taxes, Govt. of Uttar Pradesh, Lu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the GST @12% was collected on the last instalment the benefit of ITC should have been passed on to him. He had also contended that only 8% GST was collected from him by the Respondent by adjusting 4% tax as the net ITC benefit, however, he questioned the justification for passing on only 4% as no calculations were provided to him. 7. This Authority vide its order dated 17.01.2019 had asked the DGAP to file reply to the submissions made by the Respondent however, no specific reply on each issue raised by the Applicant was filed by the DGAP on the ground that all the issues/documents enclosed therein had been covered in his Report dated 23.10.2018. The DGAP was also asked to file his reply vide order dated 22.01.2019 on the submissions of the above Applicant dated 22.01.2019 and vide his Report dated 30.01.2019 the DGAP had stated that as per the Point of Taxation Rules, 2011, applicable to the Service Tax "where the invoice was raised or payment was received prior to the appointed date under GST (01.0712017), the point of taxation would arise before the appointed day and thus, such transaction would attract Service Tax and not GST". The DGAP had also quoted the provisions of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier price of Rs. 28,52,850/- (inclusive of ST @4.5%) but is not passing the benefit of input tax credit taken by him. (ii) The report received from Office of the Additional commissioner, HQ Lucknow in this regard along with the documentary evidences viz GSTR- 3B and Tran-1 form filled by the builder was perused and it was found that the builder had taken ITC in all the GSTR-3B (From July' 2017 to January' 2018) returns (copy enclosed) and utilized it for payment of GST. Therefore the contention of the complainant that benefit of ITC was not passed on to him prima-facie appears to be correct. (iii) It has also been noticed that the builder has made payments for his tax liabilities pertaining to reverse charge by cash as per the current legal provisions and has utilized it for payment of his liabilities of CST on his outward supplies. No other payment of taxes has been made through the cash edger." 10. It was absolutely clear from the perusal of para (ii) above that the recommendation Of the Uttar Pradesh Screening Committee made to the Standing Committee for investigation in to the complaint lodged by the Applicant No, I was based on the report of the Additional Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,89.20,185/- as benefit of ITC to the buyers of the flats. The Respondent had also submitted that he had 33 (Thirty Three) more projects in the brand name of "Gaur" Where he has already passed on the commensurate ITC benefit to the flat buyers. List of all these projects along with percentage of ITC benefit claimed to have been passed on by the Respondent was submitted as is given below:- S.No. Project Name Total No. of Units as on 31/12/2018 GST Benefit to per GST Customers GST Benefit to per GST Customer After 25.01.2018 (Due to rate change) 1. Gaur Siddartham 2476 7.50% 3.50% 2. Gaur City-I (1st Avenue] 1668 NIL NIL 3. Gaur City-1(4th Avenue] 680 NIL NIL 4. Gaur City-1 (5th Avenue] 1320 NIL NIL 5. Gaur City-1 (6th Avenue) 1118 NIL NIL 6. Gaur City-1 (7th Avenue) 2888 60% Carpet Area upto 60 Sq. Mtr-3.5% other-6% 7. Gaur City-1 (7th Avenue High street) 92 4% 4% 8. Gaur City-2 (City Arcade) 119 4% 4% 9. Gaur City-2 (City Galleria) 146 Nil NIL 10. Gaur City-1 (City Plaza) 218 NIL NIL 11. Gaur City-1 (Gaur City Center} 3638 4% 4% 12. Gaur City Mall (Office Spaces) 1373 4% 4% 13. Gaur Mall (Gaur Suits) 135 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-investigated the case and submitted his Report dated 10.12.2019 to this Authority on 11.12.2019, 14. The DGAP has stated that this Authority vide order No. 03/2019 dated 28.03.2019 has referred the matter back to him under Rule 133 (4) of the Rules, to conduct thorough investigation on all the relevant aspects of the present complaint and to compute ITC benefit to be passed on by the Respondent to the Applicant No, 1 as well as other buyers in respect of project "16 Park View". Further this Authority has also directed to compute the benefit of ITC in respect of the i'2f'd Park View' and "GYC Galleria" projects and also to conduct investigation in respect of all the ongoing projects of the Respondent after coming in to force of the GST in which the benefit of ITC was required to be passed on by the Respondent. 15. The DGAP has also stated that on receipt of the matter from this Authority, it was decided to initiate investigation in respect of project "16th Park View" only and not in respect of the other projects in the absence of any allegation of profiteering in respect of the other projects. In order to collect evidence necessary to determine whether the benefit of ITC has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in cost by whatsoever reason and any consideration to the incremental ITC. Even going by the various calculations made during the course of the proceedings before this Authority, the benefit of ITC actually passed on by the Respondent was more than the earned ITC benefit due to introduction of the GST. (d) That the provisions of the Section 171 of the CGST Act, 2017 have ignored certain aspects which might arise till the completion of the project, There were various instances when the Respondent could lose the ITC in future due to various reasons or events, Therefore, any such contingencies and situations which led to the reduction/reversal/loss of credit in GST would resultantly cause an impact on the GST credit already passed/liable to be passed on. Some of the circumstances are mentioned below.- (a) Reversal of ITC in future due to receipt of Completion Certificate. (b) Overflow of ITC at the end of the Project etc. Therefore, such critical factors needed to be given appropriate weightage and the Respondent should be allowed to make the final computation at the end of the project 17. The DGAP has also stated that apart from the above, during the personal hearing hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the analysis of the benefit arising due to the GST even the same was contingent and has not actually accrued till date. (vi) That during the course of the implementation of the GST, the demand has decreased and it was at all-time low. The same was due to various reasons including introduction of the GST as a key reason. To address this issue, various brokers have been appointed by the Respondent to revive his plunged sales, The appointment of the brokers has caused rise in the cost due to commission. (vii) That the project has been delayed due to some unusual reasons i.e. agitation by the farmers; therefore, interest cost has increased due to delay in demand. The implementation and compliance cost has also gone up due to implementation of the GST and the Real Estate (Regulation and Development) Act, 2016. (viii) That the calculation of benefit of ITC post introduction of GST and its distribution was a critical and complex task for the Respondent and the industry. Further. due to lack of availability of mechanism and regulation for identification of profiteering, industry as a whole was unable to calculate the effect of the benefit due to implementation of the GST, becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 Summery of projected cost Total ITC H=F+G 25,61,15,597 Benefit per sq. ft. under GST I=Total of (H)/Total of (E) 134 134 134 Total J-D+I 134 171 NET TOTAL BENEFIT Total benefit K=E*J 8,44,61,140 21,91,45,335 30,36,06,475 Benefit passed on till date (sold unit) On issued demand (L) 4,35,95,097 - 4,35,95,097 Report of customer wise detail for GST benefit passed On future Demand (M) 4,99,17,644 - 4,99,17,644 Benefit to be passed on (unsold unit) (N) 21,91,45,335 21,91,45,335 Excess passed K-(L+M+N) (90,51,601) Nil (90,51,601) It was further submitted by the Respondent that distribution of the benefit in accordance with the advisory issued by the CREDAI had gone beyond the actual benefit which was earned proportionate to the demand raised in GST era. Therefore, there was no question of not complying with section 171 of the CGST Act i.e. the Anti-profiteering measures, However, the Respondent was obliged to reconsider these benefits at the completion of the project and would make adjustments accordingly. (xii) That the benefit of 4% of basic amount of the deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and Rs, 500/- for Adhoc Charges. and Rs, 25,000/- for IFMS. The details of the amounts and taxes paid by the above Applicant to the Respondent have been furnished by the DGAP as is given in Table-'D' below:- Table-'D' (Amount in Rs.) S.No. Payment Stage Due Date Basic % BSP Adhoc Charges IFMS Services Tax VAT GST GST benefit Total Amount Paid 1. Booking 05.06.2017 10.00% 273.000 500 12,380 - - - 285,860 2,85,285 2. Installment 21.07.2017 30.00% 819.00 - - 92,280 - 917,280 22,74,156 3. On Completion 6th Floor Roof Slab 21.07.2017 15.00% 409.500 - - 49,140 - 458,640 4. On Completion 10th Floor Roof Slab 21.07.2017 10.00% 273.000 - - 32,760 - 305,760 5. On Completion 14th Floor Roof Slab 21.07.2017 10.00% 273.000 - - 32,760 - 306,760 6. On Completion 18th Floor Roof Slab 21.07.2017 10.00% 273.000 - - 32,760 - 305,760 7. On Completion 22nd Floor Roof Slab 21.07.2017 5.00% 136,500 - - 16,380 (87,326) 65,554 8. At the time offer for fit out Not yet due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he additional ITC available to the Respondent and the amounts received by him from the above Applicant and other recipients post implementation of GST, had to be taken into account to determine the benefit of ITC that was required to be passed on, 24. The DGAP has also claimed that para 5 of Schedule-III of the CGST Act, 2017 (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 CGST 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 had been received after issuance of completion certificate, where required, by the competent authority or after his first occupation, whichever was earlier." Thus, the ITC pertaining to the residential units which were under construction but not sold was provisional ITC which might be required to be reversed by the Respondent, if such units remained unsold at the time of issue of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t services only (no credit was available in respect of Central Excise Duty paid on the inputs) and also ITC of VAT paid on inputs was not available to him. Further, post-GST, the Respondent could avail ITC of GST paid on all the inputs and the input services including the sub-contracts, From the information submitted by the Respondent for the period from April, 2016 to March, 2019, the details of the ITC availed by him, his turnover from the impugned project i' Park View", the ratios of ITC to turnovers, during the pre-GST (April, 2016 to June, 2017) and post-GST (July, 2017 to March, 2019) periods, have been furnished by the DGAP as is given in the Table-'E' below:- Table-'E' (Amount in Rs.) S.No. Particulars April, 2016 to March 2017 April, 2017 to June, 2017 Total (Pre-GST) July, 2017 to march, 2018 April, 2018 to March, 2019 Total (Pre-GST) (1) (2) (3) (4) (5)=(3)+(4) (6) (7) (8)=(6)+(7) 1. CENVAT of Service Tax Paid on input service used (A) 2,34,01,522 1,17,49,823 3,51,51,345 - - - 2. Input Tax Credit of VAT Paid on Purchase of Inputs (B) - - - - - - 3. Input Tax Credit of GST Availed (C) - - - 8,90,10,873 20,67,41,284 29,57,52,157 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collected G=E+F 3,41,78,37,131 9. Recalibrated Base Price H=E*(1-D) or 94.23% of E 2,87,55,60,650 10. GST @ 12% I=H*B 34,50,67,278 11. Commensurate demand price J=H+I 3,22,06,27,928 12. Excess Collection of Demand or Profiteering Amount K=G-J 19,72,09,203 From Table-'F' above, the DGAP has submitted that the additional ITC of 5.77% of the turnover should have resulted in the commensurate reduction in the base prices as well as cum-tax prices of the flats Therefore, in terms of Section 171 of the CGST Act, 2017, the benefit of such additional ITC was required to be passed on by the Respondent to the respective recipients. 28. The DGAP has also averred that on the basis of the aforesaid CENVAT/input tax credit availability in the pre and the post-GST periods and the details of the amount collected by the Respondent from the Applicant No. 1 and other home buyers during the period from 01.07.2017 to 31.03.2019, the amount of benefit of ITC that needed to be passed on by the Respondent to the recipients, came to Rs. 19,72,09,203/- which included 12% GST on the base profiteered amount of Rs. 17,60,79,645/- The home buyer and unit no. wise break-up of this amount has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Annex-16 5. 295 4,04,330 0 0 0 0 Unsold Units Total 3104 38,79,960 3,05,16,40,295 19,72,09,203 28,22,65,749 31. From the Table the DGAP has stated that the benefit passed on by the Respondent to the recipients was less than what he ought to have passed on in case of 90B residential flats including the Applicant (Sr. 1 & 2 of Table above) by an amount of Rs. 1,04,77,604/- The details of these amounts have been given in Annexure-15 of the DGAP's Report dated 10.12.2019. Further, benefit passed on by the Respondent was higher than What he should have passed on, in respect of 1901 residential flats (Sr. 3 & 4 of Table above) by an amount of Rs. 9,55,34,150/-. The details of this excess benefit passed on by the Respondent have been given in Annexure-16 of the DGAP's Report dated 06.12.2019, However, the excess benefit passed on to some recipients, could not be set off against the additional benefit required to be passed on to the other recipients and it could only be adjusted against any future benefit that might accrue to such recipients. 32. The DGAP has further stated that the benefit of additional ITC to the tune of 5.77% of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST Act, 2017 should not be fixed. During the course of the hearings no one appeared for the Applicants and the Respondent was represented by Sh. Atul Gupta and Sh. Vishal Gill, Chartered Accountants. The Respondent has filed his written submissions dated 0801.2020 and 22.01.2020. The issues raised by the Respondent in his above submissions have been mentioned in the subsequent paras. 35. The Respondent has submitted that the incremental tax paid on services should not form part of profiteering. He has further elaborated that during the Pre-GST period, the rate of Service Tax charged on the input services was 15%, the credit of which was available, whereas during the GST regime, common GST rate for services has been increased from existing (pre-GST) 15% to 18%, the credit of which was also available in post GST. Therefore, no additional benefit has accrued to the respondent on availment of ITC related to input services in the GST regime as credit for the same was available in both the pre and post GST eras and the only difference was that the rate on services has been increased from 15% to 18%. The Respondent has submitted following illustration to strengthen his contention:- &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould also have been considered while calculating the profiteering amount. The submissions of the Respondent dated 08.01.2019 were forwarded to the DGAP for his Report. 37. The DGAP vide his supplementary Report dated 23.01.2020 has submitted as follows:- A. On the issue of incremental Tax paid on services should not form part of profiteering and the issue of profiteering amount should be restricted to ITC availed w.r.t Goods only:- The DGAP has stated that Section 171(1) of CGST Act, 2017 required that the ITC availed by the Respondent should be quantified and passed on to the recipients. The benefit of ITC post introduction of GST would be available only on the amount which bore higher tax incidence i.e. the amount paid/raised post introduction of GST, which has been quantified in DGAP's report dated 10.122019. The DGAP has further stated that ins the Report dated 10.12.2019, increase in the ITC as a percentage of total turnover availed by the Respondent post-GST has been quantified. The input or input service wise availability or non-availability of ITC prior and post implementation of GST has not been examined. Further, there should be no extra liability on the Respondent on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and was referred to the Standing Committee on Anti-Profiteering under Rule 128 (2) of the above Rules. The Standing Committee had considered the above complaint in its meetings held on and 08.08.2018 and forwarded it to the DGAP for investigation under Rule 129 (1) of the above Rules. The DGAP vide his Report dated 23.10.201b had found that the allegation of passing on the benefit of ITC was not found to be correct, Accordingly, this Authority had issued notice to the Applicant No, 1 to present evidence in support of his allegation. On the basis of the documents produced by the above Applicant this Authority was prima facie led to believe that he was eligible to get the benefit of ITC, Accordingly, the Respondent was directed to file reply why he should not be asked to pass on the benefit of ITC to the above Applicant. The Respondent in his submissions dated 19.12.2019 had admitted that he had passed on the benefit of ITC to the above Applicant as well as his other buyers on all the projects which he was executing. Keeping in view the above admission of the Respondent this Authority vide its order dated 28.03.2019 passed under Rule 133 (4) of the above Rules had directed the DGAP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on benefit of Rs. 28,22,65,749/- to the home buyers on account of ITC. He has also submitted sample copies of the credit notes along with his submission dated 08.11.2019 vide which he has passed on the benefit of ITC, The DGAP has categorically admitted in his Report dated 10.12.2019 that he has verified the above claim of the Respondent and it has been found to be correct. He has also submitted Table-G supra and stated that the benefit passed on by the Respondent to the recipients was less than what he ought to have passed on in case of 908 residential flats including the Applicant No. 1 (Sr. 1 & 2 of Table) by an amount of Rs. 1,04,77,604/-. The details of these amounts have been furnished vide Annexure-15 of the DGAP's Report dated 10.12.2019, It has also been stated that the benefit passed on by the Respondent was higher than what he should have passed on, in respect of 1901 residential flats (Sr, 3 & 4 of Table) by an amount of Rs. 9,55,34,150/-. The details of this excess benefit passed on by the Respondent have been given in Annexure-16 of the DGAP's Report dated 10.12.2019. He has further stated that the excess benefit passed on to some recipients, could not be set off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of the Respondent is frivolous and hence it cannot be accepted. 43. The Respondent has also contended that the profiteering amount should have been restricted to the ITC availed in respect of goods only proportionate to the sold and unsold area, In this respect it would be appropriate to mention that provisions of Section 171 (1) of the above Act require that the benefit of ITC should be passed on to the recipients by commensurate reduction in prices. The above provisions nowhere stipulate that the above benefit is to be passed on only on the ITC which has become available on account of purchase of the goods. For computing the benefit of ITC its availability during the pre GST period has to be compared with its availability post GST implementation and hence these computations have to be made on the basis of the overall figures of ITC and turnovers which have been furnished by the Respondent himself thorough his Tax Returns and the ITC Registers, As per the CGST Act, 2017 no bifurcation of the ITC is permissible on account of the goods and services purchased nor separate records of the same are allowed to be maintained. In case the plea of the Respondent is accepted he w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit of ITC of Rs. 1,04,77,604/-in case of 908 residential flat buyers including the Applicant No. 1, mentioned at Sr. 1 & 2 of Table-G. as per Annexure-15 of the DGAP's Report dated 10.12.2019. The details of the profiteered amount and the buyers have been mentioned by the DGAP in the above Annexure. These buyers are identifiable as per the documents placed on record and therefore, the Respondent is directed to pass on an amount of Rs. 1,04,23,791/- and the amount of Rs. 53,813/- to the other flat buyers and the Applicant No. 1 respectively along with the interest @ 18% per annum from the dates from which the above amount was collected by him from them till the payment is made, within a period of 3 months from the date of passing of this order as per the details mentioned in Annexure-15 attached with the Report dated 10.12.2019 in terms of Rule 133 (3) (b) of the above Rules. The Respondent shall not adjust any excess ITC benefit which he has passed on as per Annexure-16 against the benefit which is due to the beneficiaries as per Annexure-15. In case the above amount is not refunded by the Respondent during the above period it shall be recovered by the concerned Commissioner CG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xecuting 29 projects, had passed on benefit of ITC in respect of 14 projects and had not charged GST in respect of 12 projects. He had also admitted that he had completed 10 projects before coming in to force of the GST and sold plots only in respect of the 2 projects. Once the Respondent had himself admitted to have executed and passed on the benefit ot ITC no complaint or evidence was required to further investigate whether the benefit of ITC has been correctly computed and passed on to the buyers. It would also be relevant to mention that once this Authority has ordered the DGAP to cause further investigation under the powers given to it under Section 171 (2) of the CGST Act, 2017 read with Rule 133 (4) of the above Rules and para 9 of the Methodology & Procedure" determined by it under Rule 126 the DGAP has no authority to refuse investigation on the ground that there is no complaint in respect of the other projects. 51. It is evident from the above that the Respondent has himself admitted vide Annexure-B of his additional submissions dated 14.03.2019 that he was executing 33 projects, had passed on benefit of ITC in respect of 14 projects and had not charged GST in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 50 NIL NIL 31. 2nd park View - 1.55% 1.55% 32. GYC Galleria - 3.96% 3.96% Keeping in view the self-admission of the Respondent in which he has stated that he is liable to pass on the benefit of additional ITC as per the provisions of Section 171 of the above Act, the above projects are required to be investigated as there are sufficient reasons to believe that the Respondent is required to pass on the benefit of additional ITC to the eligible house buyers in respect of the these projects. This Authority cannot refuse to examine and take suo moto cognizance of the benefit of ITC which the Respondent is apparently liable to pass on to the buyers of the above projects as per the provisions of Section 171 (2) of the CGST Act, 2017 once it has been brought to its notice. This is in consonance with the order dated 10.02,2020 passed by the Hon'ble High Court of Delhi in W.P.(C) 969/2020, in the case of M/s. Nestle India Ltd. & another v. Union of India & others = 2020 (2) TMI 671 - DELHI HIGH COURT in which the Hon'ble Court has observed that:- "We, however, make it clear that this interim order shall not come in the way of the National Anti Profiteering Authority in cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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