9911796707
TMI Blog2020 (11) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... "Paradise" project located in Sector-62, Gurgaon. The above Applicants had also alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) availed by him by way of commensurate reduction in the price of the above fiats. The aforesaid first application was considered by the Standing Committee on Anti-profiteering, in its meeting held on 13th December 2018, wherein it was decided to forward the same to the DGAP to conduct a detailed investigation into the allegation made in the complaint according to Rule 129 (1) of the CGST Rules, 2017. The second application was considered by the Standing Committee on Anti-profiteering, in its meeting held on 11th March 2018, wherein it was also decided to forward the same to the DGAP to conduct a detailed investigation. 2. On receipt of the recommendation from the Standing Committee on Anti-profiteering, the DGAP had issued a Notice dated 15.01.2019 under Rule 129 (3) of the above Rules, asking the Respondent to intimate as to whether he admitted that the benefit of ITC had not been passed on to the above Applicants by way of commensurate reduction in the price of the flats and in case it was so, to suo-moto compute the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d) Copies of all demand letters issued and sale agreement made with the Applicant. (e) Copies of Balance Sheet for FY 2016-17& 2017-18. (f) Copy of Electronic Credit Ledger for the period 01.07.2017 to 31.12.2018. (g) CENVAT/lnput Tax Credit register for the FY 2016-17 and 2017-18 and April 2018 to December 2018 (h) Details of VAT, Service Tax, ITC of VAT, CENVAT Credit for the period April 2016 to June 2017, for the project "Paradise". (i) List of homebuyers of the project "Paradise" along with details of benefit passed on. (j) Copy of RERA Registration Certificate of the Project "Paradise". (k) Copy of Tran-1. 7. The DGAP has also stated that all the documents placed on record were carefully examined by him and he had found that the main issues for determination were whether there was a reduction in the rate of tax or benefit of ITC on the supply of construction service by the Respondent after implementation of the GST w.e.f. 01.07.2017 and in case it was so, whether the Respondent had passed on the above benefits to the home buyers as per the provisions of Section 171 of the CGST Act, 2017 or not. 8. The DGAP has further stated that the Respondent, vide his le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100.00% 2,309,503 28,869 1,50,118 13,609 24,74,881 10. The DGAP has further stated that para 5 of Schedule-III of the Central Goods and Services Tax Act, 2017, defining 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 Il, sale of building". Further, Clause (b) of para 5 of Schedule Il of the Central Goods and Services Tax Act, 2017 reads as "(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of the completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier". In the light of these provisions, the DGAP has contended that the ITC of the units which were under construction but not sold was provisional ITC that may be required to be reversed by the Respondent, if such units would remain unsold at the time of issue of CC, in terms of Section 17 (2) & Section 17 (3) of the Central Goods and Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow:- Table-'B' (Amount in Rs.) Sr.No. Particulars Total (Pre-GST) April, 2016 to June, 2017 12% GST (01.07.2017 to 31 .12.2018) (Flats + Shops) 8% GST (25.01.2018 to 31.12.2018) (Flats) Total (Post-GST) (01.07.2017 to 31.12.2018) 1. CENVAT of Service Tax Paid on Input Services used for Commercial Shops (A) 15,15,855 - - - 2 Input Tax Credit of VAT Paid on Purchase of Inputs (B) 3,59,100 - - - 3 Total CENVAT/VAT Credit Available (C)=(A+B) 18,74,955 - - - 4 Input Tax Credit of GST Availed (D) - 49,99,880 1,67,13,313 2,17,13,193 5 Turnover from residential flats as per Home Buyers List (E) 36,42,65,250 - - - 6 Turnover from commercial shops as per Buyers List (F) 1,24,82,710 - - - 7 Total Turnover (G)=(E)+(F) 37,67,47,960 25,39,89,178 41,58,39,125 66,98,28,303 8 Total Saleable Area (Excluding Balcony Area) (in SQF) (H) 4,15,905 3,91,100 (Residential) + 24,805 (Commercial) 4,15,905 9 Total Sold Area (Excluding Balcony Area) (in SQF) relevant to turnover (l) 3,60,548 3,91,100 (Residential) + 6624.89 (Commercial) 3,97,724.89 10 ITC Relevant to Turnover [(J)=(C)*(I)/(H)] or [(J)=(D)*(I)/(H)] 16,25,398 2,07,64,06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of Increase in input tax credit: 6. Base Price raised from July 2017 to December 2018 (Rs.) E 38,118,553 215,870.625 415,839,125 669,828,303 7. GST raised over Basic Price (Rs.) F= E*B 4,574,226 25,904,475 33,267,130 63,745,831 8. Total Demand raised G=E+F 42,692,779 241,775,100 449,106,255 733,574,134 9. Recalibrated Basic Price H=E*(1-D) or 97.33% of E 32,100,788 210,106,879 404,736,220 651,943,887 10. GST on recalibrated basic price @ as applicable I=H*B 4,452,095 25,212,826 32,378,898 62,043,818 11. Commensurate demand price J=H+I 41,552,882 235,319,705 437,115,118 713,987,705 12. Excess Collection of Demand or Profiteered Amount K=G-J 1,139,897 6,455,395 11,991,137 19,586,429 14. The DGAP has also observed from Table-'C' that the additional ITC of 2.67% of the turnover should have resulted in commensurate reduction in the base price as well as cum-tax price. Therefore, in terms of Section 171 of the Central Goods and Services Tax Act, 2017, the benefit of the additional ITC was required to be passed on to the recipients. 15. Based on the aforesaid CENVAT/ITC ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,03,87,182 Further Benefit to be passed on as per Annex-18 Total Residential (A) 740 3,91,100 63,17,09,751 1,84,46,532 80,47,677 3. Commercial Shop Buyers 23 6,625 3,31,18,553 11,39,897 1,15,119 10,24,778 Further Benefit to be passed on as per Annex-19 4. Commercial Shop Buyers 1 345 0 0 19,987 -19,987 No Consideration Paid Post-GST, However, Respondent passed on benefit. Details as er Annex-20 5. Commercial Shop Buyers 3 1,036 0 0 0 0 No Consideration Paid Post-GST and no benefit assed on. 6. Unsold Shop 60 16,798 0 Unsold Units Total Commercial (B) 87 24,805 3,81,18,553 11,39,897 1,35,106 Grand Total (C)=(A)+(B) 827 4,15,905 66,98,28,304 1,95,86,429 81,82,783 17. The DGAP has observed from the above Table - D that the benefit claimed to have been passed on by the Respondent was less than what he ought to have passed on in the case of 740 residential flats including that of the Applicants (Sr. 1 & 2 of the above table), by an amount of Rs. 1,03,98,855/- and in the case of 23 commercial shops (Sr. 3 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018, had not been passed on by the Respondent to the above Applicants and 761 other recipients. On this account, the Respondent has realized an additional amount to the tune of Rs. 11,673/- from the Applicant No. 1 which included both the profiteered amount @ 2.67% of the turnover (base price) and 12% GST on the said profiteered amount. Further, the investigation has revealed that the Respondent has also realized an additional amount of Rs. 1,14,11,960/- which included both the profiteered amount @ 2.67% of the turnover (base price) and GST on the said profiteered amount, from the Applicant No. 2 as well as 761 other recipients who were not Applicants in the present proceedings. 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 Rs. 1,14,11,960/- 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 31.12.2018. Profiteering, if any, for the period post-December, 2018, has not been examined by him, as the exact quantum of ITC that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /Cenvat credit availed and Turnover as per the Statutory Return (GST/Service Tax/VAT Returns) for the period from 01.04 2016 to 31 .12.2018. b) Summary of Project wise Turnover and ITC/CENVAT Credit. i. Turnover Summary and CENVAT Summary for 2016-17. ii. Turnover Summary and CENVAT Summary April-2017 to June-2017. iii. Turnover Summary and ITC summary for the period July2017 to March-2018. iv. Turnover Summary and ITC Summary for the period April-2018 to March-2019. v. Total VAT Credit summary and Detailed Chart of VAT Credit for the Sector-62 Project. c) A Project-wise list of all payments received from each of his buyers is enclosed. d) Balance Sheet for the year 2016-17, 2017-18 along with the Project-wise Trial Balance for the same period. e) Summary of the Total number of apartment/flats/ commercial units/ residential units in the Project with the total area of each flat. f) Status of the project in terms of the sold and the unsold units as of 30.06.2019. g) Registry between the landowner and builder for the Sector-62. h) Sample Credit Letters and Respective Ledger for the period from 01.04.2016 to 31.12.2018. 24. The Respondent vide his above submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Four) buyers, on a sample basis, showing the amount of ITC benefit which the Respondent had claimed to have passed on, as is mentioned in the below Table:- Sr. No. Name of Customer Contact No. Unit No. Profiteering amount to be passed Amount of ITC credit already Passed Credit to be passed (Excess assed 1 Saurabh Goyal 9810035634 T3-1103 28,287 31,442 -3,155 2 Sudesh Ahuja T5-103 28,287 31,442 -31155 3 Kuldeep 9466892318 T6-101 13,585 15,041 -1 ,456 4 Usha Gupta 9953540928 T5-503 28,287 31,442 -3,155 5 Ritu Malhotra 9313885992 T4-304 28,287 31,442 -3,155 6 Raghav Seth 8010343948 T4-704 28,287 31,442 -3,155 7 Mannath Jandotra 9891199701 T4-108 28,287 31,442 -3,155 8 Naresh Kumar Narang 9919664001 T3-1008 28,287 31,442 -3,155 9 Chandeep Singh 9999965598 T5-407 28,287 31,442 -3,155 10 Sandeep Tripathi 9873649036 T1-1107 28,287 31,442 -3,155 11 Rahul Jha 9899787802 T6-907 13,585 15,041 -1,456 12 Girish Garg 9971285671 T5-808 28,287 31,442 -3,155 13 Sunita Punia 9811142130 T5-1307 28,287 31,442 -3,155 14 Deepak Bhatia 9871260018 T5-704 28,287 31,442 -3,155 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0827893 T1-1108 28,287 31,442 -3,155 53. Rajeev Sharma 9999071808 T1-701 25,282 28,043 -2,761 54. Abhishek Dutt 9891310696 T1-607 28,287 31,442 -3,155 55. Poonam Ahluwalia 9896655522 T1-507 28,287 31,442 -3,155 56. Mukesh Chand 9810167980 T1-305 25,282 28,043 -2,761 57. Priya Yadav 9350459178 T1-208 28,287 31,442 -3,155 58. Rohit Prabhakar 8860618063 T1-204 28,287 31,442 -3,155 59. Ashok Kumar 9212259667 T1-503 28,287 31,442 -3,155 60. Sumitra Kumari 9873857976 T1-1104 28,287 31,442 -3,155 61. Preeti Grover 9899430103 T1-1206 25,282 28,043 -2,761 62. Vikram Singh Bisht 9810661518 T5-106 25,282 28,043 -2,761 63. Krishan Kumar Goel 9818667886 T5-108 28,287 31,442 -3,155 64. Sumit Uppal 7503925622 T5-102 25,282 28,043 -2,761 65. Jayant Kumar Vatsa 9413460303 T6-702 13,585 15,041 -1,456 66. Sunil Kumar 8826475294 T6-708 13,585 15,041 -1,456 67. Sukhveer 9899595588 T6-1010 13,585 15,041 -1,456 68. Jatin Raheja 8447808877 T5-502 25,282 28,043 -2,761 69. Nirmala 9911284599 T5-506 25,282 28,043 -2,761 70. Poonam Pokhariyal 9971712986 T5-1007 28,287 31,442 -3,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 12% or 8% on the pre-GST basic price. The DGAP also reported that the Respondent has thus contravened the provisions of Section 171 of the CGST Act, 2017. The DGAP further reported that the amount of benefit of ITC which had not been passed on by the Respondent, i.e. the aggregate profiteered amount, came to Rs. 1,95,86,429/- including the GST applicable on the basic profiteered amount of Rs. 1,78,84,716/-. The DGAP also reported that the above aggregate amount of profiteering also included the profiteered amount of Rs. 25,282/- (inclusive of GST as applicable) for each of the Applicant No. 1 and 2. 30. It was clear to us from the perusal of the above facts that the Respondent had indeed benefited on account of ITC to the extent of 2.67% of his turnover during the post-GST period, i.e. from July 2017 to December 2018 and hence the provisions of Section 171 of the CGST Act, 2017 had been contravened by the Respondent since he had not passed on the above benefit to his home buyers. Further, he had profiteered to the extent of Rs. 1,95,86,429/-, inclusive of GST @ as applicable, on the base profiteered amount of Rs. 1,78,84,716/ Further, it was clear to us that the Respondent had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce amount that was yet to be passed on to each of the home buyers. 32. The DGAP has submitted his report dated 28.02.2020 after reinvestigating the case under Rule 133 (4) of the CGST Rules, 2017 on 02.03.2020 to this Authority. The above report of the DGAP is discussed in the subsequent paras. 33. The DGAP has stated that after receipt of Order No. 3/2020 dated 02.01.2020 from this Authority, a letter dated 22.01.2020 was issued to the Respondent calling for all credit notes, demand notes, and ledger accounts of all homebuyers for verification of the amount of benefit of ITC passed on by the Respondent. The Respondent submitted the soft copies of ledgers and a summary list of ITC passed on to the homebuyers in his project 'Paradise, Sector -62" and stated that he had passed on the complete ITC benefit in most of the cases and in the remaining cases he would pass on the ITC benefit based on final order issued by this Authority. 34. The DGAP has stated that the case was reinvestigated based on data submitted by the Respondent on 03.02.2020. The main issues which were examined by the DGAP are given as follows:- a) To verify the total amount of Input Tax Credit benefit claimed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Total (C)=(A)+(B) 827 1,95,86,429 2,06,88,394 25,08,041 36. The DGAP has stated from the above table-E that out of 740 home buyers, in the case of 148 home buyers, the Respondent was required to pass on the ITC benefit of Rs. 39,44,122/- whereas the Respondent had passed on the ITC benefit of Rs. 20,03,391/- only, therefore, required to pass on the remaining ITC benefit of Rs. 19,40,731/- to these 148 home buyers, details of which were given in Annexure-3 of the DGAP's report. The DGAP has further stated that out of 23 commercial shop buyers, in the case of 9 commercial shop buyers, the Respondent was required to pass on the ITC benefit of Rs. 5,80,100/- whereas the Respondent had passed on the ITC benefit of Rs. 12,790/- only, therefore, he was required to pass on the remaining ITC benefit of Rs. 5,67,310/- to these 9 commercial shop buyers, details of which were given in Annexure-5 of the DGAP's report. 37. The above Report was considered by this Authority in its meeting held on 03.03.2020 and it was decided that the Applicants and the Respondent be asked to appear before this Authority on 26.03.2020. The Respondent was issued a notice on 04.03.2020 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarifications dated 02.07.2020 on the above submissions on 06.07.2020. 41. The DGAP vide clarifications dated 02.07.2020 has stated that in the erstwhile pre-GST regime, various taxes and cesses were being levied by the Central Government and the State Governments, which got subsumed in the GST. Out of these taxes, the input tax credit of some taxes was not allowed in the erstwhile tax regime. In the case of construction service, while the input tax credit of Service Tax was available, the input tax credit of Central Excise Duty paid on inputs was not available to the service provider. Such input taxes used to get embedded in the cost of the goods or services supplied and resulted in increased prices. With the introduction of GST with effect from 01.07.2017, all these taxes got subsumed in the GST and the input tax credit of GST has been made available in respect of all goods and services unless specifically denied. Broadly, the additional benefit of the input tax credit in the GST regime would be limited to those input taxes, the credit of which was not allowed in the pre-GST regime but allowed in the GST regime. This additional benefit was required to be passed on by the suppli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the claim of the Respondent and to verify whether he had actually passed on the ITC benefit to his buyers or not. Accordingly, the DGAP has submitted his Report dated 28 02.2020 under Rule 133 (4) of the CGST Rules, 2017. The DGAP vide his above report has stated that the Respondent had passed on an amount of Rs. 1,89,36,751/- to 740 home buyers and Rs. 17,51,743/- to 24 commercial shop buyers. The DGAP has further illustrated that the Respondent was further required to pass on the ITC benefit of Rs. 19,40,731/- to 148 home buyers and Rs. 5,67,310/- to 9 commercial shop buyers the details of which have been given in the Annexure-3 and Annexure-5 of the DGAP report dated 28.02.2020. 44. It is clear from the perusal of the above Reports that the DGAP has computed the ratio of CENVAT to the turnover for the pre GST period and compared it with the ratio of ITC to the turnover for the post GST period and then computed the percentage of the benefit of additional ITC which the Respondent is required to pass on to the flat buyers. The above ratios have been computed by the DGAP based on the Service Tax and GST Returns filed by the Respondent during both the above periods and the ITC R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... might accrue to such recipients. Based on the above admission of the DGAP, the claim of the Respondent of having passed on the benefit of ITC passed as per Table-E is held to be correct. However, the Respondent shall pass on the remaining amount of ITC benefit to the 148 home buyers and 9 commercial shop buyers as per Annexure3 and Annexure-5 of the DGAP report. He shall also not adjust the excess benefit passed on to the flat buyers mentioned in Annexure-2, Annexure-4, and Annexure-6 against the benefit to be passed on to the beneficiaries mentioned in the Annexure-3 and Annexure-5 of the DGAP report. 46. The Respondent has contended that the Service Tax was being computed @15% during the pre GST period which was increased to 18% in the post GST period and hence this incremental tax of 3% paid on the services should not form part of the profiteered amount as it did not amount to the additional benefit of ITC. In this regard, it would be pertinent to mention that the Respondent cannot appropriate the additional ITC which he has earned after coming into force of the IT as it does not form part of his profit. The ITC available to him by paying GST @18% on the purchase of the service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remaining 148 residential flat buyers and Rs. 5,67,310 to the remaining 9 commercial shop buyers, mentioned at Sr. 2 & 4 of Table-E, as per Annexure-3 and Annexure-5 of the DGAP's Report dated 28.02.2020. The details of the profiteered amount and the buyers have been mentioned by the DGAP in the above Annexures. These buyers are identifiable as per the documents placed on record and therefore, the Respondent is directed to pass on an aggregate amount of Rs. 25,08,041/- to the above mentioned 157 buyers 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-3 and Annexure-5 attached with the Report dated 28.02.2020 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-2, Annexure-4, and Annexure-6 against the benefit which is due to the beneficiaries as per Annexure-3 and Annexure-5. In case the above amount is not refunded by the Respondent during the above period it shall be recovered by the concerned C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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