TMI Blog2022 (5) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... 4%. This confirms that in the post-GST period, the Respondent has been benefited from additional ITC to the tune of 0.82% (1.84%-1.02%) of his turnover and the same is required to be passed on by him to the recipients of supply, including the Applicant No. 1. The Authority finds that the computation of the amount of ITC benefit to be passed on by the Respondent to the eligible recipients works out to Rs.3,87,94,4931/-. The Authority finds that the Respondent has profiteered by an amount of Rs.3,87,94.493/- during the period of investigation i.e. 01.07.2017 to 30.04.2020 and determined the said amount under Rule 133 (1) of the CGST Rules, 2017, the benefit of which has not been passed on to the recipients - 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. This Order having been passed today falls within the limitation prescribed under Rule 133 (1) of the CGST Rules, 2017. - Case No. 11/2022 - - - Dated:- 12-5-2022 - SH. HITESH SHAH, TECHNICAL MEMBER, SH. AMAND SHAH, TECHNICAL MEMBER SH. PRAMOD KUMAR SINGH, TECHN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that on receipt of the said reference from the Standing Committee on Anti-profiteering, a Notice under Rule 129 of the Rules was issued by DGAP on 04.06.2020, calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the Applicant No.1 by way of commensurate reduction in price and if so, to suo moto determine the quantum thereof and indicate the same in his reply to the Notice as well as furnish all supporting documents. Vide the said Notice, the Respondent was given an opportunity to inspect the non-confidential evidences/information submitted by the Applicant No. 1 during the period 19.06.2020 to 22.06.2020, which the Respondent couldn't avail of. However, the Respondent requested for copy of the complaint and details of description of the goods or services in respect of which the proceedings had been initiated and summary of the statement of facts on which allegations were based vide email dated 23.06.2020, and the same was provided accordingly. 7. The DGAP has further reported that the Applicant No. 1 vide his letter dated 25.06.2020, received in the DGAP on 13.07.2020 submitted that he wanted to voluntarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20, 02.11.2020, 16.11.2020, 01.12.2020, 08.12.2020, 09.12.2020, 10.12.2020, 16.12.2020, 18.12.2020, 21.12.2020, 22.12.2020, 23.12.2020, 24.12.2020, 28.12.2020 and 29.12.2020. 11. The DGAP has further stated that vide aforementioned letters/e-mails, the Respondent submitted the following documents/information: (a) Copies of GSTR-1 Returns for the period July, 2017 to April, 2020. (b) Copies of GSTR-3B Returns for the period July, 2017 to April, 2020. (c) Copy of Electronic Credit Ledger for the period 01.07.2017 to 30.04.2020. (d) Copies of Tran-1 for the period July, 2017 to December, 2017. (e) Copies of VAT ST-3 Returns for the period April, 2016 to June, 2017. (f) Copies of all demand letters, sale agreement/contract issued in the name of the Applicant No. 1. (g) CENVAT/ITC register for the period April, 2016 to April, 2020. (h) Copy of Balance Sheet for FY 2016-17 2017-18. (i) Tax rates, pre-GST and post-GST. (j) Details of turnover, output tax liability/GST payable and ITC availed and his reconciliation with the turnover as per the list of home-buyers. (k) List of home buyers in the project Pursuit of a Radical Rhaps ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lude 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, 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 proportionate additional ITC available to him post-GST. 15. The DGAP has further submitted that in response to the Notice of Initiation of investigation dated 13.05.2019, subsequent reminders and summons, the Respondent vide his submission dated 29.12.2020 stated:- a. That the Project was in 3 phases. Phase-1 commenced on Dt.14.10.2017. Phase 2 was commenced on Dt. 02.01.2019. Phase 3 was commenced on Dt. 17.08.2020. b. That separate accounts were maintained for each phase of the project Pursuit of a Radical Rhapsody as mandated under erstwhile CENVAT Credit Rules 2004, present CGST Rules 2017 RERA regulations. c. That besides phase 1, other phases of the project were launched post GST regime, where availability of additional ITC was known ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17-08-2020 h. That it was clear that the credit on Input Services was admissible to the Respondent under Rule 2 (1) of the Cenvat Credit Rules 2004, which was utilized to pay Service Tax. i. That he was also allowed to avail the credit of VAT paid on the purchase of goods under Section 10 of the Karnataka VAT Act (hereinafter referred to as KVAT Act ), which was utilised to pay outward VAT liability. 16. The DGAP further stated that under KVAT Act, Work Contractor who opt to go under Regular scheme was entitled to avail ITC. The term 'Sale' as defined under Section 2 (29) (b) of the KVAT Act, included transfer of property in goods involved in the execution of a Works Contract. In this regard, upon analysing the KVAT Act, and invoices raised by the Respondent to home-buyers it was observed that VAT for Work Contract was levied @14.5% on 70% the construction value of the demand made from the home-buyers. Thus, it was evident that there was a direct correlation between the demand made from the home buyers and the VAT charged upon them. 17. The DGAP has further reported that VAT was charged on the Work Contract agreement between the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ENVAT Credit Rules, 2004, which was in force at the material time. Moreover, since the Respondent were paying VAT @14.50% on 70% of the construction value under KVAT Regular Scheme, he were eligible to avail ITC of VAT paid on the inputs. Further, post-GST, the Respondent could avail the ITC of GST paid on all the inputs and input services. From the information submitted by the Respondent for the period April, 2016 to April, 2020, the details of the ITC availed by them, his turnover from the project Pursuit of Radical Rhapsody-I II and the ratio of ITC to the turnover, during the pre-GST (April, 2016 to June, 2017) and post-GST (July, 2017 to April, 2020) periods, was furnished in table- 'A' below: (Pursuit of a Radical Rhapsody) Table 'A' (Amount in Rs.) S.No. Particulars (Pre-GST) (Post-GST) April, 2016 to June, 2017 July, 2017 to April, 2020 1 Credit of Service Tax Paid on Input Services (A) 54,126,139 - 2 Input Tax Credit of VAT Paid on Inputs (8) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue. 21. The DGAP has submitted that the basis of the figures contained in table- 'B' above, the comparative figures of ITC availed/available as a percentage of the turnover in the pre-GST and post-GST periods and the recalibrated basic price as well as the excess collection (profiteering) during the post-GST period, was tabulated in table- 'B' below: Table B (Pursuit of a Radical Rhapsody)* (Amount in Rs.) S.No. Particulars Pre-GST Post- GST 1. Period A April, 2016 to June, 2017 July, 2017 to April, 2020** 2. Output tax rate (%) B 16.15% 12.00% 3. Ratio of CENVAT/VAT/GST Input Tax Credit to Total Turnover as per Table - B above (%) C 1.02% 1.84% 4. Increase in input tax credit availed post-GST (%) D - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eering, the next step was to quantify the same. On the basis of the aforesaid CENVAT/input tax credit availability in the pre and post-GST periods and the demands raised by the Respondent on the Applicant No. 1 and other home buyers towards the value of construction on which GST liability @ 12% was discharged by the Respondent during the period 01.07.2017 to 30.04.2020, the amount of benefit of ITC not passed on to the recipients or in other words, the profiteered amount comes to 3,87,94,493/- which included GST on the base profiteered amount of 3,46,37,940/-. The buyer (of flats sold up to 30.04.2020) and unit no. wise break-up of this amount was given for Project Pursuit of Radical Rhapsody-I II . 24. The DGAP has further stated that the investigation, it was pertinent to mention here that above computation of profiteering was with respect to 380 home buyers among all the live customers as on 30.04.2020 in the project Pursuit of Radical Rhapsody-I II . 25. The DGAP has further submitted that the above discussion, it appears that post-GST, the benefit of additional ITC to the tune of 0.82% of the turnover, accrued to the Respondent and the same was required to be passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent was directed to file written submissions. The Respondent has filed written submissions on 15.02.2021 wherein the Respondent has submitted:- (a) That there were three separate agreements entered by the Respondent with the Applicant No. 1 on 13/06/2016 namely in respect of property at 1114 of Pursuit of Radical Rhapsody Phase I: I. Agreement for sale II. Construction agreement III. Interior customization supplementary agreement (ICSA) That the Respondent replied to DGAP vide letter dated 12/10/2020 with the copies of all the three agreements entered with the Applicant No. 1 for unit No. 1114 and also intimated the deliberations he had regarding reduction in price in the final bills. The Applicant No. 1 was under the wrong impression the ITC was being paid in cash and when explained in detail he agreed for adjustment of the same in the final settlement. The Applicant No. 1 informed the Respondent that he had withdrawn the complaint filed before the DGAP stating that he had realized his mistake and was withdrawing his complaint. The Applicant No. 1 had also forwarded copy of the same to him. In view of withdrawal of the complaint the Respondent requested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1, the agreement was only for construction. Till then neither the Supply of goods nor the provisions of service was complete. It was not a case where money was paid in cash and item was delivered across the table. In such cases it might be possible that the reduction in price would be effective immediately at the time of paying the money. In the Construction Sector most of the time the Applicant No. 1payed the money at a later date and the constructor provided the services before and the payments were normally in stages. It was very important to note the fact that the supply Construction Service was 'continuous supply of service' and each stage could not be considered as individual supply to quantify the reduction in price and to pass on corresponding benefit of ITC. It was a case where the ITC was availed was on the investment made by the Respondent and not of the Applicant No.1 for that matter. Hence attributing the innuendo to his motive appeared to be not correct when the facts were otherwise and he had to be given time to settle the benefit of ITC in the final stages after correctly arriving at the exact figures rather than the imaginary figures based on the ratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such assumptions was baseless, concocted and erroneous. Further for the comparison DGAP was taking the percentage completion of 53% from the RERA Report but the same RERA Report for Phase II when it indicated percentage completion as 29% was not palatable to the DGAP. The DGAP was not agreeing with the completion of 29% in case of Phase II in 3 months but the same RERA Report of 31.12.2020 for 1st Quarter showed completion of 33.92% for which he had no objections and agreed that Phase Ill commenced after GST. This was a diabolical approach of the DGAP and was legally not tenable. (d) That the DGAP ought to have taken into consideration the total area of construction in respect of Phase Phase it and Phase III and then compared the time factor required to complete the project or for that matter the %age of construction in 3 months' time before concluding that Phase II commenced pre-GST to determine the Anti-Profiteering. The comparative figures of the saleable area of construction in respect of Phase I, II and III has been furnished in the Table below:- Phase I Phase II Phase III Reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teering. Hence, the Respondent requested this Authority to consider the Profiteering only in respect of Phase I which commenced prior to GST period and accordingly he had calculated the Profiteering based on the same methodology as adopted by the DGAP. The details of data arrived at calculating was from Phase I and attached to his above written submission. As per his calculation based on the methodology adopted by the DGAP the profiteering amount appeared to be Rs. 1,06,42,551/- and not Rs. 3,87,94,493/- as claimed by the DGAP. Hence, he requested this Authority to restrict his profiteering amount. (h) That other major point the DGAP had assumed that the commencement of Phase II started in the pre GST itself which was in contradiction to his claim of commencement of Phase Ill post GST for the reasons that certain units in tower 5, 6 and 7 were sold in pre GST period itself. This assumption was far from facts and any inference arrived at based on false assumption needed to be discarded ab-initio. The data provided by the Respondent indicated in the case of Phase II, in respect of units namely Mr. Nagappa Pillappa and M/s Bennet Coleman Co. Ltd. certain pre-launch bookings wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . For providing a standard measure to customers and to maintain a uniformity across projects, Total Environment had evolved a system wherein the customer was assured that 80% of the Saleable Area was Carpet Area and therefore the Saleable area was calculated as follows: [Super Built-up Area] = [Carpet Area]/[0.80] OR [Carpet Area] x [1.25] The carpet area included the areas of toilets, bathrooms, balconies, internal stairs, terrace gardens if built on concrete slabs and 1/3rd of the area of private gardens, if any, allotted on natural soil, as well as 50% of the area of service platforms. vi. The Cancellation of this Advance offer commitment by the Intending Purchaser/s was not feasible until the project had been launched - unless the Approvals for the Phase I of the project was delayed beyond 31.12.2012. vii. The above unit could not be transferred until the 1 st installment of Advance had been paid in full. After the First installment (Advance) had been paid in full and the Agreement for Sale signed, the unit could be transferred at a cost of INR 5,00,000/- (Rupees Five Lakhs only) and in such case, the potential Transferee would have to meet and be approv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se ensure that you was completely comfortable with his design philosophy. xvii. The apartment level numbering started with 1 at the lowest level - therefore an apartment on level 1 was equivalent to a ground floor apartment, level 2 was on the first floor, 3 on the 2nd floor and so on. xviii. The apartment number was a four digit number where the first digit represented the Block, the 2nd 3rd digits represented the Level on which it was located and the 4th digit represented the apartment type on each floor. Therefore, apartment 1032 was In Block 1, on the 3 rd level (2nd floor), Type-2. xix. All cheques were to be drawn in the name of the Respondent. (i) That from the above said clauses of the agreement it was clearly seen that the offer was only pre-launch offer and none of the approvals were obtained at the time of this agreement. There was always an option for the buyer to sell this offer to anybody else. The pre-launch agreement did not mean the property was already sold. After the commencement of the project the buyer was once again required to enter into sale agreement and Construction Agreement and paid the amount of advance/ installment separately. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were maintained for each tower. Further under RERA the Central legislation which was applicable in the Real estate sector which was implemented in Karnataka on 10.07.2017 almost coinciding with GST implementation. The Respondent had registered each phase as a separate project under RERA and maintained separate accounts for each of him which was evident from the date of approval of RERA and the various monthly statements submitted to RERA. Each of these phases commenced on different dates, details of ITC of input services and KVAT accrued had been separately maintained for each of the phases as per the CENVAT Credit Rules 2004 and tax liability of Service Tax and KVAT was separate for each of these phases. In case of Phase I the work had commenced on 19.10.2015 whereas the work commenced for Phase II much later GST regime and Phase III post GST regime as well. That was in case of Phase II and Phase III work commenced only after implementation of GST. The Phase I project had commenced before implementation of GST on 19.10.2015. If different towers were considered as one project and credit of one Phase was clubbed with that of other Phase it could jeopardize the interest of home buye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it notes on account of cancellation of contracts or as a result of rebates offered imposed a challenge for tax adjustments on the refundable portion and this might increase tax burden and the developer could not refund the tax amount to customers. (o) That credit and the taxable value did not synchronize in the same month or the same period. The credit and the taxable value did not correlate in the same period. The agreement for the sale of premises entered with the buyers and the Respondent had specified milestone for recovery of the amount. Normally the Invoice was raised only after completion of milestones whereas the credit was accrued to him on incurring expenditure for continuation of the project. Hence there was no synchronization between the credit availed and the value of the taxable services provided by him during any period would definitely vary. (p) That agreement for sale of premises entered into between the buyer and the Respondent had specified the milestones for recovery of the amount the invoice could be raised only on achieving milestones whereas the credit accrued to him on incurring expenditure for construction of the project. Therefore, there was no s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for each of the towers were maintained. Further, under the RERA, a central legislation, applicable on the Real Estate sector which was implemented in Karnataka on 10.07.2017, almost coinciding with the GST implementation, the Respondent had registered each tower as a separate project under RERA and maintained separate accounts for each of them which was also evident from the invoices. (u) That each of the phase had commenced on a different date, details of ITC of input services and KVAT accrued had been separately maintained for each of the phases as per the Cenvat Credit Rules, 2004 and tax liability of Service Tax and KVAT was separate for each of these Phases. In case of Sri Venugopal Gella others v/s M/s Shapoorji Palanji (Relationship Properties Pvt. Ltd.) Bangalore in the Case no. 59/2020 dated 31.08.2020 the Authority had held ... The DGAP had further mentioned that if different towers were considered as one project and credit of one tower was clubbed with the other tower, it could jeopardize the interest of the home-buyers of one tower at the cost of another, Further, given the different stages of construction of each tower, the Completion Certificates received fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he DGAP in all the cases and accordingly the investigations was continued once the recommendations of the State Screening Committee and Standing committee was received Further, the ITC accrued on purchase of the material and the GST was payable on accrual basis and the project wise Cenvat / Input tax account was to be maintained by the builder under extant Rules pre / post GST. Even if the submissions of the Respondent were considered, the Respondent could have passed on the benefit of ITC on provisional basis, which he had not done. c. That for the averments made by the Respondent at para 10, 11, 12 of his written submissions it was clarified that as per the RERA Reports submitted by the Respondent for the quarter ending March, 2019, the percentage of completion in respect of the ongoing Phase-I commenced much earlier was 53% whereas the percentage of completion in respect of Phase - II wherein the RERA certificate had been received on 02.01.2019 was 29% only. Following were the details regarding the work completion for phase I II: Phase I Phase II Land Portion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from time to time irrespective of the nomenclature adopted. The cancelled units and units sold post Occupancy Certificate had not been considered for computation of profiteering. g. That for the averments made by the Respondent at para 17, 18 19 of his submissions it was stated that the element of profiteering had been computed in respect of Phases I and II clubbed together following the procedure adopted by the DGAP in all his cases in respect of Construction Sector and upheld by the Authority in such cases. h. That for the claim made by the Respondent at para 20 of his submissions it was clarified that the submission of the Respondent was not tenable as the Report of the DGAP had been submitted under Section 171 of the CGST Act, 2017. i. That for the contention raised by the Respondent at para 21 of his submissions it was clarified that for the units cancelled and unsold had been excluded for computation of profiteering. j. For the contentions raised by the Respondent at para 22 to 25 of his written submissions it was clarified that the profiteering amount had been computed following the procedure adopted by the DGAP in all his cases in respect of Construct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e builder at a loss than profit. The true intention and the spirit of the anti-profiteering law was not to burden the builder with imaginary profiteering arrived at by the Authorities and its consequential passing on to the client without any basis but should be based on the true and correct quantifiable legally justifiable profit that had to be transferred and this could be done only at the end of the completion of the project. Nowhere in the CGST Act it was specified that the benefit of ITC had to be passed on provisional basis immediately on availment of ITC nor did any Section of CGST Act contemplate passing the ITC provisionally. That being the case, the DGAP's version that since the Respondent had availed the ITC benefit it should be passed on immediately on provisional basis was only a presumption not backed by Law. The availment of ITC could not be postponed infinitely as specific provisions of time frame was provided for the availment of ITC. Hence the Respondent had availed the ITC credit as and when due. However, that could not be the only reason to pass on nor the reason to quantify profitability due to the availment of ITC. It was ludicrous to presume when there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r correctly arriving at the exact figures rather than the imaginary figures based on the ratio adopted on certain assumptions which might not reflect the true and correct verifiable amount. This fact was clearly understood by the State Screening Committee and had clearly stated in his Report that the additional ITC available to Respondent should have been apportioned against the installments towards the price of the fiat . c. That other major point the DGAP had assumed that the commencement of Phase II was in the Pre-GST era itself which was in contradiction to his claim of commencement of Phase III post GST. The DGAP has stated that certain units in tower 5, 6 and 7 were sold in pre GST period itself. This assumption was far from facts and any inference arrived at based the on false assumptions needed to be discarded ab-initio. The data provided by the Respondent indicated in the case of Phase II, in respect of units namely Mr. Nagappa Pillappa and M/s Bennet Coleman Co. Ltd. etc. certain pre-launch bookings were made and the data of these pre-launch bookings were duly provided to the DGAP in his replies. Copies of these entire pre-launch booking offers and the agreements we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. of units Saleable Area (in sq ft) No. of units Saleable Area (in sq ft) 468 1725952 227 772393 365000 The area, number of units approved, plan layout etc. all were different under each of the Phases and same amount of time, effort and resources would not be required to prepare the land to begin construction of different phases, each with its specific different specifications, purpose (Residential Commercial), starting at different point of time separated by several years. The RERA Reports and approval plans for Phase II and Phase III clearly indicated these details. So, there was no logic to club together each of the separate phases into one single project defying the regulations and declarations made under RERA, another Central regulation. Further, there were no quarterly progress Reports from date of RERA implementation till the period of approval of Phase II with RERA, which in itself was a testimony to the fact that Phase II was a separate project launched separately at a later date. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s Conscient Pvt. Ltd. had already finalized the stand of the DGAP that Section 171 of the CGST Act was not applicable in a case where the project had been initiated post GST implementation. Similarly, in other cases the DGAP had taken this stand that where a project had been initiated after GST implementation, Section 171 of the CGST Act might not be attracted. However, in his reply under para 13 14 ,the DGAP had stated that profiteering had been determined using the same computing procedure as in all his cases in respect of Construction Sector and upheld by this Authority, as per Rule 126 of the CGST Rules, 2017, only 'The Authority as constituted under Rule 122 of the CGST Rules might determine the methodology and procedure for determination as to whether the reduction in the rate of tax on the supply of goods or services or the benefit of ITC had been passed on by the registered person to the recipient by way of commensurate reduction in prices. However, it was clear that no such methodology and procedure had been determined and notified by the Authority. In absence of any such methodology, the DGAP was at liberty to adopt any methodology. Further, under Rule 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , consideration was defined in Section 2 (31) as, (a) Any payment made or to be made, whether in money or otherwise, in respect of, in response to. or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government. (b) The monetary value of any act or forbearance, in respect of in response to, or for the inducement of, the supply of goods or services both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Govt. or a State Govt: Provided that a deposit given in respect of the supply of goods or service or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply . In the present case the advance received was accounted in his books of accounts as refundable deposit even the pre-launch term sheet and the conditions prescribed clearly established that the amount received was only pre-deposit which needed to be refunded at the time of booking. The law was very clear that the deposit given in respect of supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for determination of profiteering. The DGAP here was trying to mislead the Authority to the detriment of interest of builders and home-buyers alike by saying that the element of profiteering had been calculated in respect of phase I II clubbed together following the procedure adopted by DGAP in all his cases in respect of construction sector and upheld by this Authority. In this regard, it was not only contrary to the directions of the Authority, but also went against the spirit of affidavits filed by the DGAP and the Authority before various judicial forums in similar cases where the Authority had filed affidavits that Credit of one project might not be clubbed with other project else it should jeopardize the interest of the home-buyers of one project at the cost of benefit to the other. In this regard, the DGAP had deliberately chosen to overlook the bifurcation of ITC across the projects submitted vide email dated 24.12.2020 though the same had been made an annexure of Report of the DGAP. The Report of the DGAP had chosen to ignore the consolidated bifurcation of ITC for Pre-GST and Post-GST period across each phase, to inflate the alleged amount of benefit of Input Tax Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of profit or ITC to customers was unfair and illogical. i. That argument presented by the Respondent was not fully considered by the DGAP while commenting. It was said by the DGAP that the cancelled booking and unsold units were not considered for computation of profiteering. The other argument was on the discounts which might be inevitable in future dates. It was normal practice that there might be discounts offered in future installments. This situation supported the stand of the Respondent that only on completion of supply, profit could be arrived at for the purpose of anti-profiteering action. j. That no specific reasoning was given by the DGAP to follow the procedure of computation. Just because in the earlier cases it was upheld by this Authority did not absolve the DGAP from calculating the correct profiteering amount. Hence the DGAP's reply was not in tune with law. k. That the DGAP had put the onus on the Authority, in objection as to how the amount of profiteering for the period subsequent to the period April 2020 should be determined. The methodology adopted by the DGAP was totally fallacious, inaccurate and misleading, and was already subject to challe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors and amount collected in Phase-II. c. Copies of receipt of advances for Phase-II. d. RERA approval Certificates of Phase I and Phase II with application copies. e. Copy of Form 4 Certificate in respect of Phase II as on 31.03.2019. 34. We have carefully considered the Reports filed by the DGAP, all the submissions and the documents placed on record, and the arguments advanced by the Respondent. The Authority finds that, the Respondent vide his submissions has contended that when the Applicant No. 1 had withdrawn his Application, it was incumbent upon the DGAP to close the investigation. In this regard, it is pertinent to mention that there is no provision envisaged under the CGST Act, 2017 or the Rules there under to drop verification/Investigation of profiteering once the Complainant/Applicant withdraws his complaint. The same analogy was being followed by the DGAP in all the cases and accordingly the investigation was continued once the recommendations of the State Screening Committee and Standing Committee were received. The Standing Committee had forwarded this case with the comments Prima facie evidence found. State Screening Committee had submitted re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been designated as Wing 1 to Wing 7 of Building 1. It has been approved as one construction with all common amenities viz. connecting walkways, connecting bridges, connecting driveways, fire access driveways etc. by the then Competent Authority. It is this very same approved plan and project which has now after the enactment and enforcement of the RERA been bifurcated into Phase I and Phase II for the purpose of registration under the said Act. The Authority finds that, the Respondent has been obtaining amounts towards bookings of specific flats/apartments designated by specific flat/apartment numbers in the Tower numbered 5, 6 7. Such amounts have been procured/obtained prior to 1.07.2017 and prior to registration under the RERA either of the so called Phase I or Phase II. 37. The Authority finds that, the Respondent in their submissions have claimed that, Towers 1 to 4 are registered under the RERA as Phase I whereas Towers 5 to 7 have been registered under the RERA as Phase II. Based on such separate registrations under the RERA, the Respondent claims that both phases be considered separately as separate Projects and cannot be clubbed. In addition, the Respondent has subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilar document pertaining to the Project Pursuit of a Radical Rhapsody, submitted by the Respondent, during the investigation by the DGAP or during proceedings before this Authority. 40. The Authority finds that, the Respondent has in their submissions dated 1.04.2022 categorically stated that they had got approval of the Bruhat Bengaluru Mahanagar Palike (BBMP) for the entire Project i.e. Pursuit of a Radical Rhapsody. Such approved Project Plan has been submitted by the Respondent to KRERA after the enactment and enforcement of the RERA and is available online on the KRERA Website. Such Project Plan as approved does not show any demarcation between a Phase I and a Phase II. Rather, the Competent Authority had approved the Project Plan inter-alia for Building no. 1 with Wings numbered from 1 to 7 which now the Respondent claims to be Towers numbered 1 to 7 in two Phases I and II. 41. On the facts and records as narrated above, the Authority finds that, the Project Pursuit of a Radical Rhapsody was approved prior to 1.07.2017 by the Competent Authority. The Authority finds that the Respondent has been taking bookings for specific units in the said Project. The Authority finds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not have any evidentiary value. The Respondent has also contended that the total amount received as on 30.06.2017 (pre GST) was not fully for the period of Service Tax regime and all the money received after 01.07.2017 (post GST) need not be the amount attributable to GST era. In this regard, the Authority finds that as per RERA Reports submitted by the Respondent for the quarter ending March, 2019, for Phase-I II, the percentage of completion in respect of the on-going phase-I was 53% whereas in respect of Phase-II it was 29%. The percentage of completion in both the cases included land portion also as submitted by the Respondent in his written submissions. However, the site preparation was a significant factor in the Construction Sector in as much as the construction work could not commence unless the land was made suitable for construction. Further, as seen from the Respondent's submission itself, it was evident that the Towers 5 to 7 and villas 50 to 64 belong to Phase-II and certain units had been sold in the pre GST period itself and certain amounts had been received (as per documents provided by the Respondent) which attract tax in as much as the said amount was with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, tax was payable on the demands raised by the Respondent under the law. Once the expression of interest is offered to the homebuyer and the amount is received for provision of service at a later date, the amount received is taxable under the Finance Act, 1994 read with Point of Taxation Rules, 2011. 45. The Respondent has also claimed that in the absence of specific instructions, it was difficult to determine the benchmark pre-GST price for passing on the benefit by reduction in the prices. In this connection, the Authority finds that as per Section 171 (1) of the CGST Act, 2017 itself which states 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. The Respondent has got benefit of additional ITC which was required to passed on to the recipient of supply. The Authority finds that, the facts of each case are different so quantum of profiteering is determined by taking into account the particular facts of each case. The Authority finds that the additional ITC which has accrued to the Respondent on account of the implementation of the GST w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced, the Respondent was eligible to avail CENVAT credit of Service Tax paid on the input services. However, CENVAT credit of Central Excise Duty paid on the inputs was not admissible as per CENVAT Credit Rules, 2017, which was in force at the material time. Further, the Respondent was paying VAT @ 14.50% on 70% of the construction value under Karnataka VAT Regular Scheme, he was eligible to avail ITC of GST paid on all the inputs and input services. Therefore, the ratio of ITC to turnover for the calculation of profiteered amount is based on ITC of Service Tax and VAT for pre GST period and ITC of GST for post GST period on the basis of information submitted by the Respondent for the period April, 2016 to April, 2020. 50. The Respondent vide his submission has also stated that he was yet to finalise the projects and high value goods and services were consumed only in the finishing stage of Construction Service. He has also submitted that each tower was launched at different point of time, pricing decisions of units in each tower varied from the previous one based upon a number of factors. The Respondent also relied upon this Authority's Order No. 59/2020 dated 31.08.202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of ITC benefit to be passed on to all the eligible recipients as Rs.3,87,94,493/- on the basis of the information supplied by the Respondent and hence the profiteered amount computed by the DGAP is hereby accepted as correct. 52. In view of the discussions above, the Authority finds that the Respondent has profiteered by an amount of Rs.3,87,94.493/- during the period of investigation i.e. 01.07.2017 to 30.04.2020 and determined the said amount under Rule 133 (1) of the CGST Rules, 2017, the benefit of which has not been passed on to the recipients. 53. 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 detailed above. 54. We order that, the said amount of Rs.3,87,94,493/- (including 12% GST) that has been profiteered by the Respondent from his home buyers, including Applicant No. 1, shall be refunded by him, along with interest @18% thereon, from the date when the above amount was profiteered by him till the date of such payment, in accordance with the provisions of Rule 133 (3) (b) of the GCST ..... 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