TMI Blog2020 (1) TMI 1578X X X X Extracts X X X X X X X X Extracts X X X X ..... al amount of Rs. 1,95,35,865/- (inclusive of GST as applicable) from all the home buyers other than the Applicant No. 1 and 2. The total amount of profiteering on part of the Respondent works out to be Rs. 1,95,86,429/- ( Rs. 1,95,35,865 + Rs. 25,282/- + Rs. 25,282/- ) and the same is tabulated in Annexure- 17, 18 and 19 of the Report of the DGAP dated 19.06.2019. On perusal of Table-D of the DGAP Report dated 19.06.2019 suggests an amount of Rs. 81,82,783/- has been claimed to have been passed on by the Respondent to his home buyers on account of ITC benefit. However, it is also clear from Table-D of the DGAP Report and claim of the Respondent of having passed on the benefit of Rs. 81,82,783/-, has not been verified at any stage by the DGAP. Further, the claim made by the Respondent during the hearings held before this Authority of having passed on another tranche of benefit of ITC to his home buyers, taking the total ITC benefit passed on to Rs. 2,18,87,807/-, also needs to be verified by the DGAP. Accordingly the DGAP is directed to further verify the total amount of ITC benefit claimed to have been passed on to his home buyers by the Respondent till date, as per the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teering, in its meeting held on 11 th March, 2018, wherein it was also decided to forward the same to the DGAP to conduct detailed investigation. 2. On receipt of the recommendation from the Standing Committee on Anti-profiteering, the DGAP had issued 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 Applicant by way of commensurate reduction in the price of the flat and in case it was so, to suo-moto compute the quantum of the same and mention it in his reply to the Notice along with the supporting documents. The Respondent was given opportunity to inspect the non-confidential evidence/information furnished by the Applicant No. 1 during the period between 21.01.2019 to 23.01.2019 in accordance with Rule 129 (5) of the above Rules but the Respondent did not avail of the said opportunity. Vide e-mail dated 10.06.2019, the above Applicants were also given opportunity to inspect the non-confidential documents/reply submitted by the Respondent on 13.06.2019 or 14.06.2019. However, the Applicants did not avail of the said opportunity. 3. The DGAP has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an-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 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 letter dated 29.01.2019 had submitted that he had informed the above Applicants from time to time through telephonic discussion about the benefit of GST input tax credit and assured the Applicant that he would pass on such benefit to all his home buyers as early as possible. Further, vide letter dated 08.02.2019, the Respondent had informed that he was in the process of computation of additional profit under the GST regime and that he would pass on the GST benefit to all his recipients. The Respondent, vide e-mail dated 07.06.2019 had submitted sample copies of letters issued to the individual flat buyers, informing them ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 Within 30 months of the date of Allotment letter Yet to be demanded 12.50% 2,88,688 23,095 3,11,783 8 Within 36 months of the date of Allotment letter 12.50% 2,88,688 23,095 3,11,783 100.00 % 2,309,503 28,869 1,50,118 13,609 24,74,881 10. The DGAP has further stated that para 5 of Schedule-Ill 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 (b) construction of a complex, building, civil structure or a part thereof, including a complex or building i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al shops sold by him. The Respondent was also eligible to avail input tax credit of VAT paid on the inputs. Further, post-GST, the Respondent could avail input tax credit of GST paid on all the inputs and input services. From the data submitted by the Respondent covering the period April, 2016 to December, 2018 the details of the input tax credit availed by him, his turnover from the project Paradise and the ratio of input tax credit to turnover, during the pre-GST (April, 2016 to June, 2017) and postGST (July, 2017 to December, 2018) periods was furnished by the DGAP as per the Table-B given below:- 12. The DGAP has also submitted from the above Table-'B' that the ITC as a percentage of the total turnover that was available to the Respondent during the pre-GST period (April, 2016 to June, 2017) was 0.43% and during the post-GST period (July, 2017 to December, 2018), it was 3.10% which clearly confirmed that post-GST, the Respondent has been benefited from additional ITC to the tune of 2.67% [3.10% (-) 0.43%] of the turnover. 13. The DGAP has further submitted that the Central Government, on the recommendation of the GST Council, had levied 18% GST (effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit: 6 Base Price raised during 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 37,100,788 210,106,879 651 404,736,220 651,943,887 10 GST on recalibrated basic price @as applicable I=H*B 4,452,095 25,212,826 32,378,898 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved that the Respondent had supplied the construction services in the State of Haryana only. 16. The DGAP has further stated that the Respondent had submitted that he had passed on the benefit of Rs. 81,82,783/- to the home buyers. A summary of category-wise input tax credit benefit required to be passed on and the benefit claimed to have been passed on by the Respondent, was furnished by the DGAP as is given in Table- D below:- Table-D Sr. No. Category of Home buyers No. of Units Area (in Sqf) Amount Received Post GST Benefit required to be passed on as per Annex-17 Benefit claimed to have been Passed on Difference Remark A B C D E F G H=F-G 1 Applicant (Residential) 1 566 8,66,063 25,282 13,609 11,673 Further Benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Respondent was higher than what he should have passed on, in respect of one of the already sold commercial shops (Sr. 4 of above Table), by an amount of Rs. 19,987/-. The details of this excess benefit claimed to have been passed on were given in Annexure-20 of the DGAP's Report. However, this excess benefit claimed to have been passed on to some recipients, could not be set off against the additional benefit required to be passed on to some other recipients as per Annexure-18 19 of the DGAP's Report and it could only be adjusted against any future benefit that might accrue to such recipients who had received excess benefit. 18. The DGAP has further mentioned that the above computation of profiteering was with respect to 740 home buyers and 23 commercial shop buyers, whereas the Respondent had booked 740 residential units and 27 commercial shops till 31.12.2018. Out of the 27 commercial shops booked till 31.12.2018, in respect of 4 shops, though the booking amount was received in the pre-GST period, no consideration had been received during the post-GST period of 01.07.2017 to 31.12.2018 (period covered by the investigation). Therefore, if the input tax credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the provisions of Section 171 (1) of the Central Goods and Services Tax Act, 2017 requiring that a 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 , have been contravened by the Respondent in the present case. 21. The above Report was considered by the Authority in its meeting held on 09.07.2019 and it was decided that the Applicants and the Respondent be asked to appear before the Authority on 05.08.2019. The Respondent was issued notice on 10.07.2019 to explain why the above Report of the DGAP should not be accepted and his liability for violating the provisions of Section 171 of the CGST 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. Suresh Kumar, Company Representative and Sh. Narottam Rawat, CA. 22. Vide order dated 05.08.2019, The Authority directed the Respondent to submit the following documents:- a) Statement showing project-wise ITC/CENVAT Credit availed and Turnover as per the statutory Returns (GST, ST, VAT Returns) for the period from 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITC Benefit claimed to have passed on till 30.08.2019 (Amount in Lacs) Residential Commercial TOTAL 1 Sector-70 23.72 NIL 23.72 2 Sector-84 179.30 14.84 194.14 3 Sector-99 108.59 18.34 126.92 25. The Respondent has also submitted that the Report furnished by the DGAP dated 19.06.2019, was acceptable to him and ITC benefit determined as per the report would be passed on to all the home buyers. 26. The Respondent has further submitted that he had not availed any ITC on closing stock of raw material as on 30.06.2017, therefore, he was not required to submit any TRAN-2 Return. He further stated that he had reversed the ITC in respect of non-taxable turnover. 27. The Respondent has further submitted that due to newly implemented law and frequent changes at initial stage he was unable to determine exact amount to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TC to them in spite of the fact that he was availing ITC on the purchase of the inputs at the higher rates of GST which had resulted in benefit of ITC to him and that the Respondent was also charging GST from them @12%. These complaints were examined by the Standing Committee in its meetings held on 13.12.2018 and 11.03.2019 respectively and forwarded to the DGAP for investigation. The DGAP, vide his Report dated 19.06.2019 has found that the ITC as a percentage of the total turnover which was available to the Respondent during the pre-GST period was 0.43% and during the post-GST period this ratio was 3.10% details of which are given in Table-B of the DGAP Report. Therefore the DGAP has reported that the Respondent has benefited from ITC to the tune of 2.67% (3.10% - 0.43%) of his total turnover during the post-GST period which he was required to pass on to the flat buyers of his project. The DGAP has also found that the Respondent had not reduced the basic prices of his flats by 2.67% on the account of benefit from ITC although he had been charging his home buyers, GST at th increased rate of 12% on the pre-GST basic price. The DGAP has also reported that the Respondent has thus c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .06.2019 suggests an amount of Rs. 81,82,783/- has been claimed to have been passed on by the Respondent to his home buyers on account of ITC benefit. However, it is also clear from Table-D of the DGAP Report and claim of the Respondent of having passed on the benefit of Rs. 81,82,783/-, has not been verified at any stage by the DGAP. Further, the claim made by the Respondent during the hearings held before this Authority of having passed on another tranche of benefit of ITC to his home buyers, taking the total ITC benefit passed on to Rs. 2,18,87,807/-, also needs to be verified by the DGAP. Accordingly the DGAP is directed to further verify the total amount of ITC benefit claimed to have been passed on to his home buyers by the Respondent till date, as per the provisions of Rule 133 (4) of the above Rules and submit his Report clearly mentioning the verified amount of benefit passed on by the Respondent to his home buyers and the balance amount still to be passed on to each of the home buyers within a period of two months of this Order. 32. We also observe that the Respondent, vide his submissions dated 16.04.2019, has himself admitted that he has three more projects under exe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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