TMI Blog2022 (6) TMI 1164X X X X Extracts X X X X X X X X Extracts X X X X ..... , as the allotment cum first tax invoice for demand was issued after the implementation of the GST w.e.f. 01.07.2017, hence apparently there was no pre-GST tax rate or input tax credit availability that could be compared with the post-GST tax rate and the input tax credit, to determine whether there was any benefit that was required to be passed on by way of reduced price. It is established that there had been no additional benefit of ITC to the Respondent and hence he is not required to pass on the benefit to the above Applicants by reducing the prices of the flats. The Applicants could have availed the above benefit only if the above project was under execution/implementation before coming into force of the GST as the Respondent would have been eligible to avail ITC on the purchase of goods and services after 01.07.2017 on which he was not entitled to do so before the above date. Since there is no basis for comparison of ITC available before and after 01.07.2017, the Respondent is not required to recalibrate the price of the flats due to additional benefit of ITC. Hence, the allegations of the above Applicants made in this behalf are incorrect and therefore, the same cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2020. The time limit to complete the investigation was 23.05.2021. v. In response to the Notice dated 17.12.2020, the Respondent submitted his reply vide letters/e-mails dated 22.01.2021, 19.02.2021, 05.03.2021 and 25.03.2021. The Respondent placed the following facts to establish that he was not covered under the provision of Section 171 of CGST Act, 2017 and the submissions of the Respondent were as follows: (a) The provisions of section 171 (1) which had been placed in Chapter XXI of the Central Goods and Service Tax Act pertaining to Miscellaneous provisions state the following: - 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. On the reading of above provisions of the section, it was clear that the provision of Section 171 of CGST Act, shall apply only in two cases: I. Reduction in rate of tax, and II. The benefit of ITC by way of commensurate reduction in price was to be passed on to the recipient. (b) The agreement between the Respondent and the buyers of residential project was executed on 20.07.2017, vide wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Buyer Agreement (BBA) of residential project was executed on 20.07.2017. Similarly, BBA in respect of Commercial Units sold was first executed on 19.06.2018 i.e. during post GST period. (g) The Respondent offered the rates for selling flats on allotment, after due consideration of GST paid/payable on goods services involved in the execution of the Contract as well as eligible GST credit, which can be set-off against output tax liability. (h) Consideration for the sale of Flat was duly agreed between Respondent and buyer @ 4,000/- per square feet on carpet area basis, besides balcony area @ 500/- per square feet. Further, GST as applicable too was payable extra. The Builder-Buyer agreement containing all the terms conditions of allotment was duly executed on 20.07.2017 onwards between the Respondent the successful applicant. (i) The construction activities on the aforesaid project were started on 15.11.2017 and thereafter, during GST regime. (j) Vide the aforementioned letters, the Respondent submitted the following documents/information: Copies of GSTR-1 returns for the period July, 2017 to November, 2020. Copies of GSTR-3B returns for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the reduced rate of GST @12% (effectively 8%) from his buyers in terms of Notification No. 01/2018-Central Tax (Rate) dated 25.01.2019. It had been duly verified from the tax invoices raised by the Respondent. ix. From the verification of documents submitted by the Respondent and his submissions, it was observed by the DGAP that there was no sale or allotment of the flats in the said project in the pre-GST regime. Further, the first allotment made by the Respondent in this project was 05.07.2017 i.e. in post-GST period. On scrutiny of the documents submitted by the Respondent i.e. first tax invoice for demand cum allotment letter, Builder Buyers Agreement, Demand letter of the Applicants, date of first booking of flat and other documents, it was also observed that the project The Roselia Sector-95A indeed began in the post-GST era and the above Applicants also did not produce any evidence to prove otherwise. There was no unit sold in the pre-GST era which can be compared with the post-GST base price to determine whether there was any profiteering. All the events i.e. allotment of the flats, agreement between the Respondent and the buyers and construction activities started a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain why the Report dated 31.03.2021 submitted by the DGAP should not be accepted. Further opportunities were also given on 11.04.2022 and 27.04.2022. The Hearing through Video Conferencing in the matter was held on 06.05.2022. 4. The submissions made by the Applicant No. 1 dated 14.03.2022, by the Applicant No. 2 dated 02.04.2022 and by the Applicant No. 3 dated 05.04.2022 were same and are reproduced herein below: a) On recommendations of 33 rd GST Council meeting held on 24th February 2019, the GST rates on the supply in question were reduced to 1% without ITC from the earlier rate of 8%. The effective date of the new rates was from 1 st April 2019. b) It had been clearly stated in answer to FAQ (F.No. 354/32/2019-TRU) question No. 1 that, in case of an ongoing project, the promoter had an option to pay GST at old rates i.e. 8 %, and the benefit of the credit availed by him was to be passed on to the buyers. The relevant portion of the FAQ was as under: However, in case of an on-going project, the promoter had an option to pay GST at old rates, i.e. at the effective rate of 8% on affordable residential apartments and effective rate of 12 % on other than afford ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the DGAP's Report and all other submissions which have been placed on record and find that the following issues are required to be settled in the present proceedings:- I. Whether there are benefit of additional ITC available to the Respondent which are not passed on by him to the Applicants? II. Whether there is any violation of the provisions of Section 171 (1) of the CGST Act, 2017 by the Respondent? 9. Perusal of the record reveals that the complaint of profiteering is in respect of purchase of flats in the Respondent's project The Roselia Sector-95A , Gurugram, Haryana. The project is an affordable Housing project as per the policy notified by Town Country Planning Department, Government of Haryana vide Notification dated 19.08.2013. The Applicant No. 1 has been allotted flat No. 1202 in Tower A, the Applicant No. 2 has been allotted flat no. 206 in Tower B, the Applicant No. 3 has been allotted flat No. 605 in Tower I and the Applicant No. 4 has been allotted flat no. 304 in Tower A of the project. in the instant case the draw of lots for allotment of houses was conducted on 05.07.2017 in the presence of the committee constituted under the Affordable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o all the Applicants was made in the Post GST Period. Applicant Date of Demand cum allotment letter Applicant No. 1 05.07.2017 Applicant No. 2 05.07.2017 Applicant No. 3 25.01.2018 Applicant No. 4 05.07.2017 12. Based on the above discussion the Authority finds that the allotment of units, agreements, booking, construction activity and receipt of payments had taken place in the post-GST era. The draw of lots for allotment of houses was conducted on 05.07.2017 in the presence of the committee constituted under the Affordable Housing Policy, 2013. The Authority also finds that first BBA between the flat buyers the Respondent was executed on 20.07.2017 in the post GST period. On the basis of the sequence of the above events, it could be safely concluded that the above project had started after coming in to force of the GST w.e.f. 01.07.2017 and Applicants were allotted flats only after coming in to force of the GST w.e.f. 01.07.2017, as the allotment cum firs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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