TMI Blog2020 (12) TMI 1342X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of Section 171 of the CGST Act, 2017. It is observed that the provision of the RERA Act, 2016 makes it mandatory for a real estate developer/promoter to maintain separate bank accounts for each of his projects registered separately under the RERA Act, 2016. In the case of the Respondent, the above provision implies that he was required to maintain four separate escrow/bank accounts in respect of the four towers/blocks of the project Celebrity Gardens , however the DGAP's Report has no mention of this aspect. It has a bearing on the instant proceedings since the DGAP's Report dated 23.03.2020 only covers one of the four blocks i.e. Block 'K'. As the Respondent had obtained four separate RERA registrations for his four blocks/towers, he should have maintained separate escrow/bank accounts - the compliance of the Respondent with the provisions of the RERA Act, 2016, becomes paramount and need to be examined. In view of this, there arises the need to revisit the investigation to ascertain if the Respondent has passed on the benefit of ITC to the homebuyers of the other 3 towers/blocks of the impugned project by a commensurate reduction in the prices of the resid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 calling upon the Respondent to submit his reply whether he admitted that the benefit of ITC had not been passed on to Applicant No. 1 by way of commensurate reduction in price. The Respondent was also asked to suo moto determine the quantum thereof and indicate the same in his reply as well as furnish all supporting documents. Further, the Respondent was also allowed to inspect the non-confidential evidence/information furnished by Applicant No 1 during the period 30.10.2019 to 31.10.2019 which was not availed of by him. Further, Applicant No. 1 vide e-mail dated 24.02.2020 was also allowed to inspect the non-confidential documents/reply furnished by the Respondent on 02.03.2020 or 03.03.2020, which the Applicant had not availed of. The DGAP has intimated that the period of the current investigation was from 01.07.2017 to 30.09.2019. 3. The DGAP has reported that the Respondent in response to the above Notice dated 23.10.2019, had submitted his replies vide letters and e-mails dated 12.11.2019, 13.11.2019, 02.12.2019, 24.12.2019, 16.01.2020, 17.02.2020, and 24.02.2020 wherein he had submitted the following documents/information: - a) Copies of GSTR-I Returns for the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion certificate, where required, by the competent authority or after its 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 Completion Certificate (CC), in terms of Section 17(2) Section 17(3) of the CGST Act, 2017. Therefore, the ITC pertaining to the unsold units might not fall within the ambit of this investigation, and the Respondent was required to recalibrate the selling prices of such units to be sold to the prospective buyers by considering the proportionate benefit of additional ITC available to him post-GST. 7. The DGAP has further reported that before 01.07.2017 i.e. before the GST was introduced, the Respondent was eligible to avail credit of Service Tax paid on the input services (CENVAT credit of Central Excise Duty was not available) in respect of the residential flats for the project Celebrity Garden Block-K sold by him. The Respondent was not eligible to avail ITC of VAT paid on the inputs as he had discharged his VAT output liability on a no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flats came to Rs. 1,54,269/- which included 12% GST on the base amount of Rs. 1,37,740/-. 11. Consequently, the DGAP has concluded that the benefit of the additional ITC of 0.17% of the taxable turnover has accrued to the Respondent and the same was required to be passed on to Applicant No. 1 and other recipients. The provision of Section 171 of the CGST Act, 2017 has been contravened by the Respondent in as much as the additional benefit of ITC of the base price received by the Respondent during the period 01.07.2017 to 30.09.2019, has not been passed on to the Applicant No. 1 and other recipients. On this account, the Respondent had realized an additional amount to the tune of Rs. 8,799/- (including GST) from Applicant No. 1 which included both the profiteered amount @0.17% of the taxable amount (base price) and GST on tabove-profiteered amount. The DGAP has further revealed that the Respondent had also realized an additional amount of Rs. 1 which included both the profiteered amount of the taxable amount (base price) and GST on the above-profiteered amount from 42 other recipients who were not Applicants in the present proceedings. These recipients were identifiable as per t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Respondent has not passed on the benefit of ITC to him by way of a commensurate reduction in the price of the flat purchased by him (Applicant No. 1) from the Respondent. We find that the DGAP, after a detailed investigation, has found that the Respondent has not passed on ITC benefit amounting to Rs. 1,54,269/- (inclusive of GST) to his recipients/homebuyers as required under the provisions of Section 171 of the CGST Act, 2017. We observe that the details of the benefit required to be passed on to the eligible homebuyers have been detailed by the DGAP vide Annexure-Il of his Report dated 23.03.2020. 15. On perusal of the DGAP's Report and Annexures thereto, it is observed that the Respondent, vide his letter 12.11.2019 submitted by him before the DGAP, has admitted that his project 'Celebrity Garden' comprises of four towers having around 150 flats. 16. In the context of this case, we refer to provisions of Section 4 (2) (l) (D) of the Real Estate (Regulation and Development) Act, 2016 (RERA Act 2016, interalia, which provides as below:- that seventy percent. of the amounts realised for the real estate project from the allottees, from time to time, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is a significant variation in the figures adopted by the DGAP in Table-'B' in his Report dated 23.03.2020 vis-a-vis the figures mentioned in the statutory tax returns filed by the Respondent, i.e. the figures of ITC and turnover for the period from 01.04.2016 to 30.06.2017 and the post-GST period from 01.07.2017 to 30.09.2019. The said variation in the two sets of figures of ITC and turnover are detailed in the Table below:- Given the above variations in the figures of Turnovers and ITCs, we find the need for an investigation into this aspect to ensure that the Respondent has passed on the benefit of ITC. 19. Hence, in terms of the provisions of Section 171 (2) of the CGST Act and for the reasons detailed in Para 17 and Para 18 of this Order, the DGAP is directed to further investigate the present case under Rule 133 (4) of the CGST Rules, 2017 to ensure the Respondent has passed on the benefit of ITC by way of a commensurate reduction in the prices in respect of the residential units supplied by him. Hence, without dwelling upon any other aspect of the case and without going into any contentions of the Respondent and the Applicants, this Authority, under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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