TMI Blog2022 (8) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... CGST Rules, 2017. The details of the homebuyers to whom the profiteered amount was required to be passed on by the Respondent No. 1 and Respondent No. 2 along with the details of such amounts claimed to be passed on by the said Respondents (and so verified by the DGAP) is attached herewith as Annexure A to this order. The details of the four homebuyers to whom profiteered amount is required to be passed on by the Respondent No. 2 along with details of such amounts (as reported by the DGAP) are attached herewith as Annexure B to this order. Levy of Interest - HELD THAT:- The Authority finds that, the Applicant No. 1 has made a claim to interest on the amount of benefit of ITC accruing to him. It is his submission that, any return of benefit, by whatever means, must be along with interest due. The Authority finds that, as per the provision of Section 171 of the CGST Act, 2017 and Rule 133 of the CGST Rules, 2017, it is incumbent on the registered supplier to commensurately reduce the price of his supply to the recipient as soon as there is a reduction in the rate of tax or availability of ITC. Hence, in the present case too, it was incumbent on the Respondents to have compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent No. 2 and the Respondent No. 1. (ii) The Respondent No. 01 had submitted that there was a difference in ITC figures taken by the DGAP and figures in GSTR-3B Returns in as much as the DGAP had considered eligible ITC for the period July 2017 to August 2018 as Rs,9,99,82.384/- whereas the available ITC was only Rs.7,90,53,619/- as per the GSTR-3B Returns. The said figures of ITC were also required to be verified by the DGAP. (iii) The Respondent No. 01 had submitted that the Report is based on incorrect assumption that ITC for the period April 2016 to June 2017 pertains to 11 Towers whereas ITC for the period July 2017 to August 2018 pertained exclusively to two Towers i.e. Tower A and Tower L. These submissions of the Respondent No. 01, might also be looked into, and (iv) The details of reversal of credit in respect of those Towers/Units where Occupancy Certificate had been received might also be revisited. The brief facts of the present case, are that an application dated 25.01.2018 was filed under Rule 128 of the Central Goods and Services Tax (CGST) Rules, 2017 before the Haryana State Screening Committee on Anti-profiteering by the Applicant No. 1 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 2 on 11.12.2019, calling upon them to submit the information/ documents required to re-investigate the matter. (b). The Authority vide its order dated 26.08.2020 had approved to revise the period covered by the current investigation i.e. from 01.07.2017 to 30.11.2019. He also reported that the time limit of 03 months to submit his report had been extended from 28,02.2020 to 28.05.2020 by the Authority vide Order dated 04.03.2020 which further stood extended upto 31.08.2020 by virtue of Notification No. 35/2020-Central Tax dated 03.04.2020 and Notification No. 55/2020-Central Tax dated 27.06.2020. (c). In response to above said letters dated 11.12.2019 and subsequent reminders and Summons, the Respondent No. 1 had submitted his replies vide letters/e-mails dated 23.12.2019, 02.01.2020, 13.01.2020, 12.02.2020, 30.05.2020, 10.06.2020 and 17.06.2020. (d). Vide the above said replies the Respondent No. 1, has stated that:- (i) He was a Special Purpose Vehicle which was engaged primarily in the construction of the project Godrej Summit located in the State of Haryana. For the said project, the Respondent No. 1 had entered into Development Agreement with the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riods is mentioned in table- C below: Table- C S. No. Details Tower A Tower L Total A. Number of Units booked as on 30.06.2017 25 61 86 B. Add: Units booked in GST regime till 25.12.2018 2 1 3 C. Total units booked before the date of Occupancy Certificate [(A) + (B)] 27 62 89 D. Unsold Units as on the date of Occupancy Certificate 18 8 26 E. Total Units [C+D] [Respondent No.1 s Share] 45 70 115 (iv) The details of turnover in pre-GST period and GST period in table- D below: Table- D Project Turnover Pre-GST Regime GST Regime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owers on the basis, saleable area. 2. The amount of input tar credit in GST regime in the GSTR-B returns reflects credit availed for Tower A and Tower L and other Towers. The above figure reflects credit pertaining to Tower A and Tower L which includes specific credit (after adjustment of reversal of Input Tax Credit for unsold units as on the date of occupation certificate) and proportioned common credit. The amount of common credit has been apportioned between Tower A and Tower L. and other Tower on the basis of saleable area. (vi) He has already passed on the benefit of increased input tax credit to his customer and thus, there was no profiteering. In this regards he further submitted that:- (a) The essence of anti-profiteering provision is to ensure that the companies, with the introduction of GST, pass on the benefit of reduced output tax rates and increased input tax credits to the customers by way of a commensurate reduction in prices. Section 171 (1) of the CGST Act dealing with anti-profiteering provides 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 com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red the tax cost which was earlier blocked in his hands. Hence, the above approach of comparison of ITCs to turnovers ratios for pre-GST and post-GST periods was not a correct approach and thus, liable to be discarded. (viii) The amount of profiteering as per the Methodology of comparison of ratio of credits to turnover for pre-GST and post-GST periods was less than the benefit already passed on to the applicant No. 1. In this regard, he submitted that: He has framed computation based on the methodology adopted by DGAP and the Authority in recent orders. The calculation is reproduced hereunder in two scenarios: Scenarios-I: Comparison for Tower A and Tower L including details relating to area developed for landowner as furnished in Table- F below: Table- F S.No. Particulars Pre-GST GST Apr 16 to Jun 17 July 17 to Nov 19 1. Cermet Credit of Service Tax Paid on Input Service (A) 3,63,59,885 - 2. Input Tax Credit of GST A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Table- G below: Table- G S.No. Particulars Pre-GST GST Apr 16 to Jun 17 July 17 to Nov 19 1. Cermet Credit of Service Tax Paid on Input Service (A) 2,33,33,378 - 2. Input Tax Credit of GST Availed (Net of reversal as per GSTR-3B) (B) - 1,69,23,952 3. Total Turnover (C) 41,34,01,943 40,59,72,062 4. Total Saleable Area (in Sq. ft.) (D) 2,39,465 180,651 5. Total Area Sold relevant to turnover as above (E) 1,60,257 180,651 6. ITC Relevant to Turnover (F) 1,56,15,381 1,69,23,952 Ratio of Input Tax Credit to Turnover 3.78% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are in violation of principle of natural justice. Accordingly, the investigation is liable to be dropped. (b) The Central Government vide Notification No. 10/2017-Central Tax dated 28.06.2017 (amending Notification No. 3/2017-Central Tax) notified Anti-profiteering rules which provide for constitution of Authority, Standing Committee and Screening committee, power to determine the methodology and procedure, duties of Authority, examination of applications, order of the authority, compliance by the registered person etc. (c) The Rule 126 of the Rules contains provisions regarding the power of the Authority to determine the methodology and procedure for determination as to whether the reduction in rate of tax on the supply of goods or services or the benefit of input tax credit has been passed on by the registered person to the recipient by way of commensurate reduction in prices, It is important to note that as on date, CGST Rules have not prescribed any procedure/methodology/formula/modalities for determining/calculating profiteering . Whether such computation must be done invoice-wise, product-wise, business vertical-wise or entity-wise is not prescribed under the law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. the Respondent has stated that:- (a) In terms of Section 171 of the CGST Act read with Rule 128 of the Rules, an anti-profiteering investigation could be initiated only on receipt of written application from the interested party, Commissioner or arty other person. In the instant case, the proceedings were started with the application received from the Applicant No. 1. The said application was filed by Sh. Vijay Malhotra and Smt. Sunita Malhotra, hence, the investigation could not go beyond the application and cover other customers also who have not questioned the benefit passed on to them. In this regard, he has placed reliance on the following orders of the Authority, wherein investigation, Report and final order of the Authority was restricted only on the product for which complaint was filed in the respective cases: (i) M/s. U. P. Sales Services vs. M/s. Vrandavaneshwree Automotive Private Limited 2018-VIL-01-NAA: In this case, the applicant had filed an application alleging that the supplier had not passed on the benefit of reduced rate of tax on Honda Car having Model No. WR -V 1.2 VX MT (i-VTEC) purchased by the applicant. The Authority in this case while hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeals these points have not been taken. (Emphasis Supplied) (d) Similarly, in the case of Reckitt Colman of India Ltd. vs. Chief Commissioner of Excise 1996 (88) E.L.T. 641 (S.C.) it was held by the Hontile Supreme Court that the Revenue authorities could not make an order against an assessee that was based on allegations and grounds that were not raised in the notice of show-cause. The relevant paragraph has been extracted for reference, 3. It will be remembered that the case of the Revenue, which the appellant had been required to meet at every stage from the show cause notice onwards, was that the said product was a preparation based on starch. Having come to the conclusion that the said product was not a preparation based on starch, the Tribunal should have allowed the appeal. It was beyond the competence of the Tribunal to make out in favour of the Revenue a case which the Revenue had never canvassed and which the appellants had never been required to meet. It is upon this ground alone that the appeal must succeed. (e) Like an order cannot travel beyond a show cause notice, the investigation and report of the DGAP, could not go beyond the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent No. 1 has profiteered to that extent. 9. Vide the aforementioned letters and e-mails, the Respondent No.1 submitted the following documents/information: a. Copies of GSTR-1 returns for the period July, 2017 to Nov, 2019. b. Copies of GSTR-3B returns for the period July, 2017 to Nov, 2019. c. Electronic Credit Leger for the period July, 2017 to Nov, 2019. d. Copies of VAT ST-3 returns for the period April, 2016 to June, 2017. e. Copy of RERA Registration and Project Report submitted to RERA including all periodic progress reports submitted till November, 2019. f. Occupancy Certificate for the towers other than A and L received vide Memo No. ZP-802/SD(BS)12017/6649 dated 07.04.2017 and Memo No. ZP-802/SD(BS)/2017/13753 dated 20.06.2017. g. Status of Tower A and Las on 31.08.2018 and 30.11.2019 along with copy of Occupancy Certificate received on 26.12.2018 vide Memo No. ZP-802/AD(RA)/2018/34958. h. List of home buyers for the Tower A and L in the project Godrej Summit along with customer wise details of benefit passed on. i. CENVAT/ITC register for the FY 2016-17, 2017-18, 2018-19 and 2019-20 reconciled with ST-3 and GSTR-3B re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, 2017 to Nov, 2019. d. Copies of ST-3 returns for the period April, 2016 to June, 2017. e. Details of tower-wise sold and unsold units along with copies of OC for all the project Godrej Summit . f. List of home buyers for the project Godrej Summit along with customer wise details of benefit passed on. g. CENVAT/TTC register for the FY 2016-17, 2017-18, 2018-19 and for the period April 2019 to Nov., 2019 reconciled with ST-3 and GSTR-3B returns. h. Copies of Credit Notes/Payment vouchers by which benefit of input tax credit has been passed on. i. Copy of the Agreement dated 05.09.2016 between the Land Owner and the Respondent No. 1 for the project Godrej Summit . and he had not classified any of its information/documents as confidential in terms of Rule 130 of the Rules. 14. However, on receipt of above said Interim Order No. 16/2020 from the Authority, the DGAP had examined the various replies of Respondent No. 1 2 and the documents/evidences on record in respect of the project Godrej Summit and submitted that:- (i) The Respondent No. 1 had total 11 towers in the impugned project out of which 09 towers were completed in Pre-GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xable supplies including zero-rated supplies . Section 17 (3) The value of exempt supply under sub-section (2) shall be such as may be prescribed and shall include 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, the input tax credit pertaining to the unsold units may not fall within the ambit of this investigation. However, in the present case, the Respondent No. 1 has received OCs for all Units and the Respondent No. 1 has reversed ITC towards unsold units. Therefore, the input tax credit availed post-GST period (after reversal) pertained to sold units only. (v) The approach of comparison of ITCs to turnover ratios for pre-GST and post-GST periods, had direct relation of input tax credit availed with that of output tax to be paid, as the use of input tax credit was only towards making payment of its output liability and no refund of unutilised input tax credit could be allowed under Section 54(3) of the Central Goods and Services Tax Act, 2017. (vi) On contention of the Respondent No. 1 that absence of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be prescribed to determine the amount of benefit which a supplier is required to pass on to a recipient or the profiteered amount. However, to give further clarifications and to elaborate upon the legislative intent behind the law, the Authority has been empowered to determine/expand the Procedure and Methodology in detail. However, one formula which fits all cannot be set while determining such a Methodology and Procedure as the facts of each case are different. In one real estate project, date of start and completion of the project, price of the house/commercial unit, mode of payment of price, stage of completion of the project, timing of purchase of inputs, rates of taxes, amount of ITC availed, total saleable area, area sold and the taxable turnover realised before and after the GST implementation would always be different than the other project and hence the amount of benefit of additional ITC to be passed on in respect of one project would not be similar to another project. Issuance of Occupancy Certificate/ Completion Certificate would also affect the amount of benefit of ITC as no such benefit would be available once the above certificates are issued. Therefore, no s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch tax amount be refunded to the eligible recipients or alternatively deposited in the Consumer Welfare Fund, regardless of whether such extra tax collected from the recipient has been deposited in the Government account or not. Besides, any extra tax returned to the recipients by the supplier by issuing credit note can be declared in the return filed by such supplier and his tax liability shall stand adjusted to that extent in terms of Section 34 of the CGST Act, 2017. Therefore, the option was always open to the Respondent No. 1 to return the tax amount to the recipients by issuing credit notes and adjusting his tax liability for the subsequent period to that extent. 15. Further on allegation of profiteering, the Respondent No. 1 claimed that subsequent to enactment of GST w.e.f. 01.07.2017, he made his estimated computation of additional benefit which has accrued to him in Tower A and Tower L which was depending upon various factors such as stage of construction etc. and passed on the same to eligible customers through credit notes or adjustment in tax invoices. Further, he had submitted Customer-wise details of such benefit claimed to have been passed on along with document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Applicant No. 1 has also pointed out certain deficiencies in the facilities promised and provided by the Respondent No. 1. 17. In this regard, the DGAP has reviewed the statement of account enclosed by the Applicant No. 1 with his mail (also submitted by the Respondent No. 1 in his earlier submissions dated 12.02.2020), and observed that both the invoices i.e. CI0150000911 CI0150000912 dated 09.01.2019 appear in the statement of account and it is specified in the invoices that GST Credit of Rs. 50,979/- Rs. 2,899/- is given against the Charged Amount, therefore, it is established from the documentary evidences that the benefit of Rs. 50,979/- Rs. 2,899/- was duly adjusted in the aforesaid invoices CI0150000911 CI0150000912 raised on 09.01.2019 and was appearing in statement of account, although the same were not paid by the Applicant No. 1. The detailed computation and reconciliation of invoices with Statement of A/c is furnished as below: Table I (Invoices No. CI0150000911 dated 09.01.2019) S.No. Particular Amount as per Agreement Benefit of 2.25% Net Amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CGST+SGST (H) 22,666 9. Total Invoice Value (I)=(G+H) 1,66,748 10. As per Statement of Account (J) 1,66,749 11. Difference (K)=(I-J) -1 Note- The amount has been verified from the Agreement as well immediate previous instalment 5 th instalment raised an 28.01.2018) as the 5 th and 6 th instalments are equal i.e. 20%; each of total agreement value. 18. Further, on the basis of revised information and documents submitted by the Respondent No. 1 and the Respondent No. 2, the DGAP has observed that prior to 01.07.2017, i.e. before the GST was introduced, the Respondent No. 1 was eligible to avail CENVAT credit of Service Tax paid on Services but no credit was available in respect of Central Excise duty and VAT paid on the inputs. However, post-GST, the Respondent No. 1 could avail input tax credit of GST paid on all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. No. 1 s books considered in above table. However, turnover of the Respondent No. 2 is included at S.No 5 as the Respondent No 2 it also required to pass on the benefit to it s recipients Note-2: The difference in ITC as above and as submitted by the Respondent No.1 in table- F above is on account of consideration Total ITC reversed (Including Pre-GST) on account of unsold area at the time of issuance OC. Note-3 The difference in total turnover as above and as submitted by the Respondent No. 1 in table- F above is on account of units cancelled by the home buyers. 19. The DGAP has claimed that from the Table- K , it is clear that the input tax credit as a percentage of the turnover that was available to the Respondent No. 1 during the pre-GST period (April, 2016 to June, 2017) was 3.70% whereas during the post- GST period (July, 2017 to November, 2019), the percentage was 5.25%. This clearly confirms that post-GST, the Respondent No. 1 has benefited from additional input tax credit to the tune of 1.55% [5.25% (-) 3.70%] of the turnover. Accordingly, the profiteering has been examined by comparing the applicable tax rate and input tax credit available in the pre-G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rated Base Price J=(G)*(1-D) or 98.45% of (G) 38,10,07,522 12. GST @ 12% K=J*12% 4,57,20,903 13. Commensurate demand price L=J+K 42,67,28,425 14. Excess Collection of Demand or Profiteering Amount M=I-L 67,18,426 20. In view of the Table- L : above, DGAP has deduced that the additional input tax credit of 1.55% 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 such additional input tax credit was required to be passed on by the Respondent No. 1 to the respective recipients accordingly. From the above calculation, it is evident that on the basis of the aforesaid CENVAT/input tax credit availability in the pre and post-GST periods and the details of the amount raised/collected by the Respondent No. 1 from the Applicant No, 1 and other home buyers during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 84,14,264 (22,35,846) Excess Benefit passed on. List Attached as Annex-23 3. 5 11,000 4,54,22,505 - - Units cancelled as on 30.11.2019. No benefit to be passed on. 4. 26 58,814 - - - - Unsold Units 5. Buyer other than Applicant No. 1 (Land Owner) 4 7,320 2,64,56,562 4,59,286 32,17,256 (27,57,970) Excess Benefit passed on. 6. 21 45,571 - - No Consideration received post-GST 7. 1 1816 48,70,680 - Unit Sold Post receipt of OC 8. 38 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Profiteering) A B C D E F=E*1.55%*1 12% G H=F-G 1. Dimension Hotels Resorts Pvt. Ltd. L1204 1816 75,27,696 1,30,681 3,022 1,27,649 2. Richa Chauhan L1206 1844 6,75,710 11,370 5,587 6,143 3. Suresh Vyas / Raju Vyas L1501 1816 73,56,856 1,27,715 2,959 1,24,756 4. Harpreet Singh L706 1844 1,08,96,300 1,89,160 86,087 1,03,073 Total 4,59,286 97,665 3,61,621 Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant No. 1 and other recipients who are not Applicants in the present proceedings. However, as mentioned in Table- M , the Respondent No. 1 has passed on an amount of Rs. 85,20,587/- to 84 home buyers from whom consideration has been received by the Respondent No. 1 during the period 01.07.2017 to 30.11.2019 and Rs. 32,17,256/- to the land owner i.e. the Respondent No. 2. 25. In view of the above findings of the DGAP, he has submitted that Section 171 (1) of the Central Goods and Services Tax Act, 2017, requiring 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 , may not be invoked against the Respondent No. 1 in the present case. However, the same is required to be invoked against the Respondent No. 2, 26. On receipt of the above said DGAP s report dated 26.08.2020, the Authority had issued Notice dated 07.09.2020 to the Respondent No. 2 directing him to explain why the above said Report should not be accepted and his liability for profiteering should not be determined under section 171 of the CGST Act 2017. In response of the Authority s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and enclosed the copies of Credit Notes/Cheque vide which such benefit was passed on, which have been verified by the DGAP and found to be in order as is shown in Table. N of his Report dated 26.08.2020. The DGAP, for confirmation of receipt of ITC benefit had sent emails to said four buyers, in response to which, three buyers had replied and confirmed the receipt of the same and remaining one buyer Sh. Harpreet Singh having flat no. L-706 stated that he had filed a case against the Respondent No. 2 in Haryana RERA in Nov. 2018 for refund of Rs. 38.58 lakhs deposited with him for not handing over the said flat in time as per terms conditions of the buyers agreement, which was pending, so if the Respondent had made any credit note entries for payment of Rs.1,89,160/- in his favour, he was not aware of such payment. Further the DGAP also reported that the Respondent No 2 had submitted copies of emails through which the copies of credit notes were communicated to them. (b). He has prepared the report dated 26.08.2020 on the basis of documents/information submitted by the Respondent No. 1, Respondent No. 2 and the Applicant No.1 during the course of investigation in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive possession offer. The Applicant No. 1 has also pointed out certain deficiencies in the facilities promised and provided by the Respondent No. 1. however on reviewing the statement of account enclosed by the Applicant No, 1 in his mail (also submitted by the Respondent No. 1 in his earlier submission dated 12.02.2020), it is observed that these both invoices i.e. C10150000911 C10150000912 dated 09.01.2019 appear in the statement of account and it is specified in the invoices that GST Credit of Rs, 50,979/- Rs. 2,899/- is given against the Charge Amount therefore, it is established from the documentary evidences that the benefit of Rs. 50,979/- Rs. 2,899/- was duly adjusted in the aforesaid invoices 010150000911 C10150000912 raised on 09.01.2019 and appearing in statement of account, although the same were not paid by the Applicant No. 1. The detailed computation and reconciliation of invoice with Statement of A/c is furnished as below: Table I (Invoices No. CI0150000911 dated 09.01.2019) S.No. Particular Amount as per Agreement Benefit of 2.25% Net Amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CGST+SGST (H) 22,666 9. Total Invoice Value (I)=(G+H) 1,66,748 10. As per Statement of Account (J) 1,66,749 11. Difference (K)=(I-J) -1 Note: The amount has been verified from the Agreement as well immediate previous installment (5 th installment raised on 28.01.2018) as the 5 th and 6 th Installments are equal i.e. 20% each of total Areement value. 30. On receipt of above said clarifications under rule 133 (2A) of the CGST Rules 2017 from the DGAP, the same were supplied to the Respondent No. 2 and the Applicant No. 1 by the Authority directing them to submit their consolidated written submissions. However the Applicant No. 1 vide his email dated 22.12.2020 has submitted his reply reiterating his previous email dated 21.10.2020 and also stating that he had not received any refund from Respondent No. 1 whatsoe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITC benefit. d. It has also been observed from the Report dated 26.08.2020 of the DGAP that turnovers of the pre and post GST periods of Respondent No.1 do not match with the home buyers list. It has further been observed from the above Report that Respondent No. 1 has reversed the ITC in the month of March 2018 whereas the OC was received in the month of December 2018. Further saleable area has been taken as 3,73,153 Sq. ft. of the entire units whereas the area should have been taken till the OC was received. e. Based on the above, there are sufficient grounds to believe that the Respondent No. 1 is apparently required to pass on the benefit of ITC to the Applicant No. 1 along with the interest. It is also apparent that the computation of profiteered amount made by the DGAP is not correct. 34. Apart from the points as mentioned at para 33 supra, the Respondent No. 1 was also directed vide Notice dated 05.02.2021 to explain the claims of the Applicant No. 1 made during the above said hearing and his submissions dated 22.12.2020 and 28.01.2021 as given below: a. No refund has been received by the Applicant No.1 on account of the ITC benefit from the Respondent No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Applicant No.1 are furnished to the Authority. In fact, on perusal of the Statement of Account, it could be seen that it was the Applicant No.1 who owes money to him (the Respondent No. 1) and not vice versa. The balance amount payable by the Applicant No. 1 to him as per Statement of Account was Rs. 27,50,805/. The Applicant No. 1 owes the money to him due to various outstanding instalments billed by him as per the terms and conditions of Builder Buyer Agreement. (v). the Applicant No. 1 asking him for refund of input tax credit is baseless, the amount of benefit has already been passed on and duly reflected in the Statement of Account as attached. There is no averment from the Applicant No. 1 to the contrary. Thus, he has requested the Authority to reject the allegations of Applicant No. 1. (c). upon the objection No interest has been paid to the Applicant No.1 on the input tax credit benefit by the Respondent No. 1, (i) he has computed and passed on the benefit of input tax credit on each milestone of installments billed to the Applicant No. 1 therefore, there has been no delay in passing on the benefit of input tax credit to the Applicant No. 1 in fact, fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , billing of charges by him as per Builder Buyer Agreement, TDS deduction by him, non-construction of 23 mtr road, etc. Further, the Applicant No, 1 has been making defamatory tweets against him wherein he has also issued a warning to the Applicant No. 1 for First Information Report (FIR). (f). The investigation of this project has been done twice by the DGAP and the allegations by the Applicant No. 1 against him and against the report of the DGAP are completely baseless. (g). He requested the Authority; (i) to drop the proceedings initiated against him, (ii) not to invoke Section 171 of the CGST Act, 2017 against him as recommended by the DGAP in its report, (iii) to grant him, an opportunity of personal hearing and to file additional submissions if required before passing any final order in the present investigation and to pass any other order(s) as may be deemed just and proper in the facts of the present. 36. Further, the DGAP has also submitted his clarifications vide his Report dated 03.03.2021 wherein the DGAP has submitted that:- (i). The turnover considered in Table K of his Report dated 26.08.2020 consists of turnover as per list of home ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the DGAP computed the ratio of CENVAT/ITC to the turnover received by the Respondent No. 1 Landowner from such sold area. Since, the DGAP has considered the total CENVAT/ITC availed by the Respondent No. 1 (before reversal on account of unsold units) which pertains to the total saleable area of 3,73,153 sq.ft. and later on computed relevant to turnover, therefore he has correctly considered the total saleable area of the entire units. (iv). there are no restrictions in the CGST Act 2017 and the Rules made thereunder w.r.t. availment of proportionate inputs tax credit even after receipt of Occupancy Certificate pertaining to the units which were sold/consideration received (in part/full) prior to receipt of OC. The Respondent No. 1 has availed ITC of Rs. 22,07,377/- having date post receipt of OC i.e. after 26.12.2018 (which is approx. 5% of total ITC availed of Rs. 4,28,04,787/-). Therefore the DGAP has duly considered the ITC availed post receipt of OC while computing the ratio of CENVAT/ITC to turnover. (v). the reference made to para 5 of Schedule-III of the Central Goods and Services Tax Act, 2017 (Activities or Transactions which shall be treated neither as a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Completion/Occupancy Certificate would attract GST also. Therefore, the ITC available to the supplier can be availed by the supplier at the time of discharging his liability against such units. Further, DGAP has submitted that if the investigation was restricted upto Dec. 2018 then the customers who made payments post Dec. 2018 (i.e. after receipt of GC) and borne the applicable rate of GST @ 12% would be deprived of the benefit of ITC required to be passed on to them under the provisions of Section 171 of the CGST Act 2017. Since, each customer/flat buyer is entitled to receive the due benefit of ITC on services received from the Respondent, the investigation was extended upto Nov. 2019 to cover such customers/flat buyers also. Further, by extending the period, the DGAP has considered the additional ITC of Rs. 22,07,377/- availed by the Respondent post receipt of Occupancy Certificate. The DGAP has also stated that the Authority vide letter dated 26.08.2020 directed to conduct further investigation upto the period of Nov. 2019 in the present case. 37. Further proceedings in the matter could not be completed by the Authority due to lack of required quorum of Members in the Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, the DGAP has submitted that the benefit of Rs. 67,18,426/-was to be passed on by the Respondent to home buyers for the period 01.07.2017 to 30.11.2019 but as per above mentioned Table-M , the Respondent has claimed to have passed on the benefit of Rs. 1,17,37,843/- to 84 home buyers (details given in Annexure-23 of the Report dated 26.08.2020) and to the Respondent No. 2 in the form of Credit Notes in respect of 64 Units against his share @ 35% in the flats of towers A L of the project, and Tax Invoices (as verified by the DGAP from the sample copies of the Credit Notes, tax invoices and undertaking provided by the Respondent). Further, in respect of the Respondent No. 2, the DGAP has submitted that the Respondent No. 2 had acknowledged the receipt of ITC of Rs. 32,17,256/- through credit notes dated 28.04.2019 30.04.2019 and submitted an undertaking of the same on 12.02.2020 to the DGAP. The DGAP has also reported that, the Respondent No. 2 had further passed on an amount of Rs. 97,665/- to 4 buyers to whom demands were raised or payment received during the period 01.07.2017 to 30.11.2019. Credit Notes/Payment Vouchers of which have been verified by the DGAP, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e DGAP has investigated profiteering by the Respondent No. 2 in the latter s role as registered supplier and his liability to pass on the benefit of ITC in terms of Section 171 of the CGST Act, 2017. The DGAP has reported, on verification, as detailed at Table N above that, the amount profiteered by Respondent No. 2 is Rs. 459,286/- in relation to the four units for which demands were raised/advance received during 01.07.2017 to 30.11.2019. On verification, the DGAP has reported that, Respondent No. 2 had passed on benefit amounting to Rs. 97,665/- to such homebuyers by way of credit notes and an amount of Rs. 3,61,621 was not yet passed on till the date of report. (vii). The Authority finds that, the Applicant No. 1 has claimed that he had neither received any refund of excess GST nor received interest on the amount of ITC benefit from the Respondent No. 1. In reply, the Respondent No. 1 had submitted that he had passed on the benefit of ITC to the extent of Rs. 1,06,323/- in the form of two Credit Notes of Rs. 52,445/- and two Tax Invoices of Rs. 53,878/-. The Authority finds that, DGAP has clarified that, the Applicant No. 1 had confirmed the receipt of two Credit Notes dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the provisions made under Section 171 (1) of the CGST Act 2017, which is very clear in its intent. Therefore, in view of the above, the contention of the Respondent is not sustainable. (ix). The Respondent No. 1 has contended that the investigation could not go beyond the application filed by Applicant No.1. In this regard, the Authority finds that Section 171(1) of the CGST Act, 2017 which reads as Any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices. Thus, the legal requirement was abundantly clear that in the event of a benefit of ITC or reduction in rate of tax, there must be a commensurate reduction in prices of the any supply of goods or services. Therefore, law prescribes that benefit of reduction in rate of tax or benefit of increase in ITC should result in commensurate reduction in prices of any Supply and accordingly, it justifies examination of all the supply made by the Respondent No 1 and the Respondent No. 2 beyond the application filed by the Applicant No. 1. Further, the case relied upon by the Respondent No, 1 in respect of M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 171 (3A). Since, no penalty provisions were in existence between the period from 01.07.2017 to 30.11.2019 i.e. the period of investigation, when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively for such period. 39. As per the findings at paragraph 38 supra, the Authority determines the amount profiteered by the Respondent No. 1, during the period 1.07.2017 to 30.12.2019, as Rs, 67,18,426/- and the Respondent No. 2 as Rs. 4,59,286/-. The Authority takes cognizance, based on the DGAP s verification, that the Respondent No. 1 has passed on benefit as per Table M above by credit notes/ on tax invoices of the amount profiteered by him. The Authority takes cognizance, based on the DGAP s verification, that the Respondent No. 2 has passed on benefit as per Table-N above by credit notes of the amount profiteered by him. The Authority directs the Respondent No. 2 to pass on the benefit of Rs. 3,61,621/-along with interest as prescribed under Rule 133 (3)(b) of the CGST Rules, 2017. The details of the homebuyers to whom the profiteered amount was required to be passed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay also be published in minimum of two local Newspapers/vernacular press in Hindi/English/local language with the details i.e. Name of Builder/Supplier- M/s Godrej Project Development Pvt. Ltd. M/s. Magic Info Solutions Pvt. Ltd., Project- Godrej Summit , Location- Gurugram, Haryana and amount of profiteering i.e. Rs.67,18,426/- and Rs.4,59,286/- so that the concerned homebuyers can claim the benefit of ITC/interest, if not passed on. Homebuyers may also be informed that the detailed NAA Order is available on Authority s website www.naa.gov.in . Contact details of concerned Jurisdictional CGST/SGST Commissioner may also be advertised through the said advertisement. The contact details of concerned jurisdictional CGST/SGST Commissioner may also be advertised through the said advertisement. A report in compliance of this order shall be submitted to the Authority and the DGAP by the Commissioners CGST /SGST within a period of 4 months from the date of this order. 42. In view of prevailing Covid pandemics the Hon ble Supreme Court had by its Order dated 10.01.2022 passed in M. A. No. 21/2022 in M.A. no. 665/2021 in Suo Moto Writ Petition (C) No. 3 of 2020 directed as under- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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