TMI Blog2022 (8) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... June, 2017) was 1.43% and during the post-GST period (July, 2017 to September, 2019), it was 5.69% in Project Silver Oak . This clearly confirms that post-GST, the Respondent has benefited from additional input tax credit to the tune of 4.26% [5.69% (-) 1.43%] of the turnover and the same was required to be passed on to the customers/flat buyers/recipients. The DGAP has calculated the amount of ITC benefit to be passed on to all the flat buyers as Rs. 3,45,28,279/- for the project 'Silver Oak' which was availed by the Respondent. Interest - HELD THAT:- The Respondent is liable to pay interest as applicable on the entire amount profiteered, i.e. Rs. 3,45,28,279/- for the project 'Silver Oak'. Hence the Respondent is directed to also pass on interest @18% to the customers/ flat buyers/ recipients on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ payment, as per provisions of Rule 133 (3) (b) of the CGST Rules 2017. Penalty - HELD THAT:- The Respondent has denied benefit of IT to the buyers of the flats being constructed by him in his project 'Silver Oak' in contravention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter. Accordingly, investigation was initiated to collect evidence necessary to determine whether the benefit of ITC had been passed on by the Respondent to the Applicant No. 1 in respect of construction service supplied by him. 2. The DGAP has stated that on receipt of the reference from the Standing Committee on Anti-profiteering, a Notice under Rule 129 of the CGST Rules was issued by the DGAP on 23.10,2019, calling upon the Respondent to reply as to whether he admit 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. The Respondent was also given an opportunity to inspect the non-confidential evidences/information furnished by the Applicant No. 1 during the period 30.10.2019 to 31.10.2019. However, the Respondent did not avail of this opportunity. The Applicant No. 1 vide e-mail dated 09.03.2020, was afforded an opportunity to inspect the non-confidential documents/reply furnished by the Respondent on 13.03.2020 or 16,03.2020, which the Applicant did not avail of. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -GST and Post-GST. o) List of home buyers in the project Silver Oak along with details of benefit passed on p) Progress Report submitted to RERA till September, 2019. 5. The DGAP has also stated that the Respondent vide Notice dated 23.10 2019, was informed that if any information/documents were provided on confidential basis, in terms of Rule 130 of the Rules, a non-confidential summary of such information/documents was required to be furnished. The Respondent vide his e-mail dated 10.06.2020 had informed that all the documents and information including copies of the returns submitted were to be considered confidential information and should not be shared with any third party/person. 6. The DGAP on perusal of the subject application, various replies of the Respondent and the documents/evidences on record has mentioned that the main issues for determination were: - (i) Whether there was benefit of reduction in rate of tax or ITC on the supply of construction service by the Respondent after implementation of GST w.e.f. 01.07.2017 and if so, (ii) Whether the Respondent passed on such benefit to the recipients by way of commensurate reduction in price, in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CGST Act, 2017 (Activities or Transactions which shall be treated neither as a supply of goods nor a supply of services) which reads as Sale of land and, subject to clause (b) of paragraph 5 of Schedule Its sale of building . Further, clause (b) of Paragraph 5 of Schedule II of the CGST Act, 2017 reads as (b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion 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 said was provisional ITC which may be required to be reversed by the Respondent, if such units remained unsold at the lime of issue of the completion certificate, in terms of Section 17(2) Section 17(3) of the CGST Act, 2017, which read as under:- Section 17 (2) -Where the goods or services or both were used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 4. Input Tax Credit of GST Availed (D) - 7,10,66,924 7,10,66,924 5. Turnover for Flats as per Home Buyers List (E) 3,24,07,778 72,36,81,229 72,36,81,229 6. Total Saleable Area (in SQF) (F) 1,31,890 1,31,890 7. Total Sold Area (in SQF) relevant to turnover (G) 7,237 76,366 8. Relevant ITC [(H)= (C)*(G)/(F)/(D)*(G)/(F)] 4,63,343 4,11,48,660 Ratio of Input Tax Credit Pre/Post-GST [(I)=(H)/(E)] 1.43% 5.69% 10. The DGAP has claimed from the above Table-'B', that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April, 2016 to June, 2017) wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 289 11. Commensurate demand price J=H+I 77,59,94,697 12. Excess Collection of Demand or Profiteering Amount K=G-J 3,45,28,279 12. The DGAP has claimed from Table- C' above that the additional ITC of 4.26% 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 CGST Act, 2017. the benefit of such additional ITC was required to be passed on to the recipients. 13. The DGAP has deduced from the above calculation explained in Table-C that on the basis of the aforesaid CENVAT/input tax credit availability pre and post-GST and the details of the amount collected by the Respondent from the Applicant No. 1 and other buyers in respect of the flats sold by the Respondent during the period 01.07.2017 to 30,09.2019. the benefit of ITC that needed to be passed on by the Respondent to the buyers of flats came to Rs. 3,45.28.279/- which included 12% GST on the base amount of Rs. 3,08,28,820/-. The unit no. wise break-up of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eport was considered by this Authority in its meeting held on 07.072020 and the Respondent was issued a notice on 13.07.2020 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 and the Respondent and Applicant No.1 were asked to appear before the Authority on 03.022021 via video conferencing due to Covid-19 pandemic. The personal hearing in the matter was held on 03,02.2021 via video-conferencing. Sh. Vinay Kedia, Director, Ms. Tanvi Kambli, Sh. Pratik Jain, Sh. Niren Shethia, Sh. Chirag Bhinde and Ms. Shruti Nair, Consultants, appeared on behalf of the Respondent and Sh. Arnav Datta, the Applicant No. 1 appeared in person, Thereafter, before the Order could be passed, one of the Technical Members of the Authority who had heard the matter was transferred out and thereafter the Chairman of the Authority had also left the Authority. Since, the quorum of the Authority of minimum three Members, as provided under Rule 134 was not available till 23.02.2022, the matter could not be decided. With the joining of two new Technical Members in February 2022, the quorum of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d into while arriving at the saleable prices for each project. The Respondent has further stated that the Project Hill view was completed prior to GST, and hence, the benefit on account of credit was limited to the eligible CENVAT credit for services used in the construction. However. in the case of Project Silver Oak, the Respondent while determining the average price to be offered to customers, had projected the benefit of ITC that would be available to the Respondent owing to the introduction of GST and the additional benefit that would flow to the Respondent due to eligibility of tax paid on the procurement of goods (on which credit of Excise Duty and VAT/CST was unavailable prior to GST) and factored in such benefit against the construction cost. Notwithstanding the aforesaid points, the Respondent has submitted that the offer prices referred above were subject to various market factors impacting the pricing. However, the Respondent has broadly maintained his average pricing computed on a periodic basis for determining the offer prices of the flats, Further, it was pertinent to note that the market conditions and pricing practically remained constant in the period from 2017 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l View computed for agreements entered one year prior to receipt of OC, i.e. prior to February 2017; #OC for Hill View and Silver Oak was received in February 2017 and May 2020 respectively. The average percentage reduction between the sale prices of the two projects was around 6.2%. The Respondent has further submitted a CA certificate on the detailed comparison of costs per sq. ft., average sale prices and margins in both projects to substantiate the comparison. Additionally, he has attached the photographs of hoardings projecting the prices offered in both projects, The Respondent has tried to establish from the above comparison of prices between the two equitable projects that the prices for the Silver Oak project were arrived at after incorporating the benefit of ITC available to him on procurements made in the post GST period and hence, it was evident that the Respondent has suo-moto passed on the credit benefit appropriately to his customers. The Respondent has further averred that on computing the actual benefit earned by hill (i.e. primarily on account of eligibility of ITC on his goods procurements which was unavailable in the erstwhile regime), the benefit pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. Therefore, he has stated that the investigation Report submitted by the DGAP should not be considered. III. Computation of benefit on the basis of the DGAP's methodology was not suitable for the real estate industry and has already been stayed by the Hon ble Delhi High Court: - The Respondent has submitted that the approach and methodology adopted by the DGAP needed reconsideration as the same was not suitable for the real estate industry, since there was no link between the accrual of credit and the taxable turnover reported for any selected period. Ho has further, submitted that similar computation methodology adopted in the case of M/s Pyramid Infratech Pvt. Ltd. was presently under review by the Hon'ble Delhi High Court and interim relief has been provided by granting a stay on the order in question. IV. Section 171 of the CGST Act was ultra vires the Constitution and thus, investigation should be either dropped or kept in abeyance till the constitutional validity was being scrutinized by the Hon'ble High Court:- The Respondent has submitted that Section 171 of the CGST Act violated Article 19(1)(G) of the Constitution. Right to trade was a fundamenta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... analyzing the reasons. The actual reasons for the availability of such incremental credits were not looked into for arriving at the benefits to be passed. He has highlighted that there were primarily 2 reasons for such incremental credits- Increase in tax rates i.e. tax on services from 15% to 18% and on goods from 22% to 28%; Availability of blocked credits 3) The Respondent has averred that the rate of tax on services was 15% in pre-GST regime. which was subsequently raised to 18% in GST. The credit availability/eligibility was not changing as Service Tax paid on execution of works contract was earlier available as CENVAT for utilization against the output tax liability; and the same continued to be available as credit under GST. The change on this account was the increase in tax rate from 15% to 18% for which additional working capital was applied. 4) The DGAP should have taken into consideration this aspect as there was no change in the credit availability/ eligibility and only an increase in tax rate was the reason for such incremental credit. 5) Further, in pre-GST regime the credit of Excise Duty/ VAT on inputs was not available as it was expli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct was already available as CENVAT against the taxable Service Tax liability. Such credit on services continued to be available under GST regime as well. Given the above fact, there has been an increase in the rate of tax on services from 15% to 18% from the pre-GST to the current regime, for which additional working capital has been applied. Treating such additional credit arising on account of increased tax rate as a benefit in the hands of the Respondent, would be an incorrect approach, and since the benefit of additional credit was on account of eligibility of taxes paid on goods in the GST regime, which was unavailable earlier, it would be more appropriate to exclude the element of eligible credits on services to compute the appropriate amount of benefit to be passed on. The additional benefit on account of ITC (majorly on goods) amounts to approx. Rs. 3.43 crores, i.e. a benefit of 370 per sq. ft. The Respondent has averred that the actual benefit passed on by the Respondent to his customers was much higher than such amount and hence, there was no question of anti-profiteering or any benefit not being passed on. VII. Approach adopted by the DGAP need reconsideration:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- Cost incurred on construction has no direct link with the Turnover in case of Real Estate Industry. Typically, there was a wide gap between Turnover (i.e. collection from customers) and construction cost at the beginning of project and over the construction lifetime it narrowed. This resulted in lower ITC % to Turnover in the initial period and a higher ITC % to Turnover in the later period. Thus, computation of benefit on the basis of percentage of ITC to Sales in the respective regime was not the correct methodology to compute the GST benefit, since there was no synchronization between the accrual of credit and the value of taxable service during a certain period. The below table captured the ratio of ITC to the taxable turnover of three quarters from July 2017 to March 2018 for the Project Silver Oak (Le. from the post GST period):- Sr.No. Particulars July 17 to Sept 17 Oct 17 to Dec 17 Jan 18 to Mar 18 Total (July 17 to 18) 1. Input tax credit of GST (A) 5,802,931 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case, such approach was not reliable to determine the quantum of benefit to be passed on. It can be observed from the given illustration that there was a variation in the anti-profiteering amounts computed for the 3 identical projects A, B, and C through the DGAP method, though the related factors such as costs, stage of completion, taxes, etc. have been assumed to be same. However, the results through the DGAP approach were distorted. Basis the above analysis, he has submitted that the approach and methodology adopted by DGAP needs reconsideration as the same was not relevant for the real estate industry which only works on the basis of percentage completion of the property. Even the architect certification, demand from the customers, approvals from the banks were all based on the stage/percentage completion of the property. 6) Assuming methodology adopted by the DGAP stood scrutiny of legislative requirements, there were multiple apparent errors in the computation done by the DGAP:- Computation considered additional tax of 12% on alleged GST benefit. The Respondent has submitted that the computation of alleged profiteering done by the DGAP co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis for anti-profiteering provisions. 8) ITC reversal on account of sales effected post receipt of completion certificate (CC) occupation certificate (OC) should be reduced from the total post GST ITC:- By virtue of sections 17 (2) and 17(3) of the CGST Act, the Respondent was required to carry out a proportionate reversal of ITC attributable to the units sold post the receipt of CC, since such sales were exempted from the payment of GST. The post GST ITC considered by the DGAP also included such ITC which was required to be reversed by the Respondent (ITC reversal for Silver Oak towards post CC / OC sales was approx. Rs. 0.9 crores). As per Section 171 of the GST law. the Respondent was required to pass on the benefit of any additional ITC available in the hands of the Respondent to his customers by way of commensurate reduction in prices. However, given that the Respondent was liable to reverse ITC to the extent of flats sold after receipt of CC / OC, such ITC cannot be termed as a benefit available with the Respondent. Hence, including such amount in the computation for determining the anti-profiteering benefit would not be a correct approach. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensure that Section 171 of the CGST Act was interpreted in a uniform manner across all taxpayers. Such methodology was the crux of Section 171 of the CGST Act because the same would ensure equity, consistency and uniformity in defining the scope of Section 171 of the CGST Act. 2) No machinery provisions available under GST law and hence, charging provisions of anti-profiteering would fail in this case:- The Respondent has stated that this Authority was constituted to curb unfair profit-making activities by the trading community so as to ensure that the traders did not profiteer on account of reduction in GST rate or enhanced GST credit under the GST regime. Further, the GST Flyer on this Authority published by the Central Board of Indirect and Customs (CBIC) provided an overview of the anti-profiteering provisions stipulating that this Authority has been constituted to examine whether the suppliers of goods and/or services have passed on the benefit of reduced GST rate or enhanced ITC by way of commensurate reduction in the prices of goods and/or services so as to ensure that the consumer was protected from arbitrary price increase in the name of GST. The Respondent h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resources Allocation wherein it was held as under:- Therefore, a State action has to be tested for constitutional infirmities qua Article 14 of the Constitution. The action has to be fair, reasonable, non-discriminatory, transparent, non-capricious, unbiased, without favouritism or nepotism, in pursuit of promotion of healthy competition and equitable treatment. It should conform to the norms which were rational, informed with reasons and guided by public interest etc. All these principles were inherent in the fundamental conception of Article 14. This was the mandate of Article 14 of the Constitution of India The Respondent has submitted that this Authority might issue suitable guidelines for computation of the extent of profiteering and direct the DGAP to submit the revised report in accordance with such guidelines. IX. Factors affecting pricing in real estate industry:- The Respondent has Further averred that real estate industry was a service industry and was different than a manufacturing/trading concern. The real estate industry has its own mode of operation, pricing, marketing, service delivery. Real estate industry differed from region to region, state to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stry and has already been stayed by the Hon'ble Delhi High Court:- The power to determine Methodology Procedure has been delegated to the this Authority under Rule 126 of the CGST Rules. 2017 as per the provisions of Section 164 of the CGST Act. The above delegation has been granted to this Authority and functions and powers to be exercised by the Authority have been approved by Legislature. The Authority in exercise of power delegated to it under the Rule 126 has notified the Methodology and Procedure vide Notification dated 28.03.2018 which was also available on its website. However, no fixed/uniform mathematical methodology can be determined as the facts of each case differ. Therefore, the determination of the profiteered amount has to be done by taking into account particular facts of each case. As the facts of each case were different in a Real Estate project like percentage of completion of project; different proportion ITC availed because of different purchase pattern of inputs like cement, steel, fittings, etc.; area sold; taxable turnover etc, before or after the GST implementation. All these factor have been carefully considered in preparation of Report in the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the this Authority. These included WP (C) 378 of 2019 (Hindustan Unilever Ltd. v. Union of India) and WP (C) 2347 of 2019 (Jubilant Foodworks Ltd. v. Union of India). Therefore all the cases raising similar issues were bundled together and final decision was yet to come. d) Incremental credit considered instead of blocked credit:- The DGAP has observed that prior to 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 flats for the project Silver Oak sold by him. The Respondent was not eligible to avail ITC of VAT paid on the inputs, as he was functioning under Composition Scheme. Further. post-GST. the Respondent could avail ITC of GST paid on all the inputs and input services. With regard to increase in the burden of output tax it was submitted that the Respondent had charged the same from his customers. As regards the blocked credit, it was mentioned that the credit which was not available in the pre GST era was part of his cost and post GST this credit became available, the same should have been passed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply i.e. each taxable supply made to each recipient thereby clearly indicating that setting off of benefits by any supplier was not allowed. Then the word commensurate gave the extent of benefit to be passed on by the way of reduction in price. The Authority therefore has to see that the benefit if at all passed to the recipient by the supplier was actually commensurate to the reduction of rate of tax or the additional ITC available. However, to give further clarification and to elaborate upon this legislative intent behind the law, this Authority has been empowered to determine/expand the scope, procedure and methodology in detail. It was also submitted that the Methodology and Procedure has been notified by this Authority vide its Notification dated 28.03.2018 under Rule 126 of the CGST Rules, 2017. As the facts of each case were different in a real estate project like percentage of completion of project: different proportion ITC availed because of different purchase pattern of inputs like cement, steel, fittings, etc.; area sold: taxable turnover etc. before or after the GST implementation, for example, if a project was completed 10% before the implementation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Respondent has not submitted any such data or proof. The DGAP has offered comments only on matter relevant to present case. If comments were not offered on an issue then it did not mean acceptance. Only Silver Oak project has been investigated and reported in terms of Section 171 of the CGST Act, 2017 as per all the data and submissions made by the Respondent mentioned in the Report. In his submissions dated 31.08.2020, the Respondent had suggested his own methodology and compared pricing of the project under investigation with another completed project. In this regard, it was submitted that the DGAP's Report was based on the methodology as per section 171 of the CGST Act, 2017 and profiteering could not be worked out comparing with the pricing of other project. 19. We have carefully considered the Reports of the DGAP, the submissions made by the Respondent and the material placed on record. On examining the various submissions we find that the following issues need to be addressed in the present case:- a. Whether the Respondent was required to pass on and has passed on the commensurate benefit of reduction in the rate of tax to his customers? b. Whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rior to 1 July 2017 and the remaining 93 flats were sold in the GST regime. 22. The Respondent has contended that the DGAP's Report was based on incomplete facts and information as complete data/information could not be furnished by him to the DGAP on account of Covid-19 restrictions. However, it is evident from the submissions of the Respondent that at no stage he has produced the data before this Authority which he had allegedly not produced before the DGAP which falsifies his above claim. The DGAP's Reports show that enough opportunities were afforded to the Respondent to submit his complete documents, however, he had failed to produce any further data. Therefore, the above contention of the Respondent cannot be accepted. 23. The Respondent has argued that the computation of benefit on the basis of the DGAP's methodology was not suitable for the real estate industry and it has already been stayed by the Hon'ble Delhi High Court. In this regard it is clear that the the 'Procedure and Methodology' for passing on the benefits of reduction in the rate of tax and ITC or for computation of the profiteered amount has been outlined in Section 171 (1) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... word 'Commensurate' as it had no intention that it should be used to denote proportionality and adequacy. The benefit of additional ITC would depend on the comparison of the ITC/CENVAT credit which was available to a builder in the pre-GST period with the ITC available to him in the post GST period w.e.f. 01.07.2017. Similarly, the benefit of tax reduction would depend upon the pre rate reduction price of the product and quantum of reduction in the rate of tax from the date of its notification. Computation of commensurate reduction in prices is purely a mathematical exercise which is based upon the above parameters and hence it would vary from product to product or unit to unit or service to service and hence no fixed mathematical methodology can be prescribed to determine the amount of benefit which a supplier is required to pass on to a buyer. Similarly, computation of the profiteered amount is also a mathematical exercise which can be done by any person who has elementary knowledge of accounts and mathematics as per the Explanation attached to Section 171. However, to further explain the legislative intent behind the above provision, this Authority has been authorised to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te mathematical calculations are required to be prescribed separately for passing on the benefit of ITC and computation of the profiteered amount. This Authority is under no obligation to provide the same to the Respondent. The Respondent cannot deny the benefit of ITC to his customers on the above ground and enrich himself at the expense of his buyers as Section 171 provides clear cut methodology and procedure to compute the benefit of ITC and the profiteered amount and he is well aware of the benefit of additional ITC which he has obtained post-GST. Further, there is no stay on methodology adopted by the DGAP while calculating profiteering amount This observation of the Respondent is unfounded as anti-profiteering matters are sub-judice in Hon'ble High Courts. Therefore, this Authority finds that the above plea of the Respondent cannot be accepted 24. The Respondent has alleged that Section 171 of the CGST Act, 2017 is ultra vires of the constitution and thus, investigation should be either dropped or kept in abeyance till the constitutional validity was being scrutinised by the Hon ble High Court. In this connection it would be appropriate to mention that this Authority h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the incremental credit considered instead of blocked credit by the DGAP in his Report dated 26,06.2020. In this regard, this Authority agrees with the DGAP that prior to 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 flats for the project Silver Oak sold by him. The Respondent was not eligible to avail ITC of VAT paid on the inputs as he was availing Composition Scheme. Further, post-GST, the Respondent became eligible to avail ITC of GST paid on all the input goods and services. The Respondent is deliberately trying to mislead by claiming that he has been compelled to pay more GST on services of 18% when Service Tax in the pre-GST period was 15% only, whereas not even a single rupee of tax was being paid in the pre-GST regime or in the post-GST regime by him as he was getting full CENVAT credit on the taxes paid by him in the pre-GST period and was adding those taxes on which ITC was not available like the Central Excise Duty in his cost of the flat and realizing it from his customers. He is also getting full ITC on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional GST on these excess base prices which they should not have paid. By doing so the Respondent has defeated the very objective of both the Central as well as the State Governments which aimed to provide the benefit of ITC to the general public. The Respondent was legally not required to collect the excess GST and therefore. he has not only violated the provisions of the CGST Act. 2017 but has also acted in contravention of the provisions of Section 171 (1) of the above Act as he has denied the benefit of ITC to his customers by charging excess GST. Had the Respondent not charged the excess GST, the customers would have paid less price while purchasing the flats from the Respondent and hence the above amount has rightly been included in the profiteered amount as it denotes the amount of benefit denied by the Respondent. Therefore, this Authority finds that the above contention of the Respondent is untenable and hence it cannot be accepted. 29. The Respondent has also contended that ITC reversal on account of sales effected post receipt of completion certificate (CC)/ occupation certificate (OC) should be reduced from the total post GST ITC. In this regard, the Authority fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors like Market dynamics with respect to unsold inventory and changing demand and supply; Payment plan taken from customer e.g. Construction linked payment, 20:80 payment scheme, 10:90 payment scheme etc.; Operational schemes/discounts- Festival offers on Akshay Tritiya, Gudi Parva, free stamp duty/registration etc.; Stage of construction for e.g. booking in pre-launch of project vs booking at considerable completion of project; Prices of competitor in near vicinity, location preference of customer affect pricing in real estate industry are considered while fixing price. However. this contention is baseless as these are promotional schemes launched by the Respondent to increase his sales and have nothing to do with ITC benefit. Therefore, irrespective of above parameters, he cannot deny ITC benefit to the eligible buyers as per Section 171. 32. The Respondent has averred that he has suo motu passed on the ITC benefit appropriately to the eligible customers which was higher than the quantum of additional ITC. From the available records, this Authority finds that the Respondent has failed to submit any documentary evidence which confirms that he has passed on benefit of ITC in ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into account in accordance with Section 171 of the Act, 2017. Further, there is no principle of accounting which forbids computation of profiteered amount as has been done in his Report. Therefore, the above claim of the Respondent Is not defensible. 36. The Respondent has contested that the area was not a correct basis to allocate credit pertaining to sold and unsold portions and value was more logical and correct base. Allocation of credit based on area does not concur with the provisions of GST law. This Authority concurs with the DGAP that area sold has been considered by the DGAP wherein the payment has been received by the Respondent from the buyers while computing ITC to turnover ratios which gives relevant ITC. Hence, it is logical and apt method to arrive at profiteering amount in terms of Section 171 of the Act, 2017. 37. The Respondent has also mentioned the judgement passed in the case of Commissioner of Income Tax v. B. C. Srinivasa Setty in support of his argument. When this judgement was studied it was found that it is related to valuation of the goodwill for computation of income tax which is not the matter in the present case. Hence. it is submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (April, 2016 to June, 2017) was 1.43% and during the post-GST period (July, 2017 to September, 2019), it was 5.69% in Project Silver Oak . This clearly confirms that post-GST, the Respondent has benefited from additional input tax credit to the tune of 4.26% [5.69% (-) 1.43%] of the turnover and the same was required to be passed on to the customers/flat buyers/recipients. The DGAP has calculated the amount of ITC benefit to be passed on to all the flat buyers as Rs. 3,45,28,279/- for the project 'Silver Oak' which was availed by the Respondent the details of which are mentioned in Table- C supra. 41. The Authority finds no reason to differ from the above-detailed computation of profiteering in the DGAP's Report or the methodology adopted and hence, this Authority determines the profiteered amount for the period from 01.07.2017 to 30.09.2019, in the instant case, as Rs. 3,45,28,279/- for the project 'Silver Oak'. 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/shops commensurate with the benefit of ITC received by him as has been detailed above. 42 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of two local Newspapers/vernacular press in Hindi/English/local language with the details i.e. Name of builder (Respondent) - M/s Prescon Realtors and Infrastructure Pvt. Ltd.. Project- 'Silver Oak' Location- Maharashtra and amount of profiteering so that the concerned homebuyers can claim the benefit of ITC if not passed on. Homebuyers may also be informed that the detailed NAA Order is available on Authority's website www.naagov.in. Contact details of concerned Jurisdictional CGST/SGST Commissioner may also be advertised through the said advertisement. 47. The concerned jurisdictional CGST/SGST Commissioner shall also submit a Report regarding compliance of this order to this Authority and the DGAP within a period of 4 months from the date of passing of this order. 48. Further, the Hon'ble Supreme Court. vide its Order dated 23.03.2020 in Suo Moto Writ Petition (C) no. 3/2020, while taking suo-moto cognizance of the situation arising on account of Covici-19 pandemic, has extended the period of limitations prescribed under general law of limitation or any other specified laws (both Central and State) including those prescribed under Rule 133 (1) of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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