TMI Blog2022 (8) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be offset against others to whom less ITC benefit has been provided or no benefit have been provided at all. The Authority finds that the verification as done by the DGAP in terms of this Authority s Order No. 01/2021 dated 16.03.2021 does not substantiate the submissions and contentions of the Respondent that they have passed on the profiteered amount along with interest to each recipient of supply. The Authority finds that, the DGAP has made all efforts towards verification in terms of the said Order No. 01/2021 dated 16.03.2021 of the Authority, but, the Respondent was unable to provide the requisite evidence which was directed in the said Order. Hence, the Authority determines that the Respondent has profiteered an amount of Rs. 7,90,95,475/- (i.e. Rs. 7,06,20,959/- + Rs. 84,74,515/- i.e. GST thereon). The details of all eligible homebuyers/customers and the amount of the benefit to be passed on to each of them is enclosed as the Annexure-A to this Order. Penalty - HELD THAT:- The Respondent has denied the benefit of ITC to the buyers of his flats in contravention of the provisions of Section 171 (1) of the CGST Act 2017. The Authority holds that the Respondent has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red the matter back to the DGAP to reinvestigate the case on the following issues:- a. The Respondent s claim of having passed on the benefit of ITC of Rs. 8,28,91,520/- was required to be verified against third party evidence in the form of written acknowledgment receipts from the home buyers evidencing the receipt of ITC benefit, including the quantum and also evidencing that the said benefit was passed on in terms of Section 171 of the CGST Act, 2017. For this, acknowledgments from the homebuyers along with their contact details i.e. emails, Mobile Nos. were to be produced by the Respondent to the DGAP. b. To verify whether the applicable interest on the profiteered amount has been paid or not. 4. The DGAP, on receipt of the above mentioned I.O. No. 01/2021 dated 16.03.2021, reinvestigated the matter as per the directions of this Authority and submitted his Investigation Report dated 18.11.2021, wherein, he had, inter alia, stated that:- a. The Authority went through the aforesaid Investigation Report submitted by the DGAP in the subject case and passed an Interim Order No. 01/2021 dated 16.03.2021 which was received in the DGAP on 22.03.2021. Vide pars 36 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the matter is sent back to the DGAP for further investigation as per the provisions Section 171(2) of the CGST Act, 2017 read with Rule 133(4) of the CGST Rules 2017. This Authority directs the DGAP to verify the evidence submitted by the Respondent to evidence the passage of ITC benefit from the Respondent to the homebuyers and submit his Report, alongwith all the relied upon documents/evidence. The DGAP is accordingly directed to re-investigate the above issue and furnish his Report under Rule 129 (6) of the CGST Rules, 2017. 40. It has also been observed that the Report of the DGAP is silent on the issue whether the Respondent has paid applicable interest to all the eligible recipients/flat buyers/customers or not. In view of the above, we direct the DGAP to investigate and verify whether applicable interest on the profiteered amount, which the Respondent has already claimed to have passed on to his customers/flat buyers, has been paid by him or not from the date from the above amount was profiteered till the date of passing on/payment, as per the provisions of Rule 133 (3) (b) of the CGST Rules, 2017. c. On the basis of above reasons, the Authority, sent back the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was stated that in cases where the limitation would had expired during the period between 15.03.2020 till 14.03.2021, notwithstanding the actual balance period of limitation remaining, all persons shall had a limitation period of 90 days from 15.03.2021. In the event the actual balance period of limitation remaining, with effect from 15.03.2021, is greater than 90 days, that longer period shall apply . The above relief had been extended and the period from 14.03.2021 till further orders shall also stand excluded in computing the limitation period as per the Hon ble Supreme Court s Order dated 27.04.2021 passed in Miscellaneous Application No. 665/2021 in SMW(C) No. 3/2020. Prather, the above relief had been extended and the period from 02.10.2021 shall had limitation period of 90 days from 03.10.2021 as per the Hon ble Supreme Court s Order dated 23.09.2021 passed in Miscellaneous Application No. 665/2021 in SMW(C) No. 3/2020. j. In response to the DGAP letter dated 31.05.2021 and subsequent reminders and emails issued by the DGAP to the Respondent, the Respondent replied and submitted documents/information vide e-mails dated 29.09.2021, 20.10.2021, and 28.10.2021. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is claim of having been passed on the benefit of ITC. Accordingly, during the reinvestigation, vide letter dated 31.05.2021, the Respondent was requested to provide the contact details i.e., e-mail and Phone/Mobile Nos. of the home buyers and details of payments of ITC benefit and applicable interest along with documentary evidences as per the directions contained in the aforesaid order of this Authority. Further, reminders were issued on 08.07.2021, 10.08.2021, 23.09.2021, 06.10.2021, 14.10.2021 and 22.10.2021 to the Respondent. A letter was also sent to the jurisdictional Central GST Authorities on 27.10.2021, requesting him to collect the requisite information/data/documents from the Respondent and forward the same to this office. However, no reply was received. The main issues to be examined/verified were: i. As per the directions contained in pare 39 of the aforesaid order of this Authority, the Respondent s claim of having been passed on the benefit of ITC of Rs.8,28,91,520/- was required to be verified against third party evidence in the form of written acknowledgments receipts from the home buyers evidencing the receipt of the ITC benefit, including his quantum and als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed as no demands were raised from these two home buyers in post-GST period. However, out of these two, the Respondent had claimed to be passed on an amount of Rs.6,482/ to one home buyer. Further, the Respondent had provided the email ids of 174 (including Applicant No. 1) home buyers only. In order to verify the claim of the Respondent, c-mails were sent to these 173 buyers. In respect of remaining 1 home buyer, e-mail was not sent as no profiteering could be computed in respect of this home buyers as no demands were raised by the Respondent to this home buyer during post-GST period. Out of 173 emails, replies from only 32 home buyers had been received. Out of these 32 home buyers, 30 had continued that the benefit of GST Input Tax Credit had beat received, 2 had denied that benefit of GST/Input Tax Credit had not been received by him from the Respondent. It is pertinent to mention here that the email ID of the Applicant No. 1 was available in the Application Form (APAF-1) and email was sent to him by the DGAP at the time of initial investigation. The Applicant No. 1 had already confirmed the receipt of Rs.1,75,850/- from the Respondent vide email dated 28.08.2020. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -6,482 No profiteering computed but claimed to be passed or Mail sent but no reply received. 6. Other than Applicant 7 4,58,670 8,02,275 0 -3,43,605 Emails were sent but no reply received. Even if, the Respondent passed the benefit, the excess benefit passed cannot be appropriated with other buyers. 7. Other than Applicant 132 1,89,69,934 1,45,95,940 0 43,73,994 Emails were sent but no reply received. Even if, the Respondent passed the benefit, Respondent is still required to pass on the differential amount. Sub Total (Not replied) III=5+6+7 140 1,94,28,604 1,54,04,697 0 43,73,994 Buyers to whom emails were sent but no reply received. Sub Total (Emailed) IV=II+III 173 2,43,41,094 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on to 198 home buyers cannot be appropriated with the due benefit of 255 home buyers. Therefore, even if the claim of the Respondent with regards to passing on of the benefit of additional ITC of Rs.8,28,91,520/- was accepted, the Respondent was still required to pass on the benefit of additional ITC of GST of Rs.72,06,438/- to 255 home buyers, over and above the benefit of the additional ITC of GST to the tune of Rs. 8,28,91,520/- already claimed to had been passed on to the borne buyers. o. As regards the second issue whether the applicable interest out the profiteered amount had been paid or not by the Respondent to home buyers, it was observed that the Respondent had claimed that he bad passed on the benefit of ITC of GST including applicable interest @18% to all the home buyers. However, the Respondent was requested to provide the details of payment of interest along with computation in terms of the guidelines for computation of interest on profiteered amount available on website of this office. The Respondent did not provide the same. Further, the Respondent also not provided the details required for computation of interest amount i.e., amounts raised to home buyers al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of Rs.94,154/- as mentioned at SI. No. 2 of the Table-A above. Further, in respect of 29 home buyers, the Respondent had passed on Rs.33,78,681/ against the profiteered amount of Rs.43,95,687/- thereby having passed on less benefit of ITC as computed in the investigation report. Therefore, the benefit of ITC of Rs.36,44,497/- passed on to 31 home buyers including an amount of Rs.1,71,662/- of profiteered amount determined and confirmed in respect of Applicant No. 1 and an amount of Rs.34,72,835/- in respect 30 home buyers other than Applicant No. 1 stands verified by the DGAP. q. Despite the best efforts made by the DGAP, the necessary verification in respect of only 31 home buyers out of 452 could be done. However, in respect of remaining 421 home buyers necessary verification could not be completed as; i. the Respondent had failed to provide contact details of 278 home buyers; ii. out of 174 home buyers (whose entails ids were provided by the Respondent), who were contacted by the DGAP to verify the claim of the Respondent via entails, 142 had not responded. Therefore, as stated in above pares, the Respondent is required to pass on the benefit of profiteered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Input Tax Credit/Cost Reduction when the benefits were realized by the Respondent. c. Accordingly, upon analyzing all the factors in detail, as stated above and in the intimations sent to the Customers, the Respondent had worked out an amount of Rs. 8,28,91,520/- which had consequently been passed on to the Customers by way of reduction in prices. Therefore, the Respondent submitted that he had already passed on the amount of Its. 8,28,91,520/- to the Customers. Apartment wise break up of GST benefit passed on to Customers was enclosed. The Company vide his earlier submissions had provided the methodology based on which the ITC benefit had been computed and how the same had been apportioned between all the Customers. d. The amount of ITC that had been worked out by the DGAP is Rs. 7,90,95,475/- whereas the amount of ITC that had been passed on the Customers is Rs. 8,28,91,520/- which is higher the amount computed by the DGAP. Copy of the confirmation letters received from the Customers evidencing receipt of benefit of ITC were also enclosed. e. Based on the above, the provisions of section 171 of the CGST Act, 2017 would have been contravened, had the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm the benefits provided by the developer to them. This could he corroborated with the fact that out of 173 emails sent to the customers by the DGAP for verification of the Respondent s claim of having been passed on the benefit of ITC of GST, 140 customers did not reply to the same. Hence, if these customers bad not replied then from this it cannot be inferred that the benefit of ITC was not passed on to these customers. Furthermore, as stated in the DGAP Report, that out of 33 customers who replied to the DGAP s confirmation emails, 31 customers (approx. 94%) had already confirmed the fact of receiving the ITC benefit by him and merely 2 customers had denied. However, the due benefit of ITC was passed on by the Respondent to these 2 customers also which if this Authority thinks fit so, might ask these customers to appear before this Authority and might specifically ask him as to why he had denied so whereas the Respondent had actually passed on the benefit of ITC and submitted the genuine documents like Credit Notes, Customers Account Ledger in support of the claim of having been passed on the due benefit to all the customers. l. To further substantiate the fact of having be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... post GST is 30 months i.e., from 01.07.2017 to 30.09.2019 which is legally incorrect. there should be equal periods of time in pre and post GST periods for comparison of ITC availed/available to the Respondent, to evaluate the actual benefit of ITC accrued to the Respondent in post GST period as compared to the pre-GST period. However, in Real Estate Sector, the supply of the construction services to be provided to the customers do continue for long span of time period. Hence, at a particular point of time it is difficult to assess actual benefit accrued to any service provider due to change in tax regime. Construction services were entirely based on milestones. At a particular milestone, the service provider raises the demands to customers and as per law, merely raising the demands, the service providers become liable to pay Service Tax/GST on the demanded amount whereas the actual realization of that amount takes long time. Hence, in several cases, the service providers discharge the tax liability from his own without having received the actual demands raised to customers. Therefore, the actual benefit of ITC accrued to the service provider could only be ascertained at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2021, specifically directed the Respondent to procure the acknowledgements from all the home buyers to substantiate his claim of having been passed on the benefit of ITC to all the customers and also directed the DGAP to verify the claim of the Respondent from all the home buyers through emails and Phone Mobile Nos. which were required to be provided by the Respondent to the DGAP. The Respondent failed to produce the acknowledgements from the home buyers. Further, the Respondent provided email ids of 173 home buyers only to which emails were sent by the DGAP and necessary verification was done accordingly and on getting confirmation reply through entails from the respective home buyers, the claim of the Respondent was considered in the report dated 18.11.2021 submitted by the DGAP under Rule 133(4) of the CGST Rules, 2017. c. This submission was also made by the Respondent before DGAP during re-investigation of this case tinder Rule 133(4) of the CGST Rules, 2017 and had duly been mentioned in the report dated 18.11.2021 submitted by the DGAP. This certificate was submitted by the Respondent in compliance with the observations made by the Authority in Para 36 of the I.O. No.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (01.04.2016 to 30.06.2017) and post-GST (01.07.2017 to 30.09.2019) periods was not compared alone. In the instant case, the DGAP had compared the percentage (%) of ratio of ITC to the taxable turnover in pre and post-GST periods. In pre-GST period (01.04.2016 to 30.06.2017), to ascertain the percentage of ratio of ITC to the taxable turnover, a considerable period of 15 months had been considered which is reasonable period of time. In any business, inputs and outputs were correlated. If, in any business, inputs were increased then correspondingly outputs would also increase and vice-versa. Therefore, ITC which is related to inputs and taxable turnover which is related to outputs, were mutually dependent on each other. Thus, the ratio of ITC to taxable turnover in pre-GST regime would not change drastically even if the long span of period is considered. Further, in respect of post-GST period i.e., from 01.07.2017 to 30.09.2019, in the instant case, the DGAP received reference from the Standing Committee on Anti-Profiteering on 09.10.2019 to investigate the matter, hence the period from 01.07.2017 (date of implementation of GAT law) up to the preceding up to preceding month of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e requested to close the case. However, there is no such provision in the CGST Act, 2017 and Rules minting to Anti-Profiteering which stipulates that investigation will not be carried out where complaint has been withdrawn. 9. We have carefully considered the Report furnished by the DGAP, the clarifications filed by him and the records of the case. Section 171 of the CGST Act, 2017 provides that any reduction in the rate of tax on any supply of goods or services or benefit of Input Tax Credit shall be passed on to the recipients by way of commensurate reduction in prices. In the instant case, there is no reduction of rate of tax during the relevant period and the only issue that is required to be decided by the Authority is whether Respondent is required to pass on the benefit of Input Tax Credit to his recipients. It is pertinent to mention here that the Respondent had not contested the mathematical computation of the benefit of ITC available to him during the GST regime for the impugned Project as calculated by the DGAP in its Investigation Report dated 28.08.2020 and has agreed to pass on the benefit of such ITC to the recipients. Hence, the Authority vide its I.O. No. 01/202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstruction services after the implementation of GST w.e.f. 01.07.2017 and the Respondent was required to pass on such benefit to the homebuyers by way of commensurate reduction in prices in terms of Section 171 of the CGST Act, 2017 during the period from 01.07.2017 to 30.09.2019. The DGAP has calculated that an amount of benefit of ITC not passed on to the recipients or in other words, the profiteered amount comes to Rs. 7,90,95,475/- (i.e. Rs. 7,06,20,959/- Rs. 84,74,515/- i.e. GST thereon) in respect of 452 homebuyers. Further, the DGAP claimed that the Respondent had already passed on substantial amount of benefit of ITC to the homebuyers in accordance with the requirements of Section 171 of the CGST Act, 2017 at the time of offer of possession to the homebuyers and the Respondent had submitted the Credit Notes jutted to the homebuyers, Customer wise (apartment wise) break-up of the ITC benefit passed on by him, CA Certificate (as Third patty verification) and Confirmation (4 on sample basis) from the Homebuyers as supporting documents against his claim. Further, to cross check the claim of the Respondent, 174 home buyers (whose emails ids were provided by the Respondent), who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reduction in rate of tar 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 . It is clear from the perusal of the above provision that it mentions reduction In the rate of fax on way supply of good or services which does not mean that the reduction in the rate of tax was not required to be passed on to each recipient. Further, the above section mention any supply i.e. each taxable supply made to each recipient was entitled to receive the benefit of tax reduction on each invoice raised to him. The word commensurate mentioned in the above Section gives the extent of benefit to be passed on by way of reduction in the prices which had to be computed in respect of each supply based on the benefit of ITC as well as the existing base price (price without GST) of the supply. To give thither clarifications and to elaborate upon the legislative intent behind the law, the Authority had been empowered to determine/expand the procedure and methodology in detail. However, one formula which fits all unmet be set while determining such a Methodology and Procedure as the facts of each case were different. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law) up to the preceding month of receipt of reference was taken up for investigation (post- GST) i.e., from 01.07.2017 to 30.09.2019. This practice is uniformly adopted by DGAP in respect of all investigations to cover the period of investigation up to the preceding month of the month when the reference is received. Therefore., the ITC availed and the consequential profiteering, if any, had to be determined at a given point of time and such determination cannot be deferred till the completion of the project. Hence, the investigation was done up to 30.09.2019 which could not be deferred till the completion of the project. Hence, the Respondent s contention is not tenable. 15. In view of the above facts. the Authority funds that the Respondent has gained the benefit of ITC on the supply of Construction Services after the implementation of GST w.e.f 01.07.2017 and the Respondent was required to pass on such benefit of ITC to the homebuyers/customers by way of commensurate reduction in prices in tents of Section 171 of the CGST Act, 2017. However, it is observed that the benefit was not commensurately passed on by the Respondent to his recipients. 16. The Authority finds that, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven the above facts, the Authority under Rule 133(3)(a) of the CGST Rules orders that the Respondent shall reduce the prices to be realized from the buyers of the Flats/customers commensurate with the benefit of ITC received by him. The details of the recipients and benefit which is required to be passed on to each recipient/homebuyer along with the details of the unit arc contained in the Annexure A to this order. The Authority directs that the profiteered amount as determined shall be passed on/returned by the Respondent to the recipients of supply along with interest @ 18%, as prescribed under Rule 133(3)(b) of the CGST Rules, 2017, from the date such amount was profiteered by the Respondent up till the date such amount is passed on/returned to the respective recipient of supply (if not already passed on) within a period of three months form the date of this order. 20. For the reasons mentioned hereinabove and in the given facts and circumstances and also stated position of law we find that the Respondent has denied the benefit of ITC to the buyers of his flats in contravention of the provisions of Section 171 (1) of the CGST Act 2017. The Authority holds that the Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led NAA Order is available on Authority s website naa.gov.in. Contact details of concerned Jurisdictional Commissioner CGST/SGST for compliance of this Authority s order may also be advertised through the said advertisement. 23. Further, this Authority as per Rule 136 of the, CGST Rules 2017 directs the concerned jurisdictional CGST/SGST Commissioner shall also submit a Report regarding the compliance of this order to the Authority and the DGAP within a period of 4 months from the date of this order. 24. Further, the Hon ble Supreme Court, vide its Order dated 23.03.2020 in Suo Moto Writ Petition (C) No. 03/2020 while taking suo-moto cognizance of the situation arising on account of the Covid-19 pandemic, has extended the period of limitation prescribed under the general law of limitation or any other special laws (both Central and State) including those prescribed under Rule 133(1) of the CGST Rules, 2017, as is clear from the said Order which states as follows:- A period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or special laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
