TMI Blog2022 (10) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... d (July 2017 to October 2020), it was 7.78% for the project JKG Palm Court'. This confirms that during the GST period, the Respondent has benefited from additional ITC to the tune of 6.98% (7.78% - 0.80%) of his turnover for the project JKG Palm Court' and the same was required to be passed on to the customers/flat buyers/recipients. The Authority finds that, neither the Applicant no.1 nor the Respondent has contested the said Report in spite of several opportunities being given to them. They, also, did not attend the personal hearing on the scheduled date - The Authority finds no reason to differ from the above-detailed computation of profiteering in the DGAP's Report. Interest - HELD THAT:- The Authority finds that the Respondent has profiteered by an amount of Rs. 5,14,06,920/- during the period of investigation i.e. 01.07.2017 to 31.10.2020. The Authority determines an amount of Rs. 5,14,06,920/- (including 12% GST) under section 133 (1) as the amount profiteered by the Respondent from his home buyers/shop buyers/customers/recipients of supply in the impugned Project (as per Annexure-A to this Order), including Applicant No. 1, which shall be refunded by hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Notice for initiation of investigation under Rule 129 of the Rules was issued by the Director General of Anti-profiteering on 20.11.2020, calling upon the Respondent to reply as to whether he admit that the benefit of ITC had not been passed on to the recipients 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 documents in support of his reply. Further, the Respondent was afforded an opportunity to inspect the non-confidential evidences/information which formed the basis of the said Notice, during the period 03.12.2020 to 04.12.2020. The authorized representative of the Respondent availed of the said opportunity on 04.12.2020. ii) Vide e-mail dated 17.08.2021, the Applicant was also given an opportunity during 19.08.2021 23.08.2021 to inspect the non-confidential documents/reply furnished by the Respondent. The Applicant availed of the said opportunity on 19.08.2021. The Applicant vide email dated 20.08.2021 submitted his observation on the documents inspected and made his submission. iii) The period covered by the current investigation was from 01.07.2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h developing Residential cum commercial complexes. The Company was engaged in business of construction of Residential cum commercial properties at Greater Noida. The main project carried by the company was JKG Palm Court, which was being constructed in 02 phases. viii) The Respondent had claimed that he had already passed on the benefit of Rs. 1,86,112/- to the Applicant and Rs. 6,13,37,994/- to the other customers in terms of Section 171 of the CGST Act, 2017. Thus, the Respondent claimed that he had passed on total benefit of Rs. 6,15,24,106/-. ix) Vide the aforementioned letters/e-mails, Respondent submitted the following documents/ information: (a) Copies of GSTR-1 returns for the period July, 2017 to October, 2020. (b) Copies of GSTR-3B returns for the period July, 2017 to October, 2020. (c) Copies of Tran-1 return for transitional credit availed by the Noticee. (d) Copies of VAT ST-3 returns for the period April, 2016 to June, 2017. (e) Electronic Credit Ledger for the period July, 2017 to October, 2020. (f) CENVAT/ITC register for the F.Ys. 2016-17 to 2020-21 (upto October, 2020). (g) Status of project- Architect Certificate as on 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s attributable to the said taxable supplies including zero-rated supplies . Section 17 (3) The value of exempted supply under sub-section (2) shall be such as might be prescribed and shall include supplies on which the recipient was 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 ITC pertaining to the unsold units might not fall within the ambit of this investigation and the Respondent was required to recalibrate the selling price of such units to be sold to the prospective buyers by considering the net benefit of additional ITC available to him post-GST. xii) As regards the allegation of profiteering with regard to Project- JKG Palm Court, it was observed that prior to 01.07.2017, i.e., before the GST was introduced, the Respondent were eligible to avail CENVAT credit of Service Tax paid on input services. However, CENVAT credit of Central Excise duty paid on inputs was not admissible, as per the CENVAT Credit Rules, 2004, which was in force at the material time. Moreover, the Respondent were paying VAT under Uttar Pradesh VAT Scheme, wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15,10,227 5,11,55,388 9. Ratio of CENVAT/ ITC to Taxable Turnover [(I)=(H)/(E)] 0.80% 7.78% xiii) From the Table- 'A' above, it was clear that the ITC as a percentage of the turnover that was available to the Respondent during their GST period (April, 2016 to June, 2017) was 0.80% and during the post- GST period (July, 2017 to October, 2020), it was 7.78%. This clearly confirms that post-GST, the Respondent had benefited from additional ITC to the tune of 6.98% [7.78% (-) 0.80%] of the turnover. Accordingly, the profiteering had been examined by comparing the applicable tax rate and ITC available in the pre-GST period (April, 2016 to June, 2017) when effective Service Tax @4.50% was payable with the post-GST period (July, 2017 to October, 2020) when the effective GST rate was 12% (GST @18% along with 1/3rd abatement for land value) on construction service, vide Notification No.11/2017-Central Tax (Rate), dated 28.06.2017. xiv) On the basis of the figures contained in Table-'A' above, the comparative figures of the ratio of ITC availed/availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had claimed that he had passed on the benefit of Rs. 6,15,24,106/- to the 386 buyers, (out of total 714 buyers) including Applicant No. 1, reflected in the buyers list. The Respondent had submitted email addresses of 324 buyers, to whom the above mentioned benefit was claimed to be passed on. The Respondent had not submitted any documentary proof to substantiate his claim. Also, the Applicant No.1 vide email dated 20.08.2021 submitted that the claim of the Respondent of passing on of benefit of Rs. 1,86,112/- was false and wrong. The Applicant No. 1 further submitted that the Respondent had raised a demand letter dated 20.12.2019 of Rs. 30,17,729/- and another demand letter dated 23.07.2020 of Rs. 33,88,124/- by adding other charges viz. interest on delayed payment, farmer compensation and delay fit out period, which were not applicable on his demand. xvi) Further to verify the claim of the Respondent, with respect to other buyers, the DGAP had sent emails dated 17.08.2021 to 324 buyers (whose email addresses were provided by the Respondent). In response to these 324 emails, 23 home buyers had denied the receipt of any benefit. One buyer had accepted the receipt of ITC benefit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant). xviii) Thus, on the basis of the aforesaid CENVAT/input tax credit availability pre and post-GST and the details of the amount during the period 01.07.2017 to 31.10.2020, the amount of benefit of ITC that had not been passed on by the Respondent to the recipients comes to Rs.5,11,19,741/- which included GST @12% on the base profiteered amount of Rs.4,56,42,626/-. The home buyer and unit no. wise break-up of this amount was given in Annex-17 of Report dated 31.08.2021. This amount was inclusive of profiteered amount of Rs.1,99,182/- for Applicant mentioned at serial no. 701. xix) The Respondent had submitted that he had total of 878 flats and 24 shops in the whole project as on 31.10.2020, out of which 676 flats and 16 shops were booked and 202 flats and 08 shops remained unsold as on 31.10.2020. Accordingly, the buyers' data provided by him was for the live customers as existing on 31.10.2020. xx) On the basis of above discussion, it appeared that post-GST, the benefit of additional input tax credit to the tune of 6.98% of the turnover, accrued to the Respondent post-GST and the same was required to be passed on by the Respondent to the Applicant and other reci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 171 (1) that it deals with two situations: - one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax in the post-GST period; hence the only issue to be examined is whether there was any net benefit of ITC with the introduction of GST. It is observed from the Report 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) was 0.80%, whereas, during the GST period (July 2017 to October 2020), it was 7.78% for the project JKG Palm Court'. This confirms that during the GST period, the Respondent has benefited from additional ITC to the tune of 6.98% (7.78% - 0.80%) of his turnover for the project JKG Palm Court' and the same was required to be passed on to the customers/flat buyers/recipients. The DGAP has calculated the total profiteered amount as Rs. 5,14,06,920/-in respect of the homebuyers/shop buyers/customers/recipients of supply in the impugned Project including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alized from the buyers of the flats/shop buyers/customers/recipients of supply commensurate with the benefit of ITC received by him as has been detailed above. 10. The Respondent is also liable to pay interest as applicable on the entire amount profiteered, i.e. Rs. 5,14,06,920/-, for the project JKG Palm Court'. Hence the Respondent is directed to also pass on interest @18% to the customers/ flat buyers/ recipients of supply, 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. 11. The complete list of homebuyers/shop buyers/customers/recipients of supply is attached with this Order, with the details of the amount of benefit of ITC to be passed on along with interest @ 18%, as prescribed, in respect of the project JKG Palm Court' of the Respondent as in the said Annexure- A'. 12. This Authority also orders that the profiteered amount of Rs. 5,14,06,9201- for the project JKG Palm Court' along with the interest @ 18% from the date of receiving the profiteered amount from the homebuyer/customers/recipients of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been conducted up to 31.10.2020 only. However, the Respondent is liable to pass on the benefit of ITC which would become available to him till the date of issue of the Completion Certificate. Accordingly, the concerned jurisdictional Commissioner CGST/SGST is directed to ensure that the Respondent passes on the benefit of ITC to the eligible home buyers/shop buyers/customers as per the methodology approved by this Authority in the present case and submit his report to this Authority through the DGAP. The Applicants or any other interested party/person shall also be at liberty to file a complaint against the Respondent before the State Screening Committee in case the remaining benefit of ITC is not passed on to them. 18. Since the Respondent has profiteered in the instant project, there is every likelihood that he has profiteered in other projects also under the GSTIN. The Authority has reasons to believe that the Respondent may have resorted to profiteering in the other projects also and hence, it directs the DGAP under Rule 133 (5) to investigate all the other projects of the Respondent under the same GST registration which have not yet been investigated from the perspectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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