TMI Blog2023 (12) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... st-GST period (July-2017 to December, 2019), it was 4.26%. This confirms that in the post-GST period, the Respondent has been benefited from additional ITC to the tune of 0.07% (4.26% - 4.19%) of his turnover and the same is required to be passed on by him to the recipients of supply, including the Complainant. The Respondent had sold 85 units before receipt of Occupancy Certificate out of which 32 units were in affordable category on which he had charged 8% GST (after 1/3 abatement towards land) remaining 53 units were other than affordable category on which GST was charged @12% (after 1/3rd abatement towards land). Out of the 85 units, 33 units were sold Post-GST and prices were negotiated after ITC adjustments. Hence, there were only 52 units in respect of which benefit of ITC was required to be passed on. The Commission also finds that the computation of the amount of ITC benefit to be passed on by the Respondent to the eligible recipients works out to Rs. 6,43,756/- which includes applicable GST (12% or 8%) on the base amount of Rs. 5,79,349/- with respect to 52 homebuyers on the basis of the information supplied by the Respondent. The Respondent has not disputed the methodolo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost completion of the project. However, after receipt of possession, he had called and emailed the Respondent but no response was received. The Complainant also submitted that the Respondent had processed refund for a close set of people. Further, the Complainant submitted copies of receipts of payments made by him and the Letter/e-mail correspondence made with the Respondent along with his application in APAF-1 form. II. On receipt of the aforesaid reference from the Standing Committee on Anti-profiteering on 19.03.2021, a Notice under Rule 129 of the Rules was issued by DGAP on 18.05.2021, calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the recipients by way of commensurate reduction in prices and if so, to suo moto determine the quantum thereof and indicate the same in his reply to the Notice as well as to furnish all documents in support of his reply. Further, in the said Notice dated 18.05.2021, the Respondent was given an opportunity to inspect the non-confidential evidences/ information during the period 01.06.2021 to 04.06.2021. However, the Respondent had not availed of the said opportunity to inspect the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Existing Members 96 42,767 No Consideration received. 2. Independent Buyers-Pre OC 85 61,680 GST Charged. 3. Independent Buyers-Post OC 67 44,697 No GST Charged in terms of Para 5(b) of Schedule II read with Para 5 of Schedule III. Proportionate ITC reversed. 4. Unsold Units as on 28.02.2021 (These units have also been sold thereafter) 3 2,685 Total 251 1,51,829 (b) The Respondent has also submitted that the Payment schedule for the units sold in the project was construction linked and not time linked. (c) The Respondent has further submitted that his project Aaradhya Nine- Ghatkopar Avenue was an affordable housing project having infrastructure status as provided in the Notification of Government of India, Ministry of Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r benefit was required to be passed on by the Respondent. VI. The Respondent had submitted the following documents/information vide the aforementioned letters/e-mails: (a) Brief profile of the Respondent. (b) Copies of GSTR-1, GSTR-3B GSTR-9 Returns for the period July, 2017 to February, 2021. (c) Copy of Electronic Credit Ledger for the period July, 2017 to February, 2021. (d) Copy of Trans-1. (e) Copies of ST-3 and VAT Returns for the period April, 2016 to June, 2017. (f) Tax rates - pre-GST and post-GST. (g) Copy of Audited Balance Sheets for FY 2016-17 to FY 2019-20. (h) Declaration in Annexure-IV to the Notification No. 3/2019-CT (Rate) dated 29.03.20219. (i) Copies of all the demand letters and sales agreement executed with one of the buyers in the project. (j) Copy of Land Development Deed dated 30.03.2016 between the Respondent and the existing societies along with unit wise details of 96 existing members. (k) Status of the project Aaradhya Nine- Ghatkopar Avenue as on 28.02.2021 in terms of sold and unsold units. (I) Invoice-wise CENVAT/Input Tax Credit register for the period April, 2016 to February, 2021 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ix. The Respondent vide e-mail dated 04.08.2021 had submitted payment plan (part of the Agreement for Sale), demand tax invoices for the sale of flat no. A-901 in Wing-A to Sh. Ketan Mukundrai Mehta, measuring 979 square feet (carpet area). The Payment Schedule for the said unit is furnished in Table-'B' below. Table B (Amount in Rs.) S.No Payment Stage Ratio to total 1. On Booking 10% 2. On Registration of Agreement for Sale 10% 3. On Completion of Excavation 10% 4. On Completion of Basement 10% 5. On Completion of Plinth 5% 6. On Completion of 1st Floor Slab 4% 7. On Completion of 4 th Floor Slab 4% 8. On Completion of 7 th F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tegrated Goods and Services Tax Act and partly for effecting exempted supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as was 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 prices of such units to be sold to the prospective buyers by considering the net benefit of additional ITC available to him post-GST. However, in the present case, the Respondent has received the Full Occupation Certificate Building Completion Certificate on 03.12.2019, and therefore, units sold post 03.12.2019 would be considered as 'Non-GST Supply' in terms of Para 5 (b) of Schedule II read with Para 5 of Schedule III on which GST was not levi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ratio of CENVAT/Input Tax Credit to Turnover [(l)= (H)/(E) 4.19% 4.26% xII. From the above Table- 'C', it was clear 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 4.19% whereas, during the post-GST period (July, 2017 to 03.12.2019), the percentage was 4.26%. This clearly confirmed that post-GST, the Respondent had been benefited from additional ITC to the tune of 0.07% [4.26% (-) 4.19%] 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 Service Tax @4.50% and VAT @1% were payable (total tax rate of 5.50%) with the post-GST period (July, 2017 to 03.12.2019) when the effective GST rate was 12% (GST @18% along with 1/3 rd abatement for land value) on Construction Services, vide Notification No. 11/2017-Central Tax (Rate), dated 28.06.2017. The effective GST rate on Construction Services in respect of affordable and low-cost houses upto a carpet area of 60 square metres per hou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t collected/raised by Noticee l=G+H 72,23,53,028 19,72,98,612 91,96,51,640 11. Recalibrated Base Price J= (G)*(1-D) or 99.93% of (G) 64,45,06,590 18,25,56,021 82,70,62,611 12. GST @ 12% or 8% K=J*12% or 8% 7,73,40,791 1,46,04,482 9,19,45,273 13. Commensurate demand price L=J+K 72,18,47,381 19,71,60,503 91,90,07,884 14. Excess Collection of Demand or Profiteering Amount M=I-L 5,05,647 1,38,109 6,43,756 xiii. From the Table-D above, it might be deduced that the additional ITC of 0.07% of the turnover should have resulted in the commensurate reduction in the base price as well as tax price. Therefore, in terms of Section 171 of the CGST Act, 2017, the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 31.08.2021 vide which he had passed on the benefit of ITC and the same were duly verified by DGAP with the list of home buyers and found to be correct. The Respondent also submitted sample copies of signed confirmations given by customers acknowledging that the agreed prices between the Respondent and them were after giving effect to such benefit in accordance with/adherence inter alia to the provisions of Section 171 of the Central Goods Service Tax Act, 2017. Further, to substantiate the Respondent's claim of passing on the benefit of ITC, e-mails were sent to the Complainant and 56 other home buyers (whose e-mail IDs were available) on 01.09.2021 for confirmation of receipt of benefit of ITC from the Respondent. Furthermore, letters dated 08.09.2021 were also written to 24 home buyers (whose reply was not received) apart from telephone calls made to home buyers whose contact numbers could be obtained and requested them to reply via e-mails/letters. In response, total 41 home buyers replied (including the Complainant) (34 home buyers to whom the benefit was passed on by issuing cheques and 7 home buyers where benefit was adjusted in the agreement prices) and all had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43 6,08,642 94,83,735 (88,75,093) Excess Benefit passed on. List Attached as Annex-22. 3. Other Buyers 33 23,067 - - - Unit Sold Post-GST and Price negotiated after ITC adjustments. No benefit to be passed on. 4. 67 44,697 - - - Unit Sold after receipt of Occupancy Certificate. No benefit to be passed on as No GST charged. 5. 3 2,685 - - - Unsold Units as on 28.02.2021 6. Existing Members 96 42,767 - - - No Consideration was received. Total 251 1,51,829 6,43,756 94,83,735 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 and accordingly a Notice dated 25.02.2022 was issued to the Respondent to submit his written statement. He was also informed that personal hearing will be held, preferable through video conferencing, only on specific request. 4. The Respondent, vide his written submissions dated 12.04.2022, 31.10.2023 submitted that in terms of the conclusion given in Para 24 of the DGAP Report, the Respondent was required to pass on the additional benefit of ITC amounting to Rs. 35,114/- to the following customers ('remaining recipients'). Customer Name Unit No Benefit to be passed on (INR) JITENDRA RATILAL SHAH 8-904 10,330 SANKET DANGI 8-601 10,330 PARESH MOHANBHAI DAMA D-1104 5,007 JYOTI YOGESH RAVAL B-802 9,447 In this regard, it was submitted by the Respondent that, without prejudice to the various options available under law and being a law abiding Company, he has paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal 155) were to be sold to the independent buyers for consideration. It is also on record that the Complainant had alleging that the Respondent had not passed on the benefit of ITC on the flat purchased from the Respondent by him, in terms of Section 171 of the CGST Act, 2017. 8. Section 171 of the CGST Act provides as under: - 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. It is clear from the plain reading of Section 171 (1) mentioned above 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 as to whether there was any net benefit of ITC with the introduction of GST. This Commission finds 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dangi B-601 10,330/- 3. Paresh Mohanbhai Dama D-1104 5,007/- 4. Jyoti Yogesh Ravel B-802 9,447/- 10. Based on the above facts, the profiteered amount for the period from 01.07.2017 to 03.12.2019, in the instant case, is determined as Rs. 35,114/- under Section 171 of the CGST Act, 2017. 11. The Commission also takes note of the fact that the Respondent vide his submissions dated 12.04.2022 has claimed to have passed on the benefit of ITC amounting to Rs. 35,114/- to the respective homebuyers to which the benefit of ITC was not passed on by the Respondent as per the report of DGAP. To corroborate his claim, the Respondent had submitted the copy of Bank Statement, NEFT transactions details and copies of cheques in respect of the above payment. The same has been confirmed by the Bank of Baroda, Ghatkopar, West Branch. 12. It is evident from the above narration of facts that Respondent has denied the benefit of Input Tax Credit (ITC) to the customers/shop buyers in contravention ..... X X X X Extracts X X X X X X X X Extracts X X X X
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