9911796707
TMI Blog2023 (12) TMI 1405X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of slum rehabilitation projects. His Projects are Slum Rehabilitation Authority (SRA) Rehab Projects wherein there is redevelopment on slum land. The Respondent No. 1 is required to construct buildings for providing free flats to existing slum dwellers and other buildings for the sale of flats to customers. ii) The DGAP informed that as per the Maharashtra RERA website the Respondent No. 1 had total four construction projects registered with MRERA, having following details: Sl. No. Project Name Promoter Name RERA Registration No. & Date 1 OMKAR 1973 WORLI Omkar Realtors and Developers Private Limited P51900003316 09/09/2021 2 Om Gopal Floor 3 to 9 Omkar Realtors and Developers Private Limited P51900012360 18/05/2020 3 The Summit Business Bay Andheri Omkar Realtors and Developers Private Limited P51800008187 18/08/2017 4 Sairaj Floor 1, 2 and 22 Omkar Realtors and Developers Private Limited P51900006458 18/05/2020 3. The Commission had passed Interim order No. 02/2023 dated 31.07.2023 in the projects 'Om Gopal- Floor 3 to 9' and 'Sairaj Floor 1, 2, and 22' directing the DGAP to further investigate the projects and submit his report. 4. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent No. 1 had not bifurcated CENVAT/ITC figures pertaining to the Rehab building and Sale building in the respective projects. Accordingly, the figures provided has been considered for the respective Sale building in projects. v) The DGAP stated that the Respondent No. 1 had submitted list of homebuyers in the Projects "Omkar 1973 Worli" and "The Summit Business Bay Andheri" project. However, the Respondent No. 1 had not provided complete documents to verify the authenticity of the details of bookings and consideration received from the buyers. Accordingly, the DGAP had sent a letter to the jurisdictional Commissionerate to check the authenticity of the Respondent No. 1's homebuyers' list and to verify the CENVAT/ITC figures provided by the Respondent No. 1 to his office. vi) As regards the Project "The Summit Business Bay Andheri", the slum dwellers were permanently housed in Prakshwadi CHS Ltd. that could not be sold and SRA allowed equivalent FSI in the sale building "The Summit Business Bay Andheri", which comprised of 342 units. The Respondent No. 1 had received Occupancy Certificate for the project. vii) Out of 342 units of the above project the DGAP sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incorrect. The Respondent claimed that in Table A and B of the DGAP's Report dated 15.02.2023, the area of the project was actually the carpet area and not saleable area of the project. ii) The DGAP has failed to reduce incremental ITC arising on account of increase in tax rate by the Government. The DGAP's method of comparison of absolute ITC under Pre-GST and Post -GST regime is thus without logic. The rate of ITC-CENVAT was increased from 6% to 18%. The Respondent No. 1 was paying Service Tax @6% and post GST paying tax @18%. Incremental credit of higher tax paid becomes nullified since to that extent as the Respondent has paid incremental tax from his pocket. iii) While determining the alleged profiteering amount, DGAP has erred by recalibrating the amount of demand collected as inclusive of GST. The DGAP has recalibrated the base price collected from customers and added the amount of GST to it. Thereafter, alleged profiteering amount was calculated on the recalibrated figure (which was inclusive of GST). iv) The methodology adopted by DGAP was subject to various glaring issues:- a) There was no relation of turnover and ITC. Hence the ratio of ITC and turnov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2023, the area of the project is actually the carpet area and not saleable area of the project, the DGAP stated that during the course of investigation, the Respondent No. 1 vide email dated 14.02.2023 had informed that the total saleable area of the projects 'Omkar 1973 Worli' and 'The Summit Business Bay' were 9,26,567 Sq. Ft. and 2,14,224 Sq. Ft. respectively and on the basis of Respondent No. 1's submission, the said figures were considered at S. No. 6 of Tables A and B in the DGAP's report. ii) The Respondent No. 1's contention that the additional ITC is attributed due to increase in tax rate (Service Tax rate @ 6% vs GST @ 18%) and not due to profiteering is incorrect. In the erstwhile pre-GST regime, various taxes and cesses were levied by the Central Government and the State Governments, which got subsumed in the GST. Out of these, taxes, ITC of some taxes was not allowed in the erstwhile tax regime. Such input taxes, the credit of which was not allowed in the erstwhile tax regime, used to get embedded in the cost of the goods or services supplied, resulting in increased price. With the introduction of GST all these taxes got subsumed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous glaring issues. a. As regards the Respondent No. 1's contention that there is no relation of turnover and ITC, the DGAP submitted that there is direct correlation between the turnover and the ITC as the Respondent No. 1 was discharging his output tax liability out of the ITC available to him on the basis of turnover i.e. the amount realised by him from the buyers. Moreover, the benefit to be passed on is the additional ITC proportionate to the payment made by a buyer and hence the above ratios are relevant. Therefore, the claim of the Respondent No. 1 was misconceived. b. The DGAP stated that the contention of the Respondent No. 1 that the construction work is executed in phase wise manner over a period of time and the DGAP's formula, which completely ignores the procurement pattern, is not correct. The DGAP submitted that Section 171(1) of Central Goods and Services Tax Act, 2017 mandates passing on the benefit of additional ITC which has accrued to the Respondent No. 1 during the entire life of the project before occupancy certificate is issued. Further, the Respondent No. 1 has availed Input Tax Credit every month by filing GSTR-3B Returns inspite of a long ges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in by the Respondent No. 1 at the time of entering into agreements with the prospective flat buyers. The Respondent No. 1 cannot claim to set off such increase in his cost with the benefit of input tax credit which is the sacrifice of precious tax revenue made from the kitty of the Central and the State Governments and required to be passed on to the end customers who bear the burden of tax. f. In view of above, the DGAP submitted that the DGAP's methodology is rational, logical & appropriate in terms of Section 171 of the Central Goods and Services Tax, 2017, and the same has been consistently upheld by the Authority in similarly placed cases. v) The Respondent No. 1 has contended that there is no mechanism specified under law for computing the profiteered amount and in absence of such mechanism, the profiteered amount calculated by DGAP is erroneous and unjustified. In this regard, the DGAP submitted that the main contours of the 'Procedure and Methodology' for passing on the benefits of reduction in the rate of tax and the benefit of ITC are enshrined in Section 171 (1) of the CGST Act, 2017 itself which states that "Any reduction in rate of tax on any supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITC benefit to the homebuyers. However, no profiteered amount has been computed in respect of these flats of land owners by the DGAP. The DGAP has stated that he had sent a letter to the jurisdictional Commissioner to verify the assertions of the landowners and to inquire into their tax liability involved in sale of these flats. However, he has not mentioned whether any reply was received or not. Accordingly, the DGAP is directed to reinvestigate whether any ITC benefit is required to be passed on by the Respondent No. 1 to the land owners for further passing on to their buyers or not. iii) Vide Para No. 22 of the Report the DGAP has stated that the Respondent No. 1 vide email dated 14.12.2022 submitted figures of CENVAT/ITC pertaining to the projects 'Omkar 1973 Worli' and 'The Summit Business Bay' certified by Chartered Accountant as reconciled with statutory returns. However, the Respondent No. 1 had not bifurcated CENVAT/ITC figures pertaining to the Rehab building and Sale building in the respective projects. Accordingly, the figures provided have been considered for the respective Sale building in projects. The DGAP is also directed to obtain the bifurc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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