9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (6) TMI 763 - NAPA - GSTProfiteering - booking of Flat No. 0702, Block-F, in the Respondent s project Laurel Heights - benefit of Input Tax Credit not passed on by way of commensurate reduction in the price - contravention of section 171 of CGST Act - HELD THAT - The Respondent has himself admitted that there has been benefit of ITC derived and the benefit has been passed on by him to all his customers with whom agreements were entered on or before 30.06.2017. According to him the benefit has been computed at ₹ 9/per sq. ft. and based on this calculation he has passed on benefit of ₹ 22,83,426/- to 221 flat buyers. To arrive at this derived benefit the Respondent has provided worksheet (annexure-I to his reply) showing that the pending work orders with his sub-contractors were renegotiated and were reduced by ₹ 49,85,249/- which works out to ₹ 9/- per sq. ft. However no documents have been submitted to establish the credentials of the worksheet filed by him. The DGAP has correctly analysed the ITC ratio as 2.66% and applying this ratio to the payments made on or after 01.07.2017 the profiteered amount is determined as ₹ 99,20,246/-. This amount includes profiteered amount of ₹ 18,563/- to be paid to the Applicant No. 1 and ₹ 80,37,392/- to all the other 231 buyers. The Respondent has also to pass on the benefit of profiteered amount of ₹ 18,64,290/to the land owner who will in turn pass on the benefit to his buyers. Penalty - HELD THAT - The Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his Project Laurel Heights in contravention of the provisions of Section 171 (1)(i) of the CGST Act, 2017 and has thus realized more price from them than what he was entitled to collect and has also compelled them to pay more GST on the additional realisation than what they were required to pay by issuing incorrect tax invoices and hence he has committed an offence under section 122 (1) (i) of the CGST Act, 2017 and therefore, he is liable for imposition of penalty under the provisions of the above Section - a Show Cause Notice be issued to him directing him to explain as to why the penalty prescribed under Section 122 of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.
Issues Involved:
1. Alleged non-passing of Input Tax Credit (ITC) benefits by the Respondent. 2. Methodology for calculating profiteering. 3. Respondent's contention regarding market-driven pricing and project duration. 4. Comparison with the Pyramid Infratech Pvt. Ltd. case. 5. Calculation of ITC benefit and profiteering amount. 6. Penalty for issuing incorrect tax invoices. Detailed Analysis: 1. Alleged Non-Passing of ITC Benefits: The Applicant No. 1 booked a flat in the Respondent's project and alleged that the Respondent did not pass on the benefit of ITC by reducing the price after the introduction of GST. The Karnataka State Screening Committee on Anti-profiteering forwarded the application to the Standing Committee, which then referred it to the Director General of Anti-Profiteering (DGAP) for detailed investigation. 2. Methodology for Calculating Profiteering: The DGAP's investigation revealed that the Respondent had availed ITC till June 2018. The DGAP calculated the proportionate ITC benefit to be passed on by considering the total saleable area and the total ITC availed. The DGAP found that the Respondent had a higher ITC ratio post-GST (7.79%) compared to pre-GST (5.13%), resulting in an increased ITC benefit of 2.66%. 3. Respondent's Contention Regarding Market-Driven Pricing and Project Duration: The Respondent argued that real estate pricing is market-driven and influenced by various factors, making the DGAP's methodology inappropriate. However, the judgment clarified that Section 171 of the CGST Act, 2017 mandates the passing of ITC benefits to consumers, irrespective of market conditions or project duration. The completion certificate received on 07.03.2018 further validated the DGAP's methodology. 4. Comparison with the Pyramid Infratech Pvt. Ltd. Case: The Respondent referred to the Pyramid Infratech case, where the methodology for calculating profiteering was questioned. However, the judgment noted that the Delhi High Court had only granted an interim arrangement and had not stayed the methodology. Thus, the comparison was deemed irrelevant. 5. Calculation of ITC Benefit and Profiteering Amount: The DGAP's report determined the total profiteered amount as ?99,20,246/-, including GST. This amount was calculated based on the increased ITC benefit post-GST and the payments made by buyers after 01.07.2017. The Respondent's claim of passing on ?9 per sq. ft. as ITC benefit was rejected due to lack of supporting documents. 6. Penalty for Issuing Incorrect Tax Invoices: The judgment found that the Respondent had denied ITC benefits to buyers and issued incorrect tax invoices, thus committing an offense under Section 122(1)(i) of the CGST Act, 2017. A Show Cause Notice was ordered to be issued to the Respondent for imposing a penalty. Conclusion: The Respondent was ordered to reduce the prices commensurate with the ITC benefits and pass on the profiteered amount of ?99,20,246/- to the eligible buyers, along with interest @18% per annum. The Commissioners of CGST/SGST Karnataka were directed to monitor compliance with this order.
|
