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2022 (8) TMI 94 - NAPA - GSTProfiteering - purchase of flat - it is alleged that the Respondent had not passed on the benefit of input tax credit to him by way of commensurate reduction in price - Contravention of Section 171 of the Central Goods and Services Tax Act, 2017 - penalty - HELD THAT - The Authority finds that, the Respondent has benefited from the additional ITC to the extent of 0.46% of the turnover during the period from 01.07.2017 to 31.12.2018 and hence the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has not passed on the above benefit to his customers. The Authority determines that, the Respondent has realized an additional amount of Rs. 3,763/- which includes both the profiteered amount @ 0.46% of the taxable amount (base price) and 12% GST on the said profiteered amount from the Applicant No. 1. The Authority determines that, the Respondent has realized an additional amount of Rs. 49,22,281/- which includes both the profiteered amount @ 0.46% of the taxable amount (base price) and GST @ 8% / 12% on the said profiteered amount from the 394 flat buyers other than the Applicant No. 1. The Authority determines that, the Respondent has profiteered an amount of Rs. 49,26,054/- inclusive of GST @ 8% / 12% as calculated in the aforesaid Report dated 31.08.2020 for the stated period. Hence, the Authority holds that the Respondent is required to pass on the benefit of ITC along with the interest @ 18% per annum from the dates from which the above amount was collected by him from them till the payment is made as prescribed under Rule 133 (3)(b) of the CGST Rules, 2017, within a period of 3 months from the date of this Order as per the details mentioned in Annexure-A to this Order. - this Authority under Rule 133 (1) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats of the above Project commensurate with the benefit of ITC received by him. The present investigation has been conducted up to 31.12.2018 only. However, the Respondent has not obtained the Completion Certificate (CC) till that date. Therefore, he is liable to pass on the benefit of ITC which would become available to him till the date of issue of CC. Accordingly, the concerned jurisdictional Commissioner CGST/SGST are directed to ensure that the Respondent passes on the benefit of ITC to the eligible flat buyers as per the methodology approved by this Authority in the present case and submit report to this Authority through the DGAP. The Applicant No.1 or any other flat buyer shall also be at liberty to file complaint against the Respondent before the Maharashtra State Screening Committee in case the remaining benefit of ITC is not passed on to them. Penalty - HELD THAT - The Authority finds that vide Section 112 of the Finance Act, 2019 specific penalty provisions have been added for violation of the provisions of Section 171 (1) which have come in to force w.e.f. 01.01.2020, by inserting Section 171 (3A), Since, no penalty provisions were in existence between the period from 01.07.2017 to 31.12.1018 i.e. the period of the present investigation for which the profiteered amount has been calculated and the Respondent is found to have violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent for profiteering done during such period. This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017.
Issues Involved:
1. Whether the Respondent has passed on the benefit of ITC to his buyers as claimed through documentary evidence furnished during the proceedings. 2. If the Respondent has passed on the ITC benefit, what is the amount of the benefit passed on? 3. What is the amount of ITC benefit required to be passed on by the Respondent to his recipients after correctly considering the figures of Cenvat credit? 4. What is the amount of turnover to be taken into account during the period from 01.07.2017 to 31.12.2018? 5. What is the profiteered amount and entitlement of benefit of ITC to be passed on to each eligible home-buyer including the Applicant No. 1? Detailed Analysis: Issue 1: Whether the Respondent has passed on the benefit of ITC to his buyers as claimed through documentary evidence furnished during the proceedings. The DGAP re-examined the documents and submissions provided by the Respondent. The Respondent claimed that for units booked post-01.07.2017, discounts up to 5.8% on the original agreement value were passed at the time of sale, with GST charged on the reduced value. The DGAP verified this by reviewing cost sheets signed by flat-buyers and confirmed that the Respondent had indeed passed on GST benefits as upfront discounts. However, the DGAP also noted that the exact quantum of ITC benefit could only be ascertained at the end of the construction, leading to fluctuations in the ITC ratio. Issue 2: If the Respondent has passed on the ITC benefit, what is the amount of the benefit passed on? The DGAP reported that the Respondent passed on benefits totaling Rs. 9,39,81,108 for the Affordable Category and Rs. 15,76,14,471 for the Other than Affordable Category. On a pro-rata basis, the corresponding figures were Rs. 6,36,09,860 and Rs. 9,83,57,243, respectively, totaling Rs. 16,19,67,103, exclusive of applicable GST. Issue 3: What is the amount of ITC benefit required to be passed on by the Respondent to his recipients after correctly considering the figures of Cenvat credit? The DGAP determined that the input tax credit as a percentage of turnover was 1.23% during the pre-GST period and 1.69% during the post-GST period, indicating an additional benefit of 0.46% of the turnover. The DGAP calculated that the Respondent had benefited from additional ITC to the tune of Rs. 49,26,045, which needed to be passed on to the eligible home-buyers. Issue 4: What is the amount of turnover to be taken into account during the period from 01.07.2017 to 31.12.2018? The total turnover for the period from 01.07.2017 to 31.12.2018 was Rs. 387,58,27,122, of which Rs. 16,19,67,103 was given as upfront discounts to 338 home-buyers. Hence, the total benefit accrued to the Respondent was Rs. 3,71,38,60,019. Issue 5: What is the profiteered amount and entitlement of benefit of ITC to be passed on to each eligible home-buyer including the Applicant No. 1? The DGAP determined that the Respondent had profiteered an amount of Rs. 49,26,045, including GST, from 395 home-buyers (308 who booked units pre-GST and 87 who booked post-GST but received no upfront discount). The Applicant No. 1 was overcharged by Rs. 3,763, which included both the profiteered amount and GST. The Respondent was directed to pass on the benefit of ITC along with 18% interest per annum from the date the amount was collected until payment is made. Conclusion: The Authority concluded that the Respondent had not passed on the benefit of ITC to all eligible home-buyers, contravening Section 171 of the CGST Act, 2017. The Respondent was ordered to reduce prices commensurate with the benefit of ITC and to pass on the benefit along with interest to all eligible buyers. The compliance of this order was to be monitored by the Commissioners of CGST/SGST, Maharashtra, under the supervision of the DGAP. The penalty provisions under Section 171 (3A) could not be imposed as they were not in existence during the period of investigation.
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