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TMI Blog2018 (9) TMI 1107X X X X Extracts X X X X X X X X Extracts X X X X ..... [email protected] 5 Gaurav Rohilla, Nitesh Rohilla, Surender Rohilla* [email protected] 6 Razia [email protected] 7 Aarek Mehrotra* [email protected] 8 Neeraj Dale* [email protected] 9 Kuldeep Maan [email protected] 10 Alok Tyagi* [email protected] 11 Mayank Saxena [email protected] 12 Yogesh Upadhyay [email protected] 13 Parteek Sharma* [email protected] 14 Kamal Valecha* [email protected] 15 Narottam Singh* [email protected] 16 Rahul Kapoor* [email protected] 17 Vinod Khanduja* [email protected] 18 Pradeep Jangra* [email protected] 19 Amarjeet Kumar* [email protected] 20 Badri Narayan Meena* [email protected] 21 Harsh Awasthi [email protected] 22 Saurav Kumar Aggarwal* [email protected] 23 Ravi Verma [email protected] 24 Sanjeev Chadha* [email protected] 25 Sangam Shukla [email protected] 26 Udayan Kishore Mishra* [email protected] 27 Manoj Jangraa [email protected] 28 Ravi Yadav [email protected] 29 Zeeshan Ali Quazi* [email protected] 30 Sunil Kumar Jha* lakshya.skjha@ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arded to the DGAP for investigation. The following are the names of the additional Applicants who had filed applications with the Standing Committee:- S.No. S/Sh. E-mail ID 1 Rohit Yadav [email protected] 2 Bharat Bhushan* [email protected] 3 Deepak Fialok* [email protected] 4 Rajender Kumar* [email protected] 5 Sukhbir Rohilla/Surinder Kumar* [email protected] 6 Aarekh Mehrotra* [email protected] 7 Neeraj Dale* [email protected] 8 Alok Tyagi* [email protected] 9 Kamal Valecha* [email protected] 10 Narottam Singh* [email protected] 11 Vinod Khanduja* [email protected] 12 Amarjeet Kumar* [email protected] 13 B N Meena* [email protected] 14 Saurav Kumar Aggarwal* [email protected] 15 Udayan kishore Mishra* [email protected] 16 Zeeshan Ali Quazi* [email protected] 17 Sunil Jha* [email protected] 18 Rajesh Kumar* [email protected] 19 Vikas Garg* [email protected] 20 Bharat Bhushan* [email protected] 21 Kamlesh Mishra [email protected] 22 Anil Dwivedi* [email protected] 23 Ravi Gumber ravigumber1985 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuraj Singh [email protected] 76 Rajesh Kumar Jain [email protected] 77 Vikas Gupta* [email protected] 78 Rahul Kapoor* [email protected] 79 Anil Dwivedi* [email protected] 80 Amit Kumar Thakur [email protected] 81 Deepak Gupta [email protected] 82 Bansi Lal Mahlawat [email protected] 83 Dharam Narayan Tiwari/ Shashi Vir Singh [email protected] 84 Alok Kumar Singh* [email protected] 85 Mridul Verma [email protected] 86 Prateek Sharma* [email protected] 87 Paramjeet Singh [email protected] 88 Anita Chadha & Sanjeev Chadha* [email protected] 89 Monica Gulati [email protected] 90 Rakesh Chaudhary [email protected] 91 Pradeep Jangra* [email protected] 92 Ramesh Chander - 93 Rahul Mishra [email protected] 94 Prateek Tiwari [email protected] 95 Himanshu Sethi* [email protected] 96 Alok Singh (Bhim Singh)* [email protected] 97 Kilanoor Ganeshan Mudallar [email protected] 98 Deepak Jain [email protected] 99 Deepak Fialok* [email protected] 100 Gagan Nagpal [email protected] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent had also submitted the following data as has been depicted in the Table below to show that the ITC on Excise Duty, Countervailing Duty (CVD) and capital goods which was not available earlier was now available:- S. No. Nature of pre-GST Tax Total Amount (In Rs.) 1 Excise Duty/CVD included in cost, now available as ITC 46,91,507/- 2 Credit on Capital Goods capitalized not available earlier but now available 2,05,50,719/- 3 Central Sales Tax (CST) For material 12,04,661/- for capital goods 24,47,563/- Total Rs. 36,52,224/- 4 Total ITC (1+2+3) 2,88,94,450/- 5 ITC part of Cost 46,91,507/- + 12,04,661/-=58,96,168/- 6 Cost of Sale (before interest) 50,44,57,118/- 7 Interest 44,83,288/- 8 Cost of Sale after interest (6+7) 50,89,40,406/- 9 Net Sales Realization 1,21,79,69,823/- 10 Profit (9-8) 70,90,29,416/- 11 Percentage of ITC to Sales Realization (4 as % of 9) 2.37% 6. The report also submits that the Respondent had claimed that the provisions of Section 171 of the CGST Act, 2017 were not applicable in as much as there was no reduction in the rate of tax as earlier the "Affordable Housing Schemes" (AHS) executed under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months of allotment 15-03-2017 12.50% 257955 0 13543 0 0 271498 6 Within 24 months of allotment 15-09-2017 12.50% 257955 0 0 15477 15477 288910 7 Within 30 months of allotment 15-03-2018 12.50% 257955 0 0 10318 10318 278591 Total 1805685 17634 67713 25796 25796 1942623 8. The DGAP has also informed that complaints were lodged in respect of the two projects viz. (1) Urban Homes, Sector 70A, Gurugram and (2) Urban Homes, Sector-86, Gurugram which are being executed by the Respondent under the above Policy. He has further informed that after perusal of the application filed by the Respondent before the Haryana Real Estate Regulatory Authority (RERA) and as per para 5 (i) of the Policy, it was clear that the maximum sale price per sq. feet carpet area had been fixed at Rs. 4,000/- and no minimum rate had been prescribed and hence, the Respondent could not claim that there was restriction on reducing the price. The DGAP has also submitted that the Respondent's claim that Section 171(1) of the CGST Act, 2017 relating to benefit of ITC was not attracted, as there was no reduction in the GST rate was also not acceptable because t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ITC available/availed during pre-GST period and post-GST period as under:- (Amount in Rs.) ITC available Pre-GST ITC Available Post-GST Period FY 2016-17 FY 201718 (April to June, 2017) Total July, 2017 to January, 2018 February,2018 July, 2017 to February, 2018 VAT 21557942 11476408 33034350 - - - CGST - - - 31095595 5478788 36574383 SGST - - - 31095595 5478788 36574383 IGST - - - 11972568 1829277 13801845 Total 21557942 11476408 33034350 74163758 12786853 86950611 Taxable Turnover 2924955429 76935214 3001890643 725620566 482186312 1207806878 ITC ratio to Taxable Value () 0.74 14.92 1.1 10.22 2.65 7.2 Addition al ITC availed (%) 6.1 Tax Rate 5.25% (VAT) 5.25%(VAT) 12%(GST) 8%(GST) 13. Based on above data the DGAP has concluded that the ITC available to the Respondent during the pre-GST period from April 2016 to June 2017 was 1.10% of the taxable turnover and during the post-GST period from July 2017 to February 2018, the ITC available to the Respondent was 7.20% of the taxable turnover and thus there was additional benefit of ITC to the tune ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent has claimed that the amounts of Rs. 50,44,57,118/- and Rs. 50,89,40,406/- mentioned in the report of the DGAP were the costs incurred on construction and not the costs of sales during the period and they had no direct relation with the amount collected from the Applicants as the Payment Plan under the Policy was time bound and not construction linked. The Respondent has also mentioned that the payments by the Applicants were to be made in installments i.e. at the time of application 5% of the cost was to be paid, on allotment 20% was to be paid and subsequently the cost was to be paid in 6 equal half yearly installments each installment being 12.50% of the total value of the apartment. Accordingly he has claimed that Rs. 1,21,79,69,823/- were collected as per the above payment schedule and it had nothing to do with the sales. He has also stated that the amount of Rs. 70,90,29,416/- mentioned as profit was not the profit, as it was the amount of costs either already incurred or which were to be incurred. The Respondent has also claimed that the expenditure on land, license approvals and External Development Charges (EDC) was required to be incurred before start of the constructi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses, approvals, administrative and financial expenses which amounted to 40-45% of the total revenue from the Applicants. He has also submitted that while calculating the ITC against the taxable value during the pre-GST period, the taxable value should be accordingly adjusted by giving effect to the above issues during the pre-GST and post-GST period and percentage of ITC should be accordingly recalculated. 19. Finally the Respondent has prayed that the following points needed to be considered by the Authority before concluding that profiteering has been done by him. a). The taxable value should be readjusted and ratio of ITC to taxable value should be recalculated during the pre-GST and post-GST period. b). The cost of construction has increased an account of abnormal price rise of the inputs which should be taken in to account and accordingly set off should be given. c). Set off should also be given on account of the liability of tax which was leviable on the sub-contractors. 20. Out of the 109 Applicants, 14 Applicants appeared during the hearings held on 23.07.2018 & 01.08.2018. While some of the Applicants filed written submissions on 23.07.2018 and 01.08.2018, the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember, 2017 to February, 2018. This ITC was approximately Rs. 8.70 Crores and was utilized to the extent of Rs. 5.40 Crores for payment of GST by him. They also pleaded that the Respondent was fully aware that the ITC should have been passed on to the buyers after re-calibrating the price, which had not been done deliberately by him which attracted penal provisions under the anti-profiteering law. 25. The Applicants have also attached copies of the e-mail dated 14.07.2018 and reminders dated 21.07.2018 & 26.07.2018 sent by their Association to the Respondent requesting him to extend the benefit of ITC which the Respondent had failed to respond to. 26. Finally the applicants have alleged that during the period between 01.07.2017 to 24.01.2018 the benefit which had accrued to the Respondent was 6.1% as per the calculations given below:- Re-calibrated rate - Rs. 4,207 (Rs.3,756 + 12% GST) Already billed and collected rate - Rs. 4,480 (including 12% GST) Effective rate to be returned to the Home Buyers - Rs. 273 per sq. ft. Profiteering in % terms = 6.1%. During the period between 25.01.2018 to 28.02.2018 the actual benefit to the Applicants in % was- Rs. 273/4,000 = 6.825% Re- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst be reduced by 6.1% of Rs. 4000 i.e. by Rs. 244/- and the revised basic installment should be Rs. 4000 - Rs. 244 = Rs. 3756/- per sq. ft. He has further stated that during the period between 30.06.2017 to 24.01.2018, the installment including GST should be Rs. 3756+12% GST= Rs. 4207/-per sq. ft., however, the Respondent had charged Rs. 4000 + 12% GST i.e. Rs. 4480/- which amounted to profiteering of = 6.1% (4480-4207/4480 x 100). He has further stated that during the period between 25.01.2018 to 31.03.2018, the installment including GST should be Rs. 3756 + 8% GST= Rs. 4056/- per sq. ft., however, the Applicants had been charged Rs. 4000 + 8% GST i.e. Rs. 4320/- which came to profiteering of = 6.1% (4320-4056/4320 x 100) and hence 6.1% of the amount paid by the Applicants during the entire period from 01.07.2017 to 28.02.2018 was the profiteered amount. 29. We have carefully examined the DGAP's Report, the written and oral submissions of both the Applicants and the Respondent placed on record. The issues to be decided by the Authority are as under:- (a.) Whether there was any violation of the provisions of Section 171 of the CGST Act, 2017 in this case? (b.) If yes then what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been fixed as Rs. 4000/-. Para 5 (i) of the Policy is reproduced below:- (a) Allotment Rate:- The allotment rate for the Apartment units approved under such projects shall be as follows:- Sr.No. Development Plan Maximum allotment rate on per sq. ft. carpet area basis Additional recovery against balcony of min 5 ft. clear projection# a. Gurgaon, Faridabad, Panchkula, Pinjore, Kalka Rs. 4000/ - per sq. ft. Rs. 500 per sq. ft. against all balcony area in a flat adding b. Other High and Medium Potential Towns Rs. 3600/ - per sq. ft. upto and limited to 100 sq. ft., as permitted in the approved building plans. c. Low Potential Towns Rs. 3000/ - per sq. ft. Based on the above Policy the Respondent had submitted his Project Report to the RERA stating that the maximum sale price for each flat would be Rs. 4000/- per sq. ft. carpet area. Therefore, the claim of the Respondent that the price was fixed at Rs. 4000/- by the Haryana Government is incorrect as he had himself made offer of selling the flats at the above rate. It is also clear from the perusal of the above para that the above price was the maximum price and there was no restriction on the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost of construction rather than the taxable turnover. This argument does not hold good because the Policy makes it mandatory on him that he could not charge more than Rs. 4000/- per sq. ft., the price which he had himself offered and there is no provision of price escalation in the above price either in the above Policy or in the Buyer's Agreement. The Respondent vide his submissions dated 01.8.2018 has himself admitted that he had collected 62.50% of the amount due during the pre-GST period but utilized it only to the extent of 25% meaning thereby that the balance amount had been utilized by the Respondent in his business and no interest had been paid by him on this amount to the Applicants. It is also apparent from the returns that when compared to the pre- GST period where 86% of the tax liability was paid in cash after availing ITC, in the post GST period the entire amount of tax liability had been paid through ITC, which shows that the entire 12% GST liability was paid through ITC while 12% GST was being collected by him from the Applicants. Therefore this Authority is of the view that the ratio of the ITC to the taxable turnover calculated by the DGAP is correct and the Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent is that in the pre-GST regime there was no tax liability on the sub-contractors and in the post-GST era the tax levied on the sub-contractors was to be borne by the Respondent. This argument is also not tenable because the entire amount is eligible for ITC to the Respondent which has been admitted by him in his written submissions. Moreover the sub-contractors are also eligible for ITC which was not available to them earlier and on account of rationalization of tax rates many of the inputs were now available at the reduced rates. 35. From the above narration of facts it is absolutely clear that the excess ITC was available to the Respondent the benefit of which he was required to pass on to the Applicants. The Respondent cannot appropriate this benefit as this is a concession given by the Government from it's own tax revenue to reduce the prices being charged by the builders from the vulnerable section of society which cannot afford high value apartments. The Respondent is not being asked to extend this benefit out of his own account and he is only liable to pass on the benefit of ITC to which he has become entitled by virtue of the grant of ITC on the Construction Serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iple followed by the DGAP i.e. 6.1% of profiteering and accordingly the amount of profiteering has been calculated for each type of flat to arrive at the profiteering amount for each and every buyer depending upon the type of flat he has purchased. In view of the above the Authority determines the amount of profiteering as Rs. 8,22,80,998/- for all the 2476 flats. 38. The DGAP has calculated the profiteering @ 6.1% on the base price of Rs. 4000/- per sq. ft. and accordingly calculated tax amount on the reduced payment. The calculations made by the DGAP are placed below which are correct and the Authority is in full agreement with the same:- Head Row Profiteering Calculation X Calculation GST @12% GST @8% Rate (Per Sq. Ft.) A 4000 4000 Profiteering @6.1% B 244 244 New Rate (Per Sq. Ft.) C A-B 3756 3756 GST @X% D X% of C 450.72 300.48 Total Amount to Be Charged E C+D 4206.72 4056.48 Amount Already Charged F A + X% of A 4480 4320 Profiteered Amount per sq. ft. (Rs.) G F-E 273.28 263.52 39. Accordingly, it is held that the Respondent has profiteered an amount of Rs. 8,22,80,998/- from the flat owners. The details of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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