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TMI Blog2019 (3) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... licant had alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in the price after implementation of the GST w.e.f. 01.07.2017 and charged CST on full amount of instalments. This Complaint was further referred to the Standing Committee on Anti-profiteering by the Screening Committee vide minutes of its meeting dated 20.06.2018 under Rule 128 of the above Rules. 2. The above Complaint was examined by the Standing Committee on Anti-profiteering in its meeting held on 07.08.2018 & 08.08.2018 and its minutes were forward to the DGAP for detailed investigation under Rule 129 (1) of the CGST Rules, 2017. 3. The DGAP on receipt of the above minutes had called upon the Respondent to submit reply as to the whether the ITC benefit was passed on by him to his recipients and also asked him to suo-moto determine the quantum of benefit which was not passed on. The Respondent had submitted replies vide letters dated 20.09.2018, 10.10.2018, 16.10.2018, 01.11.2018, 12.11.2018, 13.11.2018, 14.11.2018, 15.11.2018, 19.11.2018, 22.11.2018 and 26.11.2018 stating that he was in the business of construction of flats under the Afforda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and unsold commercial shops. (o) Copies of contract and demand letters for new bookings made during the period August, 2018 to October, 2018 reflecting passing of 2% benefit of GST input credit to new allottees. (p) Details of Customer wise benefit passed on. 6. The DGAP in his report has submitted that as per the documents submitted by the Respondent, the payment schedule for the purchase of a flat measuring 618.24 square feet at the basic sale price of Rs. 4,000/- per square feet and the details of amounts and taxes paid by the Applicant No. 1 to the Respondent were as has been given below in the Table:- Table-'A' (Amount in Rs.) S. No. Payment Stage Due Date Basic % BSP Benefit Passed on Service Tax GST Total 1 Application for allotment (Date of Draw) 27.08.2015 5.00% 1,24,919 4,372 1,29,291 2 On allotment 11.09.2015 20.00% 4,99,674 17,489 5,17,163 3 Date of Draw+6 months 22.03.2016 12.50% 3,12,296 3,12,296 4 Date of Draw+12 months 27.08.2016 12.50% 3,12,296 3,12,296 5 Date of Draw+18 months 27.02.2017 12.50% 3,12,296 3,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 961 20,56,633 2 Input Tax Credit of VAT Paid on Purchase of Inputs B 1,36,94,480 32,37,996 1,69,32,476 3 Total CENVAT/Input Tax credit Available (C) = (A+B) 1,56,01,152 33,87,957 1,89,89,109 4 Input Tax Credit of GST Availed (D) 2,03,84,595 1,40,08,003 3,43,92,598 5 Gross Taxable Turnover for VAT as per Annex-18 (E) 33,58,48,922 7,79,19,542 41,37,68,464 6 Abated Taxable Turnover reported in VAT Return (F) 18,74,58,580 4,34,91,837 23,09,50,417 7 Taxable Turnover for Service Tax on Commercial Shops (G) 2,02,16,792 30,09,744 2,32,26,536 8 Gross Taxable Turnover for GST (H) 20,63,35,174 27,05,32,230 47,68,67,404 9 Total Gross Taxable Turnover (I) = (E)+(G) or (H) 35,60,65,714 8,09,29,286 43,69,95,000 20,63,35,174 27,05,32,230 47,68,67,404 10 Total Saleable Carpet Area (Excluding Balcony Area) (in SQF) (I) 3,81,639.92 (Residential 15,310 (Commercial) 3,96,950 3,81,639.92 (Residential 15,310 (Commercial) 3,96,950 11 Total Sold Carpet Area (Exclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n tax rate post-GST (%) D 6.75% 2.75% 5 Increase in input tax credit availed post-GST(%) E= 6.49% less 3.65% 2.84% 2.84% 2.84% Analysis of Increase in input tax credit: (Amount in Rs.) 6 Base Price collected during July, 2017 to August, 2018 F 20,63,35,174 27,05,32,230 47,68,67,404 7 GST Collected over Basis Price G= F*12% or 8% 2,47,60,221 2,16,42,578 4,64,02,799 8 Total Demand collected H=F+G 23,10,95,395 26,28,49,115 46,33,24,370 9 Recalibrated Basis Price I= F* (1-E) or 97.16% of F 20,04,75,252 26,28,49,115 46,33,24,370 10 GST @12% J=I*12% 240,57,031 210,27,929 450,84,960 11 Commensurate demand price K=I+J 22,45,32,286 28,38,77,044 50,84,09,330 12 Excess Collection of Demand or Profiteering Amount L=H-K 65,63,109 82,97,765 1,48,60,874 10. The DGAP has also intimated that, it was quite clear from the above Table that the additional ITC of 2.84% of the taxable turnover should have resulted in commensurate reduction in the base price and therefore, in terms of Section 171 of the CGST Act, 2017, the benefit of the additional ITC that had accru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stomers No. of Units Area (in sqf) Amount Received Post GST Profiteering Amt. as per Annex-21 Benefit Passed On by Respondent Difference Remark A B C D E F G H=F-G I 1 Applicant (Residential) 1 618 7,63,482 23,772 12,492 11,280 Further Benefit to be passed on as per Annex-22 2 Other Buyers (Residential) 650 3,07,425 40,32,91,960 1,25,35,181 70,71,541 54,63,640 Further Benefit to be passed on as per Annex-22 3 Other Buyers (Residential) 100 44,966 6,33,27,248 20,00,231 37,76,938 -17,76,707 Excess Benefit passed on. 4 Other Buyers (Residential) 29 13,477 - - -2,72,610 No Consideration Paid Post-GST, However, Respondent passed on benefit. 5 Other Buyers (Residential) 10 4,116 - - - - Cancelled Units 6 Other Buyers (Residential) 26 11,038 - - - - Unsold Units Total Residential (A) 816 3,81,640 46,73,82,690 1,45,59,184 1,11,33,581 34,25,603 7 Commercial Shop Buyers 13 4,438 94,84,715 3,01,690 - 3,01,690 Benefit to be passed on as per Annex-23 8 Commercial Shop Buyers 9 2,901 - - - - No Consideration Paid Post-GST 9 Commercial Shop Buyers 14 7,971 - - - - Unsold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings. The Report further admitted that these recipients were identifiable as per the documents on record as the Respondent had provided their names and addresses along with unit no. allotted to them, therefore, this additional amount of Rs. 57,65,329/- was required to be returned to such eligible recipients. The DGAP has also submitted that the present investigation covered the period from 01.07.2017 to 31.08.2018 and profiteering, if any, for the period post August, 2018 has not been examined as the exact quantum of ITC that would be available to the Respondent in future could not be determined at this stage when the construction of the project was yet to be completed 15. The above report was considered by the Authority in its meeting held on 03.12.2018 and it was decided to hear the Applicants and the Respondent on 19.12.2018, which was postponed to 07.01.2019 on the request of the Respondent. On 07.01.2019 the Applicant No. 1 did not appear but the DGAP was represented by Shri Manoranjan, Assistant Commissioner while Mr. Ankur Agarwal, Authorised representative and Ms Alka Gupta, CA appeared on behalf of the Respondent. Further hearings were held on 13.02.2019 and 18.02.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77 home buyers the Respondent stated that since the balance instalments were pending from these buyers the profiteered amount for each one of them will be adjusted against their pending instalments. In this regard he also produced letters to the effect that the amount will be adjusted against the payments due which had been sent to all these 177 home buyers by him. On 19.02.2019 the Respondent had sent details of the payments of the profiteered amount through various modes. Further on 25.02.2019 the Respondent has submitted a letter giving the breakup of payments made through various modes along with the Annexures. 18. We have carefully examined the DGAP's report and written submission by both the Applicants and the Respondent placed on record and find that following issues are to be settled in the present proceedings:- I. Whether there was reduction in the rate of tax on the service in question w.e.f. 01.07.2017 and w.e.f. 25.01.2019? II. Whether there was any net additional benefit of ITC? III. Whether there was any violation of the provisions of Section 171 of the CGST Act, 2017, by not passing on the benefits by the Respondent? 19. Rule 127 of the CGST Rules, 2017 read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rived at by the DGAP by taking into account the benefit of credit available during pre GST (April 2016 to June 2017) to the taxable turnover received during the said period. Similarly for the post GST period (01 07.2017 to 31.08.2018) the percentage of ITC has been arrived at by taking into account the credit available as against the taxable turnover received during the same period. Based on the above analysis it is clear that the Respondent had benefit of ITC of Rs. 1,59,38,195 (3.6%) in pre GST when compared to Rs. 3,09,70,006 (6.49%) in the post GST period thus providing him the net benefit of ITC of 2.84%:- 22. It is also evident that the Central Government had levied 18% GST (effective rate was 12% on account of 1/3rd abatement on the land value) on construction service vide Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017. The effective GST rate of construction service in the case of affordable and low cost housing was further reduced from 12% to 8% vide Notification No. 1/2018-Central tax (Rate) dated 21 01 2018. Accordingly the profiteered amount has to be broken into two parts one for the period w.e.f. 01.07.2017 to 24.01.2018 where the effective rate of GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the buyers of these commercial units. Accordingly out of total profiteered amount of Rs. 1,48,60,874 an amount of Rs. 90,84,264 has already been passed on as is evident from Annexure 17 of the DGAP's Report where intimations have been filed by the Respondent stating the details of the payments regarding ITC benefit paid to their buyers. The balance amount of Rs. 57,76,610 is to be passed on to the identified buyers as per the following table:- 24. In view of the above facts this Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the price to be realized from the buyers of the flats commensurate with the benefit of ITC received by him as has been detailed above. Since the present investigation is only up to 31.08.2018 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondent as and when the remaining residential/commercial units are sold. The Respondent's Annexures dated 19.02.2019 and 25.02.2019 which comprise of the details of payments made through various modes are taken on record. As per this Annexure the Respondent has paid to the Applicant No. 1 and 473 other home buyers the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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