9911796707
TMI Blog2019 (5) TMI 1448X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 2,83,026/- in respect of the Applicant No. 1. This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 directs that the Respondent shall reduce the prices to be realised from the buyers of the flats commensurate with the benefit of ITC received by him as has been discussed above. The profiteered amount of ₹ 41,82,198/- paid along with interest is for the period July 2017 to August 2018, and in case any benefit of ITC which accrues subsequently shall also be passed by the Respondent to all the buyers failing which the Applicant No. 1 will be at liberty to file fresh application for grant of ITC benefit which may accrue to him. Though the Respondent did not deny that the benefit of ITC had accrued to him and he had to necessarily pass on the same to the home buyers as per the provisions of Section 171 of the CGST Act, 2017, the benefit of ITC was passed on by him only in the month of February 2019. He had not only collected extra amount from the buyers but also compelled them to pay more GST on the additional amount realised. The above act of the Respondent appears to be deliberate and conscious violation of the provisions of Section 171 of the CGST Act, 2017. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ti-Profiteering (DGAP) to initiate detailed investigation in the matter. 3. The DGAP after completing the investigation has submitted his report under Rule 129 (6) of CGST Rules, 2017 on 28.11.2018 pertaining to the period w.e.f. 01.07.2017 to 31 08.2018. 4. The DGAP has stated that a notice under Rule 129 of the CGST Rules, 2017 was issued on 11.09.2018, calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the Applicant No. 1 by way of commensurate reduction in price and if so, to suo-moto determine the quantum thereof and indicate the same in his reply to the notice along with all supporting documents. The Respondent was also given an opportunity to inspect the non-confidential evidences/information furnished by the above Applicant which was availed by him 5. The DGAP in his Report has also stated that the Respondent submitted that he was in the business of construction of the project Eldeco County located in Sonepat which was almost completed in the pre-GST regime and there was nominal procurement during the GST regime. The Respondent also submitted that the consideration received after th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 19.11.2018 as ₹ 21,12,400/- (i.e. 2% on amount paid during 01.07.2017 to 31.08.2018). 7. The DGAP on verification and completion of his investigation has also submitted that the Respondent had provided the payment schedule for the purchase of a Duplex Villa measuring 561.28 Sq. yards at the basic sale price of ₹ 17,520/- per square yard, and the details of amounts and taxes paid by the Applicant No. 1 to the Respondent are furnished in the Table below:- Table (Amount in Rs.) S.No. Payment Stages Due Date Basic Other Charges Service Tax VAT GST Total 1 At the time of Booking 03.06.2017 9,82,831 - 44,227 - - 10,27,058 2 Within 30 days of allotment 14.08.2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired, by the competent authority or after its first occupation, whichever is earlier . Thus, he has argued that the ITC pertaining to the units which were under construction but not sold was provisional ITC which needed to be reversed by the Respondent in terms of Section 17(2) Section 17(3) of the Central Goods and Services Tax Act, 2017 which read as under: Section 17(2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies. Section 17(3) The value of exempt supply under sub-section (2) shall be such as may be prescribed, and shall include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building. 10. The DGAP has further argued that prior to 01.07.2017, i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 Total Taxable Turnover as per Returns (E) 12,82,89,346 7,02,77,743 19,85,67,179 7,21,61,576 5,85,73,391 13,07,34,967 6 Total Saleable Area of Villas in the project (SqaureMtr) (F) 1,01,795.90 1,01,795.90 7 Area Sold relevant to Taxable turnover as per returns 14,843.33 34,646,89 8 Relevant CENVAT/Input Tax Credit (H)=[(C)*(G)/(F)] or [(D)*(G)/(F)] 12,02,753 45,06,436 9 Ratio of CENVAT/Input Tax Credit to Taxable Turnover [(I)=(H)/(E)] 0.61% 3.45% 11. Based on the above analysis the DGAP has stated that the ITC as a percentage of the total turnover that was av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng July, 2017 to August 2018 G 1,39,55,578 9 Total Taxable Value raised during July, 2017 to August, 2018 H=F+G 13,07,34,967 10 GST Collected @ 12% over Basic Price I=F*12% 1,40,13,527 11 GST Collected @ 18% over other than Basic Price J=G*18% 25, 12,004 12 Total GST Collected K=I+J 1,65,25,531 13 Total Demand collected L=H+K 14,72,60,498 14 Recalibrated Basic Price M=F*(1-E) or 97.16% of F 11,34,62,854 15 GST@12% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red, the DGAP was represented by Sh. R.A. Rajneesh, Assistant Commissioner and the Respondent was represented by Mr. Kapil Kumar Sharma Advocate, Mr. K. Kharbanda Sr. General Manager, Mr. Vimal Kumar Assistant General Manager (Accounts), Mr. Tushar Aggarwal and Mr. Hitesh Arora Consultants. On the request of the Respondent, further hearings were held on 30.01.2019 and 11.02 2019. 14. The Respondent has filed detailed written submissions on 26.12.2018 and 03.01.2019. The Respondent in his submissions has stated that while section 171 prescribed passing on the benefit of ITC by way of commensurate reduction in prices, there was no methodology prescribed to measure the benefit. He has further stated that being a compliant taxpayer he had calculated the benefit to be passed on to the customers. He has also submitted that he accepted the profiteered amount which had been calculated by the DGAP and assured to pass on the same to his customers. He also, requested that no penalty should be levied on him as he had volunteered agreed to pass on the benefit of ITC as per the provisions of the law. He has further submitted that with respect to payment of interest to the customers alon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and hence no comments were being offered. 18. We have carefully considered the Report of the DGAP, the submissions of the Respondent and all the documents placed on record. From the perusal of the facts of the DGAP's Report it is revealed that the ratio of ITC to the taxable turnover during the pre GST period was to the extent of 0.61% as compared to post GST period of 3.45% thus, there was net benefit of 2.84% of ITC to the Respondent. Based on this net benefit and the amounts collected from the home buyers during the post GST period, an amount of ₹ 41 82,198/- has been computed as the profiteered amount as per Annexure-15. The Respondent has raised no objection against the computation of the above amount made by the DGAP vide Annexure-15 and hence it can be relied upon. 19. The Respondent has also not denied the fact that there has been net benefit of ITC during the post GST period. His only contention was that there was no methodology in place to determine the profiteered amount and since the project was not complete he had suo-moto decided to pass on the benefit on completion of the project. However on receipt of the DGAP Report he had suo-moto acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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