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TMI Blog2019 (7) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent in the post-GST period and therefore, there was no additional benefit of ITC which had accrued to the Respondent post-GST as compared to pre-GST period. In view of the fact that there was no reduction in the rate of tax nor there was increased additional benefit on account of ITC, the provisions of Section 171 of CGST Act, 2017 could not be invoked in this case. The allegation of not passing on the benefit of ITC is not established. Even the charging of GST @18% in post-GST regime is not within the scope of Section 171 of CGST Act, 2017 - The DGAP in his investigation Report has clearly stated that in the post-GST regime the Respondent had not availed ITC and there was no ITC available with the Respondent, the benefit of which could have been passed on to the recipients. The provisions of Section 171 of the CGST Act, 2017 are not attracted in the present case and therefore, the contentions of the Applicant No. 2 also do not fall under the scope of Section 171 of the CGST Act, 2017. Further, it has been revealed from the records that Respondent had completed the project Independent Floor Phase-Il prior to implementation of the GST and he had neither availed ITC on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Credit (ITC) by way of commensurate reduction in the price of the apartment purchased by him, on implementation of GST w.e.f. 01.07.2017. The said application was examined by Haryana State Screening Committee in its meeting held on 20.06.2018 and upon being prima facie satisfied that the Respondent had contravened the provision of Section 171 of the CGST Act, 2017 and forwarded the same with its recommendation to the Standing Committee on Anti-Profiteering for further action in terms of Rule 128 of the CGST Rules, 2017. The said application was examined by the Standing Committee on Anti-Profiteering in its meeting held on 07.08.2018 08.08.2018 and it had referred the application to the DGAP for investigation under Rule 129(1) of the CGST Rules, 2017 to determine whether the benefits of reduction in the rate of tax or ITC had been passed on by the Respondent to his recipients. 2. Meanwhile, the Applicant No. 2 was also made a co-applicant on 29.11.2018 in the present case as he had alleged that the Respondent had already recovered Service Tax from the previous allottee of the unit which was allotted to him on cancellation and therefore, the GST should not be recovered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Applicant No. 2 was the first allottee of the said unit and it was never allotted to anyone before him. The Respondent had also submitted the following documents for the period July-2017 to August-2018 for all the projects related to the Applicant No. 1 and 2 a. Copies of GSTR-1 returns. b. Copies of GSTR-3B returns. c. Copies of Tran-1 returns in respect of transitional credit availed. d. Copies of VAT ST-3 returns. e. Electronic Credit ledger. f. Copies of all demand letters and sale agreement/contract and construction agreement. g. Tax rates- pre-GST and post-GST. h. copy of Balance Sheet for FY 2016-17 2017-18. i. Details of turnover and ITC for the project Independent Floor Phase-II . j. List of home buyers in the project Independent Floor Phase-Il 6. The DGAP in his Report has stated the details of ITC availed by the Respondent and his turnover from the project Independent Floor Phase-II during the period April-2016 to August-2018 (Pre-GST and Post-GST) was as per the Table below:- Table (Amount in Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the plaster on 25.08.2017 and another demand against completion of flooring work on 05.09.2017 along with GST @ 18%. But when he alongwith the bank officials visited the site on 10.09.2017, found that no work had commenced for their floor and as such bank was not ready to disburse the loan against the construction. A representation was made to the Respondent in this regard, and the Respondent assured to commence the work. All these payments including GST as demanded by the Respondent were paid. The Respondent had been demanding the payment from the buyers even without construction of flat on Plot No. 18, Street F-3.1, EMillia Floor, Sector-82, Gurgoan. He has also attached copies of e-mails from other aggrieved buyers. b. Further, a demand for an amount of ₹ 2,33,660/- including GST @ 18% was raised by the Respondent on offer of possession, although the flat was not ready. However, the same was paid to the Respondent. The Respondent handed over the keys of the property without any OC/registration. c. The Applicant No. 1 also stated that the construction of the flat was carried out by the builder post-GST regime and GST @18% was charged against v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent, however, did not commence any construction at the allotted site. e) He received a letter dated 7.7.2017 from the Respondent stating that there was revision of the master layout of the township due to certain fine tunings and that amendments in the master layout (were) necessitated due to architectural and other related considerations He was invited to visit Vatika office at Gurgaon on 20.7.2017 for re-allotment of an alternative unit. f) On his visit to Vatika office, he was offered re-allotment of a dwelling unit in a proposed multi-storey cluster. Considering certain serious drawbacks in the offer for re-allotment, he had declined the offer. g) He visited Vatika office again on 3.10.2017 when he was offered for re-allotment of Unit 48, GF, S-1, Sector 82, Vatika India Next (the Apartment), in lieu of the Independent Floor assigned to him by Mrs. Maya Pruthi, which was accepted by him. h) He enquired from the concerned executive the reason for which the Apartment was not offered to him when he visited earlier on 20.7.2017. He was informed that the Apartment had become available after 20.7.2017 on cancellation of allotment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, the Allottee shall be liable to pay from the date of his/her application house tax/ property tax or any other tax, fee or cess as and when levied by any statutory Body or Authority and so long as the said independent dwelling unit of the Allottee is not separately assessed to such Taxes, Fee or cess, the same shall be paid by the Allottee in proportion to the Built-up area of the said independent dwelling unit to the total Built-up area of the dwelling units in the said Building as determined by the Company. These taxes, fees, cesses etc shall be paid by the Allottee irrespective of the fact whether the maintenance is carried out by the Company or its Nominee or any other Body or Association of all or some of the independent dwelling unit owners. n) Apart from Clause 2 of the BBA, there is no other provision enabling the Respondent to recover taxes from the Applicant No. 2. o) A bare perusal of Clause 2 of the BBA suggests that the taxes, duties etc. contemplated therein are to be shared in proportion to the built-up area of the Apartment vis- -vis the total area of the whole Vatika India Next complex. In other words, the taxes, duties etc that are levi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, Service Tax or Goods and Services Tax, as applicable on the date of cancellation/surrender, on total amount paid/payable, Service Tax or Goods and Services Tax, as applicable on the date of cancellation/surrender, on Forfeited Earnest Money, Value Added Tax(VAT) - Paid or Payable up to 31.3.2014, Transfer Charges applicable on sale to subsequent buyer, Interest and Certain other charges. x) Though the he was unaware of the actual recoveries made by the Respondent from the original allottee upon cancellation of allotment, it is clear that the Respondent had made various recoveries from the original allottee of the Apartment, including of Service Tax or GST, as the case may be, depending on the date of cancellation. y) For the reason that no formal invoices for the recoveries of the Service Tax/GST from the original allottee on cancellation of the Apartment were issued by the Respondent, there was a strong possibility that the amount recovered from the original allottee was not deposited with the Government. This is, however, a matter of verification by the Revenue authorities. z) He was informed by the Respondent in its email dated 13.11.2017 that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pre-GST regime and the Service Tax or GST has actually been recovered from the original allottee on completion of construction of four stages of the Apartment, GST is not recoverable from him. ii) In the circumstances, the conclusion drawn in the given fact situation is that the recovery of GST from him was wholly unjustified. jj) Without prejudice to his main contention that GST could not be recovered from him, there is another issue of allowing him the benefit of ITC. kk) In accordance with the notification issued by the Central Government under the GST Act, GST is chargeable at the rate of 12% on the under construction flats. ll) During the pre-GST regime, a plethora of taxes, Central as well as State, such as Central Excise, VAT, Entry Tax etc on the inputs (goods and services) going into the construction of flats were being passed on to the allottees in the cost agreed under the BBA and such cost was inclusive of taxes. mm) In accordance with the GST Act, under the GST regime, the pre-GST taxes have been subsumed in GST. Now the embedded input taxes are to be utilised for offsetting GST rate of 12% applicable in case of un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it does so it has to pass on the benefit to the allottees. However, in pre-GST period taxes were not payable by the allottee in addition to the agreed price, the taxes paid by the Respondent got subsumed in the price. Therefore the benefit of taxes subsumed in the price during pre-GST period has to be passed on the allottee. vv) When seen in the light of the above submissions, the invoices issued to him were excessive, which the Respondent has recovered under duress and threat of cancellation of the Apartment. ww) The Respondent has charged him excess money and has to make up for the loss suffered by him. xx) Certain communications received from the Respondent have been referred to in the report of DGAP. To enable him to present my case more effectively, he should be provided copies of these documents to the extent permitted by law. The copies of the following documents referred to in this communication have been attached for reference: 1. Copies of Invoices dated 7.11.2017, 2. Copy of letter dated 17.9.2014, addressed to Mr. Tarun Rana 3. Respondent's email dated 13.11.2017, 4. Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in hand on 30th June, 2017. Though, he had received services for minor works after 30.06.2017, ITC thereof was not availed. Copies of GST TRAN-1 Statement and Electronic Credit Ledger for the period July-17 to August-18 were also enclosed. c. He also stated that the DGAP vide his Report had given a finding that there was no ITC available with the Respondent, the benefit of which could have been passed on to the above Applicants. It was thus concluded that provisions of Section 171 were not attracted. It was also submitted that as he had not availed any ITC benefit in respect of the project, there was no benefit that could have been passed on to the above Applicants. 11. The Authority has carefully examined the DGAP's Report, the written submissions of the above Applicants as well as the Respondent placed on record. The issues to be decided by the Authority are as under:- 1) Whether there was any violation of the provisions of Section 171 of the CGST Act, 2017 in this case? 2) If yes then what was the quantum of profiteering? 12. Perusal of Section 171 of the CGST Act shows that it provides as under:- (1). Any redu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there was no ITC available with the Respondent, the benefit of which could have been passed on to the recipients. The provisions of Section 171 of the CGST Act, 2017 are not attracted in the present case and therefore, the contentions of the Applicant No. 2 also do not fall under the scope of Section 171 of the CGST Act, 2017. 16. Further, it has been revealed from the records that Respondent had completed the project Independent Floor Phase-Il prior to implementation of the GST and he had neither availed ITC on any of the inputs procured in the GST Regime, nor had he availed/carried forward the pre-GST credit pertaining to the stock held in hand as on 30.06.2017. Therefore, he is not liable to pass on the benefit of ITC to the above Applicants. Therefore, the provisions of Section 171 (1) of the CGST Act, 2017 which state that a reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices , have not been contravened in the present case, as the same are not even applicable. 17. In view of the above, the allegation that the Respondent has not pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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