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TMI Blog2019 (11) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... lty - HELD THAT:- It is evident from the above that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him under the above Policy in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus realized more price from them than he was entitled to collect and has also compelled his consumers/buyers to pay more GST than that they were required to pay and therefore, he is liable for imposition of penalty - Accordingly, a Show Cause Notice be issued to him directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with rule 133(3)(d) of the CGST Rules, 2017 should not be impose on him. - Case No. 55/2019 - - - Dated:- 5-11-2019 - SH. B. N. SHARMA, CHAIRMAN, SH. J. C. CHAUHAN, TECHNICAL MEMBER, MS. R. BHAGYADEVI, TECHNICAL MEMBER, SH. AMAND SHAH, TECHNICAL MEMBER Present: - Applicant No. 1 Sh. Hardev Singh, Applicant No. 2 Sh. Vaneet Malhotra, Applicant No. 3 Ms. Martha Paohaonamai, Applicant No. 4 Ms. Megha in person alongwith their Authorised Representative Sh. R. K. Jain and Sh. Rameshwar Singh, Sh. Rahul Chawdhary, Sh. Ishu Khurana, Sh. Sonu Verma and Sh. Ashok Singhal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to forward the same for detailed investigation to the DGAP with the request to club the fourth application with the previous three applications. Minutes of this meeting of the Standing Committee on Anti-Profiteering were received by the DGAP on 07.01.2019. 5. The DGAP, on receipt of the first of the above four references from the Standing Committee on Anti-profiteering, issued a notice to the Respondent under Rule 129 of the CGST Rules, 2017 on 10.09.2018 (Annexure-4), calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on by him to the above Applicants by way of commensurate reduction in prices and if not passed on, to suo moto determine the quantum thereof and pass on the benefit and indicate the same in his reply to the notice as well as to furnish all supporting documents in the case. The Respondent was given an opportunity to inspect the non-confidential evidence/information furnished by the Applicants during the period 17.09.2018 to 19.09.2018. However the Respondent did not avail of the said opportunity. As regards the application received vide the second of the two references of the Standing Committee on Anti-Prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issued in May, 2018. (d) That the Respondent had submitted that due to non-availability of permission to start construction activity prior to 05.02.2018, he had not raised demands on all the home buyers, but the same were issued to only those home buyers who had asked for the demand letters. (e) That the Respondent had assured that he would definitely pass on ITC benefit to all his customers when the last demand would be raised. By then, he would be aware of the details of the benefit of ITC to be passed on to his clients as his project would be close to completion/ possession. 8. In his Report, the DGAP has further stated that vide his aforementioned letters, the Respondent had submitted the following documents/information: (a) Copies of GSTR-1 returns for the period August, 2017 to August, 2018. (b) Copies of GSTR-3B returns for the period August, 2017 to August, 2018. (c) Copies of all demand letters issued in the name of the above Applicants. (d) Tax rates- pre-GST and post-GST. (e) copy of Balance Sheet for FY 2016-17 FY 2017-18. (f) Copy of Electronic Credit Ledger for the period 01.08.2017 to 31.08.2018. (g) ITC register for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Within 18 months of the date of issuance of offer of Allotment letter 12.5% of the total price Within 24 months of the date of issuance of offer of Allotment letter 12.5% of the total price Within 30 months of the date of issuance of offer of Allotment letter 12.5% of the total price Within 36 months of the date of issuance of offer of Allotment letter 12.5% of the total price 11. The DGAP has also submitted that the Respondent, vide letter dated 19.09.2018, had submitted copies of the payment schedule and the demand letters issued to the Applicants No. 1, 2 3. The details of amounts and taxes paid by the said four Applicants to the Respondent were furnished by the DGAP as are given in Table-'B' below. Table- B Applicant No. 1 (Amount in Rs.) S. No. Payment Stage Due Date Basic % BSP Service Tax GST Total Amount payable Amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.2018 12.50% 3,28,250 - 26,260 3,54,510 13,130 Total 50.00% 13,13,000 - 52,520 13,65,520 10,24,140 Applicant No. 4 (Amount in Rs.) S. No. Payment Stage Due Date Basic % BSP Service Tax GST Total Amount payable Amount paid 1. At the time of booking 12.12.2016 5.00% 63,125 - - 63,125 63,125 2. Within 15 days of the date of issuance of offer of Allotment letter 01.04.2017 20.00% 2,52,500 - - 2,52,500 2,52,500 3. Within 06 months of the date of issuance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its remained unsold at the time of issue of completion certificate, 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 . In view of the above, the DGAP has claimed that the ITC pertaining to the unsold units was outside the scope of this investigation and the Respondent was required to recalibrate the selling price of such units to be sold to the prospective buyers by consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - - 23,46,360 1,19,81,147 1,43,27,507 4. Total CENVAT/ITC Available (D)=(A)+(B) or (C) - - - 23,46,360 1,19,81,147 1,43,27,507 5. Total Turnover (E)= (C)+(D) - - - 19,465,786 149,554,736 169,020,522 6. Total Saleable Carpet Area (in SqFt) (F) - - - 5,58,047 5,58,047 7. Saleable Area relevant to turnover (in SqFt)(G) - - - 2,45,616 2,45,616 8. Relevant ITC [(H)= (A)*(G)/(F)] or [(H)= (B)*(G)/(F)] 0 0 0 6,306,037 6,306,037 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 3.73% 3.73% 3.73% 4. Increase in ITC availed post-GST (%) D - 3.73% 3.73% 3.73% 5. Analysis of Increase in ITC: 6. Base Price collected during July, 2017 to August, 2018 (Gross Turnover) E 1,94,65,786 14,95,54,736 16,90,20,522 7. GST Collected over Basic Price F= E*12% or 8% 23,35,894 1,19,64,379 1,43,00,273 8. Total Demand collected G=E+F 2,18,01,680 16,15,19,115 18,33,20,795 9. Recalibrated Basic Price H=E*(1-D) or 96.27 % of E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l no.187 and 484 of Annexure-25, the amount profiteered was ₹ 25,3941- (including GST). 19. On the basis of the details of the outward supplies of the construction service submitted by the Respondent, the DGAP has further reported that the said construction service had been supplied by the Respondent in the State of Haryana only. 20. The DGAP has further reported that whereas the Respondent had booked 1,089 flats in the pre-GST period and had received booking amount from all the home buyers in the pre-GST period, no demand had been raised by him in respect of 596 home buyers during the period 01.07.2017 to 31.08.2018 post-GST (period under investigation). Therefore, the above computation of profiteering was with respect to 493 [1089 (-) 596] flats only, wherein demands had been raised and/or payment had been received in the post-GST period. If the ITC in respect of these 596 flats was taken into account to calculate profiteering in respect of 493 flats, where payments had been received post GST, the ITC as a percentage of turnover would be distorted and erroneous. Therefore, the profiteering in respect of these 596 units was required to be calculated when the considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02.2019 and it was decided to hear the Applicants No. 1 to 4 and the Respondent on 13.03.2019. Sh. Rahul Chaudhary, Sh. Ashok Singal, Sh. Rameshwar Singh, Sh. Ishu Khurana and Sh. Ramesh Singh were also added as applicants on their request as they had also purchased flats from the Respondent. First hearing was held on 13.03.2019 when the Applicant No. 1 to 4 had filed written submissions. During subsequent proceedings the above Applicants had filed further written submissions on 02.04.2019, 16.04.2019, 03.05.2019 and 21.05.2019 which are summarized as below:- i. The above Applicants stated that in addition to 4 Applicants, there were several other buyers who had alleged contravention of the provisions of Section 171 of the CGST Act 2017, against the Respondent hence, their names should be tagged with the existing 4 Applicants. Further, the order to be passed by the Authority should be made applicable to all the, buyers on whom the demand had been raised by the Respondent during the period of investigation. ii. The above Applicants further submitted that the Respondent has without sharing the total benefit of ITC or commensurate reduction in the price, passed on merely 4% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led/ Turnover (3 divided 1) 12% 7.998% - 6. Re-caliberated rate (100 minus 5) 88% 92.002% - 7. Re-caliberated price (1 * 6) 171,29,892 1375,93,348 1547,23,240 8. GST @ 12% / 8% 20,55,587 110,07,468 130,63,055 9. Commensurate demand price with GST (7 + 8) 191,85,479 1486,00,816 1677,86,295 10. Total Turnover plus GST collected originally collected from buyers (1 + 2) 2,18,01,676 16,15,19,116 18,33,20,792 11. Excess collection of demand or profiteering amount (10 minus 9) 26,16,197 129,18,300 155,34,497 vi. The Applicants have also submitted that profiteering due to n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s has also been accepted by the Applicants. The Respondent has also submitted the list of all the buyers including the above Applicants to whom he had passed on the ITC benefit. The Respondent has claimed that, upto 31.08.2018 the total ITC benefit of ₹ 68,39,570/- has been passed on by him along with the applicable interest thereon to the 493 home buyers, as per the Annexure 25 of the DGAP's Investigation Report, which is inclusive of the ITC benefit of Applicant No. 2 of ₹ 12,697/- along with interest of ₹ 1496/- and Applicant No. 3 of ₹ 12,697/- along with interest of ₹ 1521/-. Since the Applicant No. 1 4 have not paid any amount post GST (upto 31.08.2018) and hence, there was no benefit of ITC to be passed on in respect to these two Applicants during the period of investigation. The Respondent has also claimed that the total ITC benefit of ₹ 1,90,09,595/- has been passed on by him along with interest of Rs. 26,00,920/- to the 720 home buyers up to 31.03.2019. 25. We have carefully considered the DGAP's Report and the written submissions filed by both the Applicants and the Respondent which have been placed on record and find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in every such case, the Authority allows benefit to all the buyers of the project and not only the Applicants. Therefore, this pleading of the Applicants is accepted. ii. Second pleading of the Applicants is that instead of actual ITC benefit accrued to him, the Respondent had passed on the ITC benefit at a flat rate of 4% to the buyers. In this regard, during the proceedings, the Respondent has admitted that he has passed on the ITC benefit on actual calculations as per the DGAP's investigation report along with the interest @18% p.a. This fact was also admitted by the Applicants during the proceedings. Therefore, the objection of the above Applicants is not sustainable. iii. The above Applicants have also raised objection that the request of the Respondent that he would pass on the benefit at the time of completion of the project was not sustainable. In this regard, the Respondent has admitted that he has passed on the ITC benefit as per the DGAP's investigation report along with the interest @18% p.a. during the proceedings. This fact has also been admitted by the above Applicants during the proceedings hence, the request of the Respondent to pass on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 8 3. Ratio of CENVAT/ Input Tax Credit to Turnover asper Table - 'D' above (%) C 0 3.73% 3.73% 3.73% 4. Increase in input tax credit availed post-GST (%) D - 3.73% 3.73% 3.73% 5. Analysis of Increase in input tax credit 6. Base Price collected during July, 2017 to August, 2018 (Gross Turnover) E 19,465,786 149,554,736 169,020,522 7. GST Collected over Basic Price F= E*12% or 8% 2,335,894 11,964,379 14,300,273 8. Total Demand collected G=E+F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the time of submission of the Application for allotment 5% of the total price Within 15 days of the date of issuance of offer of Allotment letter 20% of the total price Within 06 months of the date of issuance of offer of Allotment letter 12.5% of the total price Within 12 months of the date of issuance of offer of Allotment letter 12.5% of the total price Within 18 months of the date of issuance of offer of Allotment letter 12.5% of the total price Within 24 months of the date of issuance of offer of Allotment letter 12.5% of the total price Within 30 months of the date of issuance of offer of Allotment letter 12.5% of the total price Within 36 months of the date of issuance of offer of Allotment letter 12.5% of the total price As per the payment schedule, buyers had to pay 5% of the total amount at the time of booking, i.e. at the time of submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 171 of the above Act against the Respondents. The concerned CGST or SGST Commissioner shall take necessary action to ensure that the benefit of additional ITC is passed on to the eligible house buyers in future. 32. It is evident from the above that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him under the above Policy in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus realized more price from them than he was entitled to collect and has also compelled his consumers/buyers to pay more GST than that they were required to pay and therefore, he is liable for imposition of penalty. Accordingly, a Show Cause Notice be issued to him directing him to explain why the penalty prescribed under Section 171(3A) of the above Act read with rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him. 33. Further in terms of Rule 136 of the CGST Rules 2017, the Authority directs the Commissioner of CGST/SGST Haryana to monitor the implementation of this order under the supervision of the DGAP by ensuring that the amount profiteered by the Respondent, as ordered by the Authority, is passed on to the b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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