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TMI Blog2019 (12) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... in the last para of his letter to 11 home buyers that this amount of profiteering was merely based on a provisional computation at his end. There are no reason to differ from the Report of DGAP and we therefore agree with his findings since there was no reduction in the rate of tax nor there was increased additional benefit on account of ITC. Hence, the provisions of Section 171 of CGST Act, 2017 are not liable to be invoked in this case, notwithstanding the contention of the Applicant No. 1 that the Respondent had issued a credit note to him which indicated that an amount of ₹ 1,12,080/- was being passed on to him. We take cognizance of the Report of DGAP dated 07.10.2019 that this issue had already been considered by him during the investigation and was found extraneous to the computation of profiteering since the communications regarding the credit note issued by the Respondent were based on a mere provisional computation of the amount of profiteering on his (Respondent) part. We also find that on his part, the Applicant No. 1 has also not substantiated his allegations during the course of the hearings. Therefore, there are no ground to differ from the Report of the DG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meeting held on 13.12.2018 and it had referred the application to the DGAP for investigation under Rule 129 (1) of the CGST Rules, 2017 to determine whether the benefit of reduction in the rate of tax or ITC had been passed on by the Respondent to his recipients. 2. The DGAP has stated that the Applicant had submitted the duly filled in Form APAF-1 and copies of demand letters alongwith his application. 3. Thereafter, the DGAP issued a notice to the Respondent on 14.01.2019 under Rule 129 of the above Rules, 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 prices and if so, to suo-moto determine the quantum thereof and indicate the same in his reply to the notice as well as furnish all supporting documents. The Respondent was also given an opportunity to inspect the non-confidential evidences/information furnished by the above Applicants during the period 21.01.2019 to 23.01.2019. However, the Respondent did not avail of the said opportunity. The Applicant No. 1 was also given an opportunity to inspect the non-confidential evidences/reply furnished by the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST on other charges Total 1. At the time of Booking 31-Oct-11 6,16,650 15,879 6,32,529 2. Within 60 days or Allotment (whichever is later) 15-Dec-11 12,33,300 31,757 12,65,057 3. within 90 days of booking 25-Jun-12 18,49,951 57,163 19,07,114 4. Payment due OC 10-Jul-12 2,20,000 27,192 2,47,192 5. Interest charge on overdue amount 25-Feb-13 79,656 79,656 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econd floor 16-Sep-17 9,24,975 55,000 1,10,997 6,600 10,97,572 17. ON Completion of Internal Plaster 16-Sep-17 9,24,975 55,000 1,10,997 6,600 10,97,572 18. On Completion of External Plaster 16-Sep-17 12,33,300 73,333 1,47,996 8,800 14,63,430 19. On completion of Flooring work 16-Sep-17 18,49,951 1,10,000 2,21,994 13,200 21,95,145 20. Interest Overdue amount 20-Sep-17 12,26,772 12,26,772 21. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... units which were under construction but not sold was provisional ITC which may be required to be reversed by the Respondent, if such units remained unsold at the time of issue of the 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 . Since, the Respondent had obtained the completion certificate of the project Vatika Premium Floors issued by the competen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Total CENVAT/VAT Credit Available (C)= (A+B) 25,98,769 9,27,733 35,26,502 4. Input Tax Credit of GST (D) 3,10,249 1,66,676 4,76,925 5. Total Turnover (E) 14,84,77,976 1,16,22,676 16,01,00,652 1,75,05,307 2,43,91,208 4,18,96,515 6. Total Saleable Area of the flats in the project (in Square Feet) (F) 9,74,590 9,74,590 7. Area unsold at the time of issue of Completion Certificate (in Square Feet) (G) 3,65,592 3,65,592 8. Net Saleable Area of the flats (in Square Feet) (H) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e benefit of ITC to the flat buyers as has been mentioned in Table-C below:- Table-C S.No. Name of the Flat Buyer (S/Sh./Smt) Unit No. Amount of ITC Benefit passed on as per Section 171 of CGST Act, 2017 (Rs.) 1. Krishna 2nd Floor, 5, F-7, Vatika India Next, Gurugram, Premium Floors. 8.814 2. Munesh Chandra Tamang 2nd Floor, 2, H-7, Vatika India Next, Gurugram, Premium Floors. 16,903 3. Rajesh Kumar 2nd Floor, 17, F-1, Vatika India Next, Gurugram, Premium Floors. 4761 4. Mohd. Shahid 2nd Floor, 31, E-1, Vatika India Next, Gurugram, Premium Floors. 35190 5. Surinder Kumar Sindhwani Ground Floor, 4, E-3.1, Vatika India Next, Gurugram, Premium Floors. 6292 6. Sanjay Dewan (Applicant) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Respondent had mentioned in the last para of his letter to 11 home buyers that this amount of profiteering was merely based on a provisional computation at his end. The DGAP has also Reported that for the above reasons, this issue was not mentioned in the DGAP's Report dated 19.06.2019. 14. The Respondent vide his submissions dated 16.09.2019 submitted the details/information called for vide order dated 18.07.2019 and stated that:- a. The anti-profiteering investigation was already carried on by the DGAP for the period 01.07.2017 to 31.12.2018 in respect of the project. b. The DGAP had required him to submit various information and documents. c. The DGAP in his Report had given negative findings on the allegation of profiteering made by the above Applicant. It was observed that he had neither benefitted from additional ITC nor there had been a reduction in the tax rate in the post-GST period. d. The Report of the DGAP gave findings in his favour that the provisions of Section 171 of the CGST Act, 2017 were not attracted in the present case. However, he had taken a commercial decision to provide benefits to customers on whom demand notes were raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofiteering? 18. Perusal of Section 171 of the CGST Act shows that it provides as under:- (1). Any 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. It is clear from the plain reading of Section 171 (1) mentioned above that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax in the post GST period. Hence the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. On this issue, the DGAP in his Report, has stated that ITC as a percentage of the turnover which was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 0.30% and during the post-GST period (July-2017 to December-2018), it was 0.20%. On this basis, the DGAP has concluded his Report with the findings that the Respondent had neither been benefited from add ..... X X X X Extracts X X X X X X X X Extracts X X X X
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