9911796707
TMI Blog2019 (12) TMI 1264X X X X Extracts X X X X X X X X Extracts X X X X ..... ent had not passed on the benefit of input tax credit to him by way of commensurate reduction in price, in terms of Section 171 of the Central Goods and Services Tax Act, 2017. While filing his application, he had sought anonymity. The Haryana State Screening Committee on Anti-profiteering conducted prima facie verification of the application and after having satisfied itself that the Respondent did not appear to have passed on the benefit of ITC, forwarded the said application with its recommendation to the Standing Committee on Anti-profiteering for further action, in terms of Rule 128 of the above Rules. 2. The Standing Committee on Anti-profiteering examined the aforesaid reference, in its meeting held on 13.12.2018 and it forwarded the same to the DGAP for detailed investigation. 3. The DGAP, on receipt of the application and the supporting documents from the Standing Committee on Anti-profiteering, issued a Notice under Rule 129 of the CGST Rules, 2017 on 15.01.2019 calling upon the Respondent to reply as to whether he admitted that the benefit of input tax credit had not been passed on to the Applicant No. 1 by way of commensurate reduction in price and if so, to suo-moto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of GST, the Respondent raised demand of the balance amount (37.50% of the total cost of the flat) with applicable GST. 9. The Respondent further submitted that he was not directly engaged in the construction activity and all the work related to the project was assigned to various sub-contractors, who procured all the required materials on their own except Steel, Cement and RMC which were supplied by the Respondent on free of charge basis. However, the project was executed under the supervision of the staff employed by the Respondent. 10. The Respondent also informed the DGAP that in the pre-GST regime, under the provisions of Haryana Value Added Tax Act, 2003, "Under-Construction Properties" were covered under the definition of 'Works Contract' and subjected to Haryana VAT @ 4.5% (approximately) with full ITC of VAT paid on the goods involved in the execution of works contracts. He also clarified that under the Service Tax regime, "Construction Services" were subjected to Service Tax @ 4.5% but the Affordable Housing was exempted from Service Tax, vide Notification No. 9/2016-ST dated 01.03.2016 with effect from 01.03.2016. He then submitted that in the GST regime, construction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017, he (Respondent) had himself calculated the additional benefit of ITC (provisionally) available under the GST regime and the same had been credited to his homebuyers. 14. The Respondent requested for disposal of the application filed by the Applicant No. 1 by way of a speaking order, before proceeding further under Section 171 of the CGST Act, 2017, citing the decision of the Hon'ble Supreme Court in the case of M/s. GKN Driveshafts (India) Ltd. [2002] 1 SCC 72 = 2002 (11) TMI 7 - SUPREME COURT. He also contended that the issues relevant to be addressed vide a speaking order before proceeding further in the matter were as follows: - (i) Whether on the facts & circumstances of the case, there was any reduction in the rate of tax on the supply of goods & services involved in the execution of works contract in the current GST regime. (ii) Whether on the facts & circumstances of the case, the benefit already credited/forwarded to the buyers before initiation of proceedings, should not be treated as compliance with the provisions of Section 171 of the Central Goods and Services Tax Act, 2017. (iii) Whether on the facts & circumstances of the case, the Applicant No. 1 had mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onths of Allotment 12.5% of total cost 5. Within 18 months of Allotment 12.5% of total cost 6. Within 24 months of Allotment 12.5% of total cost 7. Within 30 months of Allotment 12.5% of total cost 8. Within 36 months of Allotment 12.5% of total cost 19. The Respondent submitted before the DGAP that the benefit already credited/passed onto the buyers by him should be treated as compliance with provisions of Section 171 of the CGST Act, 2017. Also, in support of this claim, the Respondent, on 12.04.2019, submitted:- 1. Sample copies of some individual homebuyer ledgers maintained by him; 2. Sample copies of covering letters dated 18.07.2018 issued to the homebuyers informing them regarding his intent to pass on the ITC benefit @ Rs. 75.75/- per sq. ft. 3. Copies of credit notes issued to his buyers. 20. The DGAP further reported that while the Respondent has claimed that he has already passed on the benefit of ITC and complied with the provisions of Section 171 of the Act, the correctness of the amount so passed on by the Respondent, has to be computed in terms of Rule 129(6) of the CGST Rules, 2017. Therefore, the ITC available to the Respondent in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 was 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 was 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". 23. Hence, the ITC pertaining to the unsold units did not fall within the ambit of this investigation and as such the Respondent was required to recalibrate the selling price of such units to be sold to the prospective buyers by considering the net benefit of additional input tax credit available to them in the post-GST period. 24. The DGAP further reported that prior to 01.07.2017, i.e., before the GST was introduced, Service of construction of affordable housing provided by the Respondent was exempt from Service Tax, vide Notification No. 25/2012-ST dated 20.06.2012 (as amended by Notification No. 9/2016-ST dated 01.03. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n SQF)(I) 477068.59 (Residential) 23769.54 (Commercial) 5,00,838 477068.59 (Residential) 23769.54 (Commercial) 5,00,838 10. Total Sold Carpet Area (Excluding Balcony Area) (in SQF) relevant to turnover (J) 452796.67 (Residential) 15023.42 (Commercial) 4,67,820 477068.59 (Residential) 17535.67 (Commercial) 4,94,604 11. Relevant ITC [(K)=(D)*(J)/(I)] or [(K)=(E)*(J)/(I)] 4,01,32,046 13,17,17,518 Ratio of Input Tax Credit to Turnover [(L)=(K)/(H)*100] 4.75% 15.40% 25. From the above Table, it was clear that the input tax credit as a percentage of the turnover that was available to the Respondent during the pre-GST period (April, 2016 to June, 2017) was 4.75% and during the post-GST period (July, 2017 to December, 2018), it was 15.40% which evidenced that in the post-GST period, the Respondent had benefited from input tax credit to the tune of 10.65% [15.40% (-) 4.75%] of the turnover. 26. The DGAP also stated in his Report that the Central Government, on the recommendation of the GST Council, had levied 18% GST (effective rate was 12% in view of 113rd abatement for land value) on construction service, vide Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the Table given above, it was clear that the additional input tax credit of 10.65% of the turnover, which was the benefit to the Respondent, should have resulted in the commensurate reduction in the base prices as well as cum-tax prices of the units. 28. On the basis of the aforesaid CENVAT/input tax credit availability pre and post-GST and the details of the amount collected by the Respondent from the Applicant No. 1 and other buyers during the period 01.07.2017 to 24.01.2018, the DGAP computed the profiteered amount as Rs. 2,88,98,231/- for residential flats and commercial shops, which included 12% GST on the base profiteered amount of Rs. 2,58,01,992/-. Further, the amount of benefit of input tax credit that was needed to be passed on by the Respondent to the recipients or in other words, the profiteered amount during the period 25.01.2018 to 31.12.2018, came out to be Rs. 7,07,20,406/- which included 12% GST on commercial shops and 8% GST on residential flats, on the base profiteered amount of Rs. 6,52,80,958/-. Therefore, the DGAP computed the total profiteered amount during the period 01.07.2017 to 31.12.2018 as Rs. 9,96,18,637/- which included GST (@ 12% or 8%) on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ops, (Sr. 3 of above table) by an amount of Rs. 3,03,872/-. However, in terms of the relevant provisions this excess benefit claimed to have been passed on to some recipients, could not be permitted to be set off against the additional benefit required to be passed on to the other homebuyers/ shop buyers/ recipients and any such amount could only be adjusted against any future benefit that might accrue to such recipients. 32. The DGAP concluded his report by reporting that the benefit of additional input tax credit, which worked out to 10.65% of the turnover, has accrued to the Respondent in the post-GST period and the same was required to be passed on by the Respondent to the Applicant No. 1 and 1038 other recipients. In monetary terms, the Respondent had benefitted by an aggregate amount of Rs. 5,91,01,833/- (as detailed in Table-'D' of the report), which included both, the profiteered amount @10.65% of the base price and the GST on the said profiteered amount and the same needed to be passed on to the eligible recipients (Applicant No. I and other 1038 recipients - 979 home buyers and 59 shop buyers), all of whom were identifiable as per records furnished by the Respondent. 33 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that stage. The Authority supplied the same to the Respondent after procuring a copy of the application filed by the Applicant No. 1 from the DGAP. 40. Further, the Respondent, vide his submissions made on 19.08.2019 and on 26.08.2019, averred that the information sought by the Applicant No. 1 vide submissions dated 17.07.2019, was not public information and the same was sought to be kept confidential by the Respondent under Rule 130 of the CGST Rules, 2017. The Respondent also submitted that the provisions of Section 11 of the Right to Information Act, 2005 (22 of 2005) apply mutatis mutandis to the disclosure of any information, which was provided on confidential basis. The desired information contained business sensitive information such as vendor details, sources of material, detail of sub- contractors and buyer details of the project and this information might be used in a manner prejudicial to the business interests of the Respondent. The Respondent also submitted that the CGST Act, 2017 and the CGST Rules, 2017 nowhere provided power of disclosure of confidential documents to this Authority. He further cited Rule 129 and 130 of the CGST Rules, 2017 and requested not to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Application money 20 5,48,073 - 22,973 - 04.09.2015 31.08.2015 3. Within 6 months of Allotment 12.5 3,28,188 - - - 16.09.2016 13.09.2016 4. VAT Payable - 59,077 59,077 - - 20.02.2017 20.02.2017 5. Within 12 months of allotment 12.5 3,28,188 - - - 13.03.2017 20.02.2017 6. Within 18 months of allotment 12.5 3,67,570 - - 39,383 15.09.2017 21.08.2017 7. Within 24 months of allotment 12.5 3,28,188 - - 26,253 15.03.2018 12.03.2018 8. Within 36 months of allotment 12.5 3,54,444 - - 26,256 15.09.2018 28.08.2018 9. Within 42 months of allotment 12.5 3,33,389 - - 26,660 22.03.2019 22.03.2019 Gross Total Payment 27,78,392 59,077 1,18,552 - - The Applicant No. 1 further submitted that the gross total taxes paid by him were Rs. 2,00,601/-; the total Cost of the flat was Rs. 26,25,500/-; and no benefit on account of ITC was passed on to him by the Respondent. He also enclosed a copy of the Agreement executed between him and the Respondent; copies of the demand letters issued by the Respondent; copies of the acknowledgement receipts issued by the Respondent as proof of having paid the amounts to the Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITC by the Respondent" which was also false as per applicant's own admission made in his complaint dated 13.11.2018, wherein he had admitted that he had not been passed on the benefit of ITC fully and only a meagre amount had been paid to him. The Respondent also submitted a copy of letter dated 07.08.2018 issued by Applicant No. 1 to the Respondent, vide which the Applicant No. 1 had complained to the Respondent that the amount of ITC passed on by the Respondent @ 75.75 per sq. ft. was miscalculated and needed rectification. Citing the said later, the Respondent alleged that the Applicant No. 1 had himself accepted on 07.08.2018 itself that the Respondent had passed on benefit of ITC to the Applicant @ 75.75. per sq. ft. The Respondent further alleged that Applicant No. 1 was in know of the fact that benefit has been passed on by the Respondent to the buyers much before filing his first application / complaint on 13.11.2018. 46. The Respondent also enclosed a comparison sheet of tax liability on Builders/Developers in pre-GST and post-GST prepared by the Haryana State Screening Committee. 47. Next, the Applicant No. 1 filed his written submissions on 05.10.2019, vide which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that * He had sold his flats within the investigation period. * He had since applied for completion certificate in the residential project consisting of 980 dwelling units. * Of the total dwelling units, 44 units were sold after 01.07 2017 i.e. during the GST period and should not have formed part of the profiteering investigation. * He had also sold 70 units out of the total of 75 units (shops) of the commercial area by December 2018. Out of these, 70 units so sold, 21 units were sold after 01.07.2017 i.e. during the GST period and should not have formed part of the profiteering investigation. * 5 commercial units, aggregating to total demand of Rs. 2,69,81,920/-, remained unsold as on 31/12/2018. * He had applied for Occupation Certificate before the Competent Authority on 02.12.2018. * The project stood completed for occupation by 31.12.2018. 52. The Respondent reiterated his earlier submission that the complaint made by the Applicant No. 1 was false, mischievous and against the facts. The Respondent also claimed that the Applicant No. 1 had filed his complaint before this Authority on 13.11.2018 and the same was thereafter forwarded to the Haryana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal of ITC of Rs. was reflected in the above Return and the same was also intimated to the DGAP. However, the DGAP in his Report dated 14.06.2019, rejected his claim of reversal of Input Tax Credit of Rs. 7,00,00,091/- made by him in terms of section 18 (4) read with rule 42 of the CGST Act/Rules, on the grounds that the period covered by the DGAP was only from 01.07.2017 to 31.12.2018 and the Respondent still had unsold inventory, in respect of which his output GST liability might arise. The Respondent contended that refusal of the DGAP to consider the said reversal of ITC of Rs. 7,00,00,091/-was unfair as the reversal pertained to the period upto 31.12.2018. The Respondent also averred that the reversal ought to have been factored in the computation of the amount profiteered as the DGAP had himself accepted in his Report that all 980 residential units were sold during the period of his Report, while 70 out of 75 commercial units had been sold before 31.12. 2019. 55. The Respondent further submitted that his ITC was blocked by the jurisdictional Officer of State GST on 12.02.2019 and the same was unblocked on 28.05.2019 and thereafter the Respondent had voluntarily reversed an am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led input tax credit which pertained to the period upto 31.12.2018. He also stated that even after the reversal of Rs. 7,00,00,091/-, the electronic credit ledger reflected closing balance of approximately Rs. 59 lakh of unadjusted ITC as on 06.06.2019. He also added that the DGAP had also overlooked the fact that the present project stood completed on 31.12.2018 and except for unsold commercial area comprising of 5 units aggregating to 2,652 sq. ft. valued at Rs. 2,69,81,920/-, the entire project was sold within the period under investigation of the DGAP. Further, out of the sold inventory the following residential flats / commercial units were sold during the post GST period and were therefore out of purview of the provisions of Section 171 of the CGST Act read with Rule 122 to 137 of the CGST Rules:- i. Shops numbering 21 aggregating Rs. 6,26,05,341/- @ 18% effective @ 12%; ii. Residential flats numbering 44 aggregating Rs. 9,90,47,070/- @ 12% effective 8%. 58. The Respondent also stated that certain inputs in construction including bricks, stones and dust stone aggregate etc. were exempted from VAT in pre GST period. In post GST period, such inputs suffered GST @ 5%. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said judgment had also quoted the judgment of Hon'ble Supreme Court passed in the case of State of Jharkhand v. Voltas Ltd., East Singhbhum (2007) 9 SCC 266 = 2007 (5) TMI 18 - SUPREME COURT. 60. The Respondent also claimed that Anti-Profiteering provision under the CGST Act and the Procedure & Methodology drafted as provided in Rule 126 was silent on the timing of the accrual of benefit in respect of an agreement of supply entered in pre-GST regime where the transfer of property in goods/services took place in the post-GST regime and the timing of the passing on of the same to the buyer. He also mentioned that in a conventional sale of goods/services, the property in goods/services got transferred as intended by the parties and after transferring risk and reward of the goods/services, the recipient became the owner after paying due consideration along with taxes thereon. In a conventional case, the anti-profiteering provisions would become applicable from the time the recipient received the goods/services. He further submitted that in the present case, he was engaged in the development of Affordable Group Housing residential flats. The project was launched on 18.08.2015 with e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vary from case to case depending upon the facts and circumstances of each case and the nature of goods or services supplied. Therefore, the average profiteering arrived on the basis of a comprehensive study of different cases pertaining to different projects and different developers/ builders could not be compared with the computation of any individual case. 65. Regarding the Respondent's submission that on the basis of the ITC stated to have been utilized by him, the comparative utilisation of ITC was in excess of 2.15% in the post GST period as against 10.65% in the DGAP's Report, the DGAP has stated that the claim of the Respondent was incorrect as the Respondent had taken the amount of ITC utilized by him whereas the DGAP in his Report dated 14.06.2019 had considered the amount of ITC availed by the Respondent for making the computation of profiteering in this case. 66. Regarding the Respondent's submission that out of the sold inventory the following residential flats I commercial units were sold during the post GST period and were therefore out of purview of the provisions of Section 171 of the CGST Act read with Rules 122 to 137 of the CGST Rules: - i. Shops numbering 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reversal of input tax credit of Rs. 7,00,00,091/-. The Respondent also pointed out that the DGAP has accepted that this submission made by the Respondent has not been incorporated in the Report of the DGAP and hence needed to be considered appropriately. The Respondent also submitted that his submissions were based on the past orders passed by this Authority as also on a study of comparative statement of tax liability on builders/developers in the pre and the post GST periods under taken by the State Level Screening Committee of Haryana. He also stated that the above comments were notwithstanding his submissions dated 14.10.2019 with regard to the provisions of section 171 and the inference drawn by the Respondent with regard to the wording of section and also the fact of its being positioned in Chapter XXI of the CGST Act pertaining to "Miscellaneous Provisions" and not Transitional Provisions" detailed in Chapter XX of the CGST Act. He further requested that his above submissions may be taken on record and the case be concluded without granting any further hearing to him. In case any documents/clarifications were required, the same may be conveyed to him for being submitted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . ft. under Section 171 of the CGST Act. He also furnished the details of benefit of ITC given by way of commensurate reduction in prices transferred to the buyers through Cheques/Bank Transfers and the details of benefit of ITC credited by way of commensurate reduction in prices transferred to the buyers through Credit Notes and adjusted in demand notes in the MS-Excel sheet. 72. Clarification had also been sought from the DGAP on the Respondent's submissions dated 25.11.2019. The DGAP vide his Report dated 13.12.2019 submitted that the Respondent's submission of passing on the benefit of ITC through credit notes which have been adjusted in the next demand notes of the home buyers have been verified from the documents submitted by the Respondent and the same were duly been considered in Para 22 of the DGAP's Report dated 14.06.2019. The DGAP also mentioned that in respect of ITC reversal, clarification has already been submitted by him vide his Report dated 01.11.2019. However, the reversal of ITC of Rs. 7,00,00,091/- has been verified from the GST returns and Electronic Credit Ledgers of the Respondent. He further stated that this Authority may consider the same and give directi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Respondent had violated the provisions of Section 171 of the above Act by profiteering an amount of Rs. 5,91,01,833/- after excluding an amount of Rs. 4,08,20,676/-, which was the benefit claimed to have passed on by the Respondent to his customers/ home buyers. The total profiteered amount for the period 01.07.2017 to 31.12.2018 computed by the DGAP worked out to Rs. 9,96,18,637/- (inclusive of GST) on the base profiteered amount of Rs. 9,10,82,950/-. 75. Records also reveal that the identity of Applicant No. 1 was kept anonymous at his insistence right from the time of filing of the application till the completion of the DGAP's investigation. However, during the first hearing held by this Authority on 17.07.2019, the Applicant No. 1 requested to make him a part of the hearings which this Authority had allowed. 76. We observe that the Applicant No. 1 has claimed that the ledger account maintained by the Respondent clearly shows that full and final payment of Rs. 28,31,181/- (including all taxes) in respect of the unit purchased by him had been received from him (the Applicant No. 1) and thus, the respondent ought to have passed on the benefit of ITC to him. The investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, we observe that the CGST Rules mandate a State level Screening Committee to examine the accuracy and adequacy of the evidence provided in the application to determine whether there was prima-facie evidence to support the claim of the applicant that the benefit of reduction in the rate of tax on any supply of goods or services or the benefit of input tax credit has not been passed on to the recipient by way of commensurate reduction in prices and this is exactly what the Screening Committee has correctly done in the instant case. It is pertinent that any investigation under provisions of Section 171 of the Act, ibid, can only be undertaken by the DGAP after the State level Screening Committees carries out a prima-facie examination of an application and the connected evidence supplied by an applicant to sieve out cases of profiteering before these are forwarded to the Standing Committee and then to the DGAP. 78. We observe that the Respondent has contended that in Page No. 1 of the Form APAF-I dated 13.11.2018 filed by the Applicant No. 1, it has been mentioned by the Applicant No. 1 that the ITC has not been passed fully and that only a meagre figure has been offered to him by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the Applicant No. 1 was baseless and motivated. On this contention, we find that once the investigation by DGAP has revealed that the Respondent has not passed on the commensurate benefit of ITC to his customers/buyers, any inconsistencies in the application or subsequent submissions of the Applicant No. 1 (including those relating to the quantum of tax component paid by the Applicant to the Respondent) become bereft of significance to the outcome of the case. In any case, the amount profiteered by the Respondent has no direct correlation with the total amount of tax paid by the Applicant No. 1 to the Respondent. Thus, the contention of the Applicant No. 1 does not hold good. 79. We also observe that the Applicant No. 1 has continuously questioned the need for retaining the confidentiality of the documents/ records/ returns marked as confidential by the Respondent. We observe that the applicant has cited the case of Shruti Garg & Ors v/s Signature Builders Pvt. Ltd. (Solera-l) = 2019 (12) TMI 834 - NATIONAL ANTI-PROFITEERING AUTHORITY, wherein this Authority, vide order dated 08.08.2019, had made available certain documents to the applicant, although these had been marke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... os have also been worked out by the DGAP for the pre and post GST periods by actual mathematical computation and not on any average basis as has been claimed by the Respondent. Thus, we find no force in this contention of the Respondent. 81. The Respondent has further claimed that he had not been given opportunity by the DGAP to either controvert or respond to the methodology adopted for determining the alleged profiteering. In this context, we find it pertinent to mention that as per the provisions of Rule 129 (1) of the CGST Rules, 2017 the DGAP has been entrusted with the responsibility of carrying out detailed investigation in allegations of profiteering and collection of necessary evidence. However, the DGAP, being an investigating agency, is not required to afford opportunities of hearing to the Respondent. As per the provisions of Rule 129 (3) the DGAP is required to give notice to the Respondent which he has given on 15.01.2019 and hence he has complied with the above provision. Proper and ample opportunities of being heard have been provided to the Respondent by this Authority in which the Respondent has controverted the computations of the DGAP through his written and or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mineral Development Corporation v. State of M. P. and another (2004) 65 SCC 281 = 2004 (5) TMI 575 - SUPREME COURT and Larsen & Toubro v. State of Bihar and others 2004 (134) STC 354 (Pat.) = 2003 (11) TMI 565 - PATNA HIGH COURT which was affirmed by the Hon'ble Supreme Court in the case of State of Jharkhand and others v. Voltas Ltd. (2007) 7 VST 317 (SC) = 2007 (5) TMI 18 - SUPREME COURT, Commissioner Central Excise & Customs Kerala & others v. Larsen & Toubro 2015 SCC Online SC 738 = 2015 (8) TMI 749 - SUPREME COURT, are not being followed. 85. The Respondent has also stated that the Anti-Profiteering provision under the CGST Act and the Procedure & Methodology drafted under Rule 126 was silent on the timing of passing on of the benefit. In this connection it would be pertinent to mention that Section 171 (1) of the CGST Act, 2017 clearly states that "Any reduction in the 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". Therefore, the intention of the legislature is amply clear from the above provision which requires that the benefit of tax reduction or ITC is requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m to pass on the above benefit when the project would be nearing completion/completed. Hence, all the above claims of the Respondent are wrong and hence they cannot be accepted. 86. The Respondent has also submitted that while computing the above benefit the DGAP has not taken in account the rate of tax on those materials, which were tax free in the pre-GST period. This argument of the Respondent is untenable since the DGAP has computed the benefit of additional ITC by comparing the ratios of ITC which was available to him in the pre and the post-GST period and it is clear from his computation that the Respondent has got additional benefit of 10.65% of the turnover. As discussed in para supra the DGAP has also not calculated the profiteered amount by using averages. Hence, the above arguments of the Respondent are incorrect. 87. The Respondent has also contended that he had voluntarily reversed the unutilized Input Tax Credit, amounting to Rs. 7,00,00,091/-(SGST - Rs. 3,04,61,609/-, CGST - Rs. 3,04,61,609/- & IGST of Rs. 90,76,873/-) for the period 01.04.2018 to 31.12.2018, in terms of first proviso of sub-section 4 of Section 18 of the CGST Act, 2017 within the time limit prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oluntarily, has no bearing on the computation of profiteering under Section 171 of the CGST Act. Hence we hold that the said reversal of ITC affected by the Respondent on his own accord does not alter the computation of profiteering by the DGAP in any manner. It is apparent that the Respondent has, by his act of reversal of ITC, attempted to deny his customers/homebuyers the benefit of ITC. It is pertinent that this issue has to be seen from the perspective of the legislative intent behind Section 171 (1) of the CGST Act, 2017, i.e. protection of the right of the consumers to the benefit of ITC and not as an issue related to leviability of tax. 89. Further, in this context, after having carefully gone through the contentions of the Respondent and the evidence submitted by him, we observe that the reversal of the unutilized credit has been effected by the Respondent even before occupancy certification/ completion certificate was issued by the competent authority. We also observe that the said voluntary reversal of the credit has been effected by the Respondent only in March 2019, i.e. much after the expiry of the period of investigation of the DGAP i.e. from 01.07.2017 to 31.122018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and given effect to the reversal of an amount of Rs. 1,25,00,000/-in view of sub-section 4 of section 18 read with rule 42 of the CGST Act/Rules 2017 and the ITC reversal in view of Rule 42 had been considered by the DGAP for computing the profiteered amount. However, this contention of the Respondent is not established from the Report dated 21.05.2019 submitted by the DGAP in the above case as no such reversal has either been mentioned or allowed by the DGAP. Further, since reversal of ITC is to be done in respect of unsold units or exempted supplies of units as per Rule 42 (E) of CGST Rules, 2017, the same has already been considered in the DGAP's Report. Moreover, profiteering is calculated only in respect of sold units on which GST is being charged by the Respondent from the customers and the effect of reversal of ITC must be treated as "NIL" before receiving of the Occupancy Certificate. Thus, it will not affect the profiteered amount computed by the DGAP. So, the argument that he has reversed the amount of ITC is not relevant to the amount of profiteering calculated by the DGAP in his Report. 91. The Respondent has further claimed that he had himself determined the profiteer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... homebuyer, Ms. Savitri Devi, who has been allotted unit No. A005 in the above project reads as "Receipt Ref. CRAN/00188/18-19 (38,967.00+ Tax 3118.00)." we find that nowhere has it been mentioned against the said entry that this amount has been credited to the homebuyer on account of benefit of ITC. In the absence of any specific entry which could relate the said credit to the passing on of benefit on account of ITC, we find no grounds to treat the said credit entry as one that evidences passing on of the benefit of ITC, as such credit entries could be on a number of other grounds. Scrutiny of the ledger accounts of the other homebuyers/customers to whom the Respondent has claimed to have passed on the benefit of ITC also shows that similar entries have been made in all such cases on 01.08.2018 itself but the said entries do not mention that these are on account of passing on of the benefit of ITC. Therefore, the claim of the Respondent that he had already passed on the benefit of ITC amounting to Rs. 4,08,20,676/- to his home buyers/ customers cannot be accepted. 93. We also observe that the provisions of Section 171 (1) of the CGST Act, 2017 are aimed at ensuring that the recipi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period from 25.01.2018 to 31.12.2018, when the effective GST rate was 8%. Accordingly, the DGAP has calculated the profiteered amount or the benefit to be passed on for the period from 01.07.2017 to 24.01.2018, as Rs. 2,88,98,231/- for the residential flats and commercial shops, which includes 12% GST on the base profiteered amount of Rs. 2,58,01,992/-. He has also computed the amount of benefit of ITC or the profiteered amount that needs to be passed on by the Respondent to his recipients during the period from 25.01.2018 to 31.12.2018 as Rs. 7,07,20,406/- which includes 12% GST on commercial shops and 8% GST on residential flats, on the base profiteered amount of Rs. 6,52,80,958/-. Therefore, the total benefit of ITC which is required to be passed on during the period from 01.07.2017 to 31.12.2018, comes to Rs. 9,96,18,637/- which includes GST @ 12% or 8% on the base profiteered amount of Rs. 9,10,82,950/- as per Table C of the above Report. The home buyer and unit no. wise break-up of this amount has been given by the DGAP vide Annexure-14 of his Report. This amount is inclusive of profiteered amount in respect of the Applicant No. 1. Since, Table C has been prepared on the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section. Accordingly, a Show Cause Notice be issued to him directing him to explain as to 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. Accordingly, the notice dated 02.07.2019 vide which it was proposed to impose penalty under Section 29, 122-127 of the above Act read with Rule 21 and 133 of the CGST Rules, 2017 is withdrawn to that extent. 99. The Authority as per Rule 136 of the CGST Rules 2017 directs the Commissioners of CGST/SGST Haryana to monitor 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 all the eligible buyers. A Report in compliance of this order shall be submitted to this Authority by the Commissioners CGST/SGST Haryana through the DGAP within a period of 4 months from the date of receipt of this order. 100. A copy each of this order be supplied to both the Applicants, the Respondent, Commissioners CGST/SGST Haryana as well as the Principal Secretary (Town & Country Pla ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
