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TMI Blog2020 (6) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... ove in terms of Rule 133 (3) (a) of the above Rules - It is also clear from the facts of the case that the Respondent has been directed to pass on the benefit of ITC till 31.08.2018. Any benefit of ITC which may become available to the Respondent post 31.08.2018 would also be passed on by the Respondent to the eligible buyers. The Concerned Commissioner GST shall ensure that the above benefit is passed on to the eligible buyers and report submitted to this Authority. Penalty - HELD THAT:- The Respondent has denied the benefit of ITC to the buyers of the flats being constructed by him in his Project Vedantam in contravention of the provisions of Section 171 (1) of the CGST Act, 2017. Therefore, he is apparently liable for imposition of penalty as per the provisions of Section 171 (3A) read with Rule 133 (3) (d) of the CGST Act, 2017. Therefore, notice be issued to him to explain why penalty should not be imposed on him. Accordingly, the notice dated 11.12.2018 whereby the Respondent was asked to explain why penalty should not be imposed on him under Section 29, 122-127 of the CGST Act, 2017 read with Rule 21 and 133 of the CGST Rules, 2017 should not be imposed, is partially wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TC benefit was passed on by him to his recipients and if not to suo-moto determine the quantum of benefit which was not passed on and intimate the same to him. The Respondent was also given opportunity to inspect the evidence produced by the above Applicant on 03.12.2018 but he did not avail the same. The Applicant No. 1 vide his email dated 13.07.2018 intimated the DGAP that the Respondent had agreed to provide him the benefit of ITC and adjust the same in his next instalment and hence the present proceedings should be stayed. 5. The present investigation has been conducted by the DGAP for the period w.e.f. 01.07.2017 to 31.08.2018 and the period for completing the investigation was extended by this Authority up to 07.12.2018 vide its order dated 28.08.2018 under Rule 129 (6) of the above Rules. 6. The DGAP has intimated that the Respondent had failed to provide the required information even after repeated requests and hence summons under Section 70 of the CGST Act, 2017 read with Rule 129 of the above Rules were issued against him however the Respondent had not put in an appearance nor supplied the required documents. Ultimately, vide his email dated 05.11.2018 he had suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount in Rs.) S.No. Payment Stages Due Date Base Price (%) Base Price Other Charges/IFMS Service Tax including Cess GST GST benefit passed on Total 1. At the time of Booking 02.04.2012 10% 3,62,870 - 11,213 - - 3,74,083 2. Within 45 Days of Booking 17.05.2012 30% 10,88,610 - 33,638 - - 11,22,248 3. At the time of PCC 01.10.2014 10% 3,62,870 - 11,213 - - 3,74,083 4. At the time of 2nd floor Casting 10.10.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings could not be dropped. The DGAP had further submitted that the Respondent had passed on an amount of ₹ 14,514/- as per Receipt No. 8457 dated 12.02.2018 to the above Applicant as benefit of ITC which was 4% of the amount paid by him post GST however, he was required to affirm the correctness of the benefit of ITC so passed on by the Respondent by taking in to account the ITC and the amount collect by him from the above Applicant as well as from all other flat buyers post GST. 11. The DGAP had also intimated that para 5 of Schedule-III of the CGST Act, 2017 (Activities or Transactions which shall be treated neither as a supply of goods nor a supply of services) reads as Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building . He has further intimated that clause (b) of Paragraph 5 of Schedule II of the CGST Act, 2017 reads as (b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o stated that the Respondent was eligible to avail ITC on the GST paid on inputs and input services including the ITC availed by the sub-contractors after coming in to force of the GST w.e.f. 01.07.2017. He had further submitted that it was clear from the information furnished by the Respondent which had been duly verified from his GSTR-1 and GSTR-3B Returns for the period from July, 2017 to August, 2018, the details of the ITC availed by the Respondent and his taxable turnover for the project Vedantam during the above period that the ratios of CENVAT/ITC to the Taxable Turnovers during the pre and post GST periods were as has been furnished in Table-B below:- Table- B (Amount in Rs.) S.No. Particulars April, 2016 to March, 2017 April, 2017 to June, 2017 Total (Pre-GST) July,2017 to March, 2018 April, 2018 to August, 2018 Total (Post-GST) (1) (2) (3) (4) (5)=(3)+(4) (6) (7) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The comparative computation of the ITC availed/available during the pre-GST period and the post-GST period and the profiteered amount has been tabulated by the DGAP in the Table- C below:- Table- C (Amount in Rs.) Particulars Pre-GST Post-GST 1. Period A April, 2016 to June, 2017 July, 2017 to August,2018 2. Output tax rate (%) B 4.50% 12.00% 3. Ratio of CENVAT/ Input Tax Credit to Taxable Turnover as per Table - B above (%) C 3.40% 8.68% 4. Increase in tax rate post-GST (%) D= 12% less 4.50% - 7.50% 5. Increase in input tax credit availed post-GST (%) E= 8.68% less 3.40% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fiteered by the Respondent, from the Applicant No. 1. Thus, the DGAP has claimed that the Respondent has contravened the provisions of Section 171 of the CGST Act, 2017 in as much as the additional benefit of ITC 5.28% of the base price received by the Respondent during the period between 01.07.2017 to 31.08.2018, has not been passed on to the above Applicant and other recipients by him. However, he has also stated that the Respondent had suo-moto passed on an amount of ₹ 14,514/-, to the above Applicant therefore, the Respondent had profiteered an amount of ₹ 6,982/-[21,496/-(-) 14,514/-] in respect of the above Applicant. The DGAP had further stated that the Respondent had also realized an additional amount of ₹ 40,70,558/- which included both the profiteered amount 5.28% of the taxable amount (base price) and GST on the said profiteered amount from other recipients who were not party in the present proceedings. He had also submitted that these recipients/flat buyers were identifiable as per the documents supplied by the Respondent himself in which their names and addresses along with unit no. allotted to such recipients were duly mentioned and hence this amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts made to him. He has also stated that the benefit due in the case of Phase-2 and Phase-3 of the project wherein the possession was still to be given, shall be passed on as per the computation made vide Annexure-2 and Annexure-3 amounting to ₹ 1,11,292/- and ₹ 6,07,667/- respectively. He has also stated that no other housing or commercial project either in the name of the Respondent or otherwise had been launched by him. He has also claimed that no complaint was pending against him for not passing on the ITC benefit and the Applicant No. 1 had already withdrawn his complaint as was evident from Annexure-5. He has further claimed that as on date he had ITC credit of around ₹ 69,75,946/- (Annexure-6) and due to change in the law w.e.f. 01.04.2019, the same shall not be available for utilization which should be taken in to account while passing any directions. Vide Annexure-4, 7, 8 and 9 the Respondent has also submitted the copies of the Joint Development Agreement, details of sold and in stock units, CENVAT Chart and the RERA Construction Progress Reports. 18. In his submissions dated 01.03.2019 the Respondent has claimed that the calculations made in the Repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has stated that the Respondent had requested to reconsider the issue of input ITC of VAT available to him in the pre-GST period which had already been addressed in para 19 of his Report dated 05.12.2018. The DGAP has further stated that vide his submissions dated 26.02.2019 the Respondent had claimed that he had given an amount of ₹ 1,56,56,749/- as discount to various customers on account of prompt and timely payment, waiver of possession charges and interest on late payments, details of which had been submitted by him customer wise however now he had gone back on his earlier stand and claimed that ₹ 23,76,551/- were given on account of ITC, for which he had not submitted any documentary evidence, such as, credit notes or cheques etc. The DGAP has also submitted that the issue of passing on the benefit of ITC in the case of the house buyers of Phase-2 and 3 had already been addressed in his Reports dated 05.12.2018 and 07.03.2019. 20. After considering the Reports furnished by the DGAP and the submissions of the Respondent vide order dated 26.06.2019 the case was sent back to the DGAP under Rule 133 (4) of the above Rules for investigation on the following grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant provisions hardly distinguished the purchases made by cash or by making payment in any other mode e.g. Cheque, electronic transfer etc. The other findings of the DGAP on the above order are as follows:- a) Notwithstanding the provisions contained in the Uttar Pradesh Value Added Tax Act and the Uttar Pradesh Trade Tax Act, the fact was that the Respondent had discharged his output VAT liability on a notional/deemed taxable value which was 110% of the purchase price of the inputs and the VAT so paid by the Respondent has not been recovered from the home buyers. Since the taxable value for the purpose of output VAT liability of the Respondent was distinct/different from the actual base price raised/collected from the home buyers the taxable value reflected in the VAT Returns of the Respondent has not been considered for computation of profiteering and instead, the demand shown to have been raised in the home buyers list has been taken into account as any variation in the credit/VAT liability of the Respondent had no impact on the consideration demanded or received by the Respondent from the home buyers. b) In respect of the credit of any Input Tax availed to dischar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... become available to him, by reducing the price of the flat commensurately, after coming in to force of the GST w.e.f. 01.07.2017. It was also alleged that the Respondent had charged GST on the full amount of the instalments paid by the Applicant No. 1. After preliminary consideration in its meeting held on 12.04.2018 the complaint was forwarded by the Screening Committee to the Standing Committee on Anti-profiteering on 16.04.2018. The above complaint was considered by the Standing Committee on Anti-profiteering in its meeting held on 25.05.2018 and was referred to the DGAP for detailed investigation under Rule 129 (1) of the CGST Rules, 2017. 24. Accordingly, the DGAP had called for the record and after its examination he has furnished his Report dated 05.12.2018 in which he has stated that it was evident from Table-B prepared by him that the ratio of ITC as a percentage of the total turnover which was available to the Respondent during the pre-GST period from April, 2016 to June, 2017 was 3.40% and during the post-GST period w.e.f. July, 2017 to August, 2018 it was 8.68% which showed that post-GST, the Respondent had benefited from additional ITC to the extent of 5.28% [8.68% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teered by the Respondent from the Applicant No. 1. It has also been established from the record that the Respondent had suo-moto passed on an amount of ₹ 14,514/- to the above Applicant therefore, the Respondent had profiteered an amount of ₹ 6,982/- [21,496/-(-) 14,514/-] from him. It is further established that the Respondent had also realized an additional amount of ₹ 40,70,558/- which included both the profiteered amount @5.28% of the taxable amount (base price) and GST on the said profiteered amount from the other flat buyers who were not party in the present proceedings. These recipients/flat buyers were identifiable as per the documents supplied by the Respondent himself in which their names and addresses along with unit no. allotted to such recipients were duly mentioned and hence this amount of ₹ 40,70,558/- was required to be refunded to them. The profiteering, if any, for the period post August, 2018, has not been computed by the DGAP as the exact amount of ITC which would be available to the Respondent in future was not available at this stage. 27. Vide his submissions dated 26.02.2019 the Respondent has claimed that under Phase-1 of the proje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scharge his tax liability. As per Section 171 (1) of the above Act he is required to pass on the benefit of additional ITC to his buyers as he cannot appropriate the same as this benefit has been given by the Central and the State Government out of their tax revenue in favour of the flat buyers. Not even a single penny is required to be paid as ITC benefit by the Respondent from his own pocket. Therefore, the above contention of the Respondent is untenable. 30. The Respondent has further claimed that the Applicant No. 1 has withdrawn his complaint as was evident from Annexure-5 and hence, the present proceedings were not maintainable. Perusal of Annexure-5 shows that it is copy of the e-mail dated 13.07.2018 sent by the above Applicant to the DGAP in which he has stated that the Respondent vide his letter dated 07.07.2018 had informed that the ITC benefit would be adjusted in his next demand and therefore, the proceedings should be closed. In this connection it would be appropriate to mention that once the investigation has been started by the DGAP to ascertain whether the benefit of tax reduction or ITC has been passed on there is no provision in the above Act or the Rules to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efit of ITC on VAT which he had duly mentioned in his Returns filed during the period from April, 2016 to June, 2017. In this regard perusal of Table-B prepared by the Respondent shows that he has included an amount of ₹ 94,44,084/- as ITC on VAT which he has claimed to have availed during the period from 01.04.2016 to 30.06.2017 pertaining to the pre-GST period. He has not disputed rest of the figures taken by the DGAP for computing the ratios of CENVAT/ITC to the taxable turnover for the pre and the post GST periods. Since he has added the ITC on VAT amounting to ₹ 94,44,084/- in his calculations the ratio of CENVAT to ITC for the pre GST period has been computed by him as 6.35% when it has been computed by the DGAP as 3.40% as he has not included the above amount of ITC on VAT in the Table-B prepared by him. This Authority vide its order dated 26.06.2019 had specifically directed the DGAP to furnish his findings whether the amount of ITC on VAT claimed to have been utilised by the Respondent during the period from 01.04.2016 to 30.06.2017 could be allowed to him or not. The DGAP vide his Report dated 04.11.2019 has submitted that notwithstanding the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent and has taken the amount of demands raised by the Respondent for computing the above turnover. Hence, the above amount of ₹ 94,44,084/- on account of ITC on VAT cannot be allowed to be included for computation of the ratio of ITC to taxable turnover for the pre GST period and hence, the ratio of 3.40% computed by the DGAP for the above period is held to be correct. While preparing the Table-C the Respondent has taken ratio of CENVAT to taxable turnover as 6.35% for the pre GST period which has been calculated by him by adding the ITC on VAT which has not been allowed to be added. After taking the ratio of ITC on GST to taxable turnover during the post GST period as 8.68% he has accordingly computed the additional benefit of ITC as 2.32% of the taxable turnover whereas the DGAP has computed it as 5.28%. Accordingly, the Respondent has calculated the Re-caliberated price as ₹ 6,75,90,165/- instead of 6,55,43,729/- as per Table-C, GST @ 12% as 81,10,820/- instead of ₹ 78,65,247/, Commensurate Demand Price as ₹ 7,57,00,985/- in place of ₹ 7,34,06,976/- and Excess Collection as ₹ 18,00,046/- instead of ₹ 40,92,054/-. Since, the Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of Section 171 (1) of the CGST Act, 2017. Therefore, he is apparently liable for imposition of penalty as per the provisions of Section 171 (3A) read with Rule 133 (3) (d) of the CGST Act, 2017. Therefore, notice be issued to him to explain why penalty should not be imposed on him. Accordingly, the notice dated 11.12.2018 whereby the Respondent was asked to explain why penalty should not be imposed on him under Section 29, 122-127 of the CGST Act, 2017 read with Rule 21 and 133 of the CGST Rules, 2017 should not be imposed, is partially withdrawn to that extent. 38. This Authority as per Rule 136 of the CGST Rules 2017 directs the Commissioners of CGST/SGST UP 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 UP through the DGAP within a period of 4 months from the date of receipt of this order. 39. As per the provisions of Rule 133 (1) of the CGST Rules, 2017 this order was to be passed on or before 04.05.2020 as the investigati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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