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TMI Blog2020 (12) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... y way of commensurate reduction in the price of his residential unit and that GST had been charged on the amounts due to him against payments to be made by him to the Respondent. Along with the application, Applicant No. 1 also submitted copies of demand letters issued by Respondent to him. On receipt of the aforesaid reference from the Standing Committee on Anti-profiteering on 09.10.2019, a Notice under Rule 129 of the Rules was issued by the DGAP on 22.10.2019, calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the recipients by way of commensurate reduction in price 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 documents in support of his reply. Further, the Respondent was allowed to inspect the non-confidential evidence/information which formed the basis of the said Notice, during the period 30.10.2019 or 31.10.2019. However, the Respondent did not avail of the opportunity. Further, vide his e-mail dated 24.01.2020, Applicant No. 1 was also given an opportunity by the DGAP to inspect the non-confidential documents/reply furnished by the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pre-GST regime and balance was paid after the introduction of GST, to ensure that the benefit of additional ITC made available to the service provider upon introduction of the GST regime, which was not available or was a part of the cost in earlier regime, was duly transferred/passed on to the buyers. (vi) That the Hon'ble Supreme Court in case of Larsen & Turbo Limited & others Vs State of Karnataka & other's (2013) 65 VST 1 (SC)=2014 1 SCC 708) = 2013 (9) TMI 853 - SUPREME COURT held that "The activity of construction undertaken by the developer etc. would be work contract only from the stage he entered into a contract with the flat purchaser" (vii) That all the events including the allotment of the Flats on 27.10.2017, the agreement between him (the Respondent) & the Buyer duly executed on 08.11.2017 & construction activities started on 25.09.2017, occurred within the GST regime. The transaction between the builder & the buyer was covered by clause (b) of paragraph 5 of Schedule II of the CGST Act from the date the buyer was allotted the flat i.e. 27.10.2017 or the date of signing of Builder-Buyer Agreement whichever was earlier. Hence, the anti-profiteering provisions under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 22,49,265/- (@Rs. 4000/- basic sale price per sq. ft. for super buildup area of 552.36 sq. ft. and Rs. 500 per sq. ft. for balcony area). The details of amounts and taxes paid by Applicant No. 1 to the Respondent were furnished in Table-'A' below:- Table-'A' (Amount in Rs.) SI.No. Payment Stage Due Date Basic% BSP GST Total Rate of GST A B C D E F G=E+F H=F/E 1. At the time of Application 21.07.2017 5% 1,12,463 13,496 1,25,959 12% 2. At the time of Allotment 16.11.2017 20% 4,49,853 53,982 5,03,835 12% 3. Within 6 months of Allotment 02.05.2018 12.50% 2,81,158 22,492 3,03,650 8% 4. Within 12 months of Allotment 27.10.2018 12.50% 2,81,158 22,492 3,03,650 8% 5. Within 18 months of Allotment 27.04.2019 12.50% 2,81,158 22,492 3,03,650 8% 6. Within 24 months of Allotment 31.10.2019 12.50% 2,81,158 22,492 3,03,650 8% 7. Within 30 months of Allotment Not yet Due 12.50% 2,81,158 22,492 3,03,650 8% 8. Within 36 months of Allotment 12.50% 2,81,158 22,492 3,03,650 8% Total 100.00% 22,49,264 2,02,430 24,51,694 9% 7. The DGAP has reported that in the context of the subject case, the Haryana State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the subject project, the DGAP has reported that it was clear to him that the project The Millenia' was launched in the post-GST regime itself and that there was no price history of sale of units in the subject project in the pre-GST regime that could be compared with the Post-GST base price for computation of profiteering. The DGAP has further reported that as per para 5 of Annexure- A of Affordable Housing Policy 2013. notified by the Haryana Government on 19.08.2013, Rs. 4000/- per sq. ft. of carpet area (apart from the balcony area) has been fixed as the maximum allotment price for Gurugram. The DGAP has added that although this is the maximum price at which residential units constructed under the above Policy were required to be sold, the supplier was free to fix his base price at any level subject to the ceiling of Rs. 4000/- per sq. ft. 12. The DGAP has reported that in the instant case, all activities related to the project had been initiated in the period after the introduction of GST, i.e. after 01.07.2017, hence, the provisions of Section 171 of the CGST Act do not apply to the instant case. He has also reported that examination of the issue of passing on the benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017 and the RERA registration certificate had been issued on 20.06.2017. The said clarification was sought by this Authority in terms of Rule 133 (2A) of the CGST Rules 2017 in the context of DGAP Report dated 28.02.2020. 16. The DGAP, vide its Report dated 05.11.2020, submitted the chronology of the benchmark events relating to the impugned project, which is in the Chart below:- CHART S.No. Date Event 1 02.02.2017 Grant of License by the Director, Town and Country Planning Department, Haryana 2 20.06.2017 Issuance of registration certificate by the Haryana Real Estate Regulatory Authority 3 01.07.2017 Introduction of Goods and Services Tax 4 21.08.2017 Issuance of Environment Clearance Certificate Work order for construction to the contractor 5 22.09.2017 Construction activities started 6 25.09.2017 The draw of Lots conducted for allotment of Units 7 27.10.2017 First Builder Buyer Agreement entered b/w Respondent and the first homebuyer 8 08.11.2017 Grant of License by the Director, Town and Country Planning Department, Haryana 17. Vide his Report dated 15.11.2020 the DGAP reiterated the comments made by him vide Para 13 of the DGAP Report dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be two or more parties to the agreement. (iv) There should be an immovable property under contract He also submitted that in the present case, except for existence of immovable property, which till 30.06.2017 was not under contract with the home buyers, the other elements were found missing. 20. The DGAP also stated that grant of License by the Director, Town and Country Planning Department, Haryana and registration certificate by the Haryana Real Estate Regulatory Authority were the requirements to comply with the relevant laws being in force. Therefore, invoking of Anti-Profiteering provisions has no relation with the DG TCP's license or RERA registration date. He further reported that the following events were the determining factors in furnishing the Nil Report dated 28.02.2020. a. Allotment of dwelling unit was made on 27.10.2017. b. Builder Buyer Agreement containing the allotment terms was entered on 08.11.2017. c. Contract for construction of the project was executed on 25.09.2017. d. There was no Cenvat Credit/ITC availed by the Notices in pre-GST regime. 21. We have carefully considered the DGAP's Report dated 28.02.2020 and Supplementary Report dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailability of ITC or not. From the above facts it are established that there had been no additional benefit of ITC to the Respondent and hence he was not required to pass on its benefit to the above Applicant No.1 by reducing the price of the flat. The Applicant No. 1 could have availed the above benefit only if the above project was under execution before coming in to force of the GST as the Respondent would have been eligible to avail ITC on the purchase of goods and services after 01.07.2017 on which he was not entitled to do so before the above date. Since there is no basis for comparison of ITC available before and after 01.07.2017, the Respondent was not required to recalibrate the price of the flat due to additional benefit of ITC. Hence, the allegations of the Applicant No.1 made in this behalf are incorrect and therefore, the same cannot be accepted. 22. The Perusal of Section 171 (1) of the CGST Act, 2017 shows that it reads as under:- "any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices." It is clear from the above Section that there should either be reduc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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