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TMI Blog2020 (12) TMI 888X X X X Extracts X X X X X X X X Extracts X X X X ..... ach supply which implies that each homebuyer/ recipient is entitled to the commensurate benefit due to him in respect of the residential unit supplied to him. The adjustment sought by the Respondent, if agreed, would result in depriving the aforementioned 20 homebuyers of the benefit which would be against the legislative intent of Section 171 (1) of the CGST Act, 2017 and is hence not acceptable. Whereas the Respondent was required to pass on the ITC benefit of ₹ 2,71,11,917/- (including GST), in respect of the period July 2017 to June 2019, in terms of provisions of Section 171 of the CGST Act, 2017, he has only passed on ₹ 2,67,88,794/- (including GST) to his homebuyers and that the remaining amount of ITC benefit that remains to be passed on to 20 homebuyers (as detailed in Table D of this Order amounts to ₹ 7,14,837/- Hence we take the view that in compliance with the provisions of Section 171 of the CGST Act, 2017, the Respondent is required to pass on ITC benefit amounting to ₹ 7,14,837/- (inclusive of GST) to the twenty homebuyers - Respondent is thus directed to pass on the above amount to the said homebuyers within a period of three months of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the DGAP on 08.07.2019 calling upon the Respondent, to intimate as to whether he admitted that the benefit of ITC had not been passed on to the Applicant No. 1 by way of a commensurate reduction in the price of the flat and if it was so, to suo-moto compute the quantum of the same and mention it in his reply to the Notice along with the supporting documents. Further, vide DGAP's Notice dated 08.07.2019, the Respondent was allowed to inspect the non-confidential evidence/information submitted by Applicant No. 1 on any day between 15.07.2019 and 17.07.2019. The Respondent availed of the opportunity to inspect the non-confidential documents on 17.07.2019. Likewise, vide DGAP's email dated 10.01.2020, Applicant No. 1 was also offered the opportunity to inspect the non-confidential documents/ information furnished by the Respondent on either 14.01.2020 or 15.01.2020, which Applicant No. 1 availed of on 15.01.2020. 3. The DGAP has reported that the period covered by the current investigation was from 01.07.2017 to 30.06.2019. the DGAP has also stated that the time limit to complete the investigation had been extended up to 27.03.2020 in terms of Rule 129 (6) of the CGST Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice Tax, ITC of VAT, CENVAT Credit, for the period April 2016 to June 2017 and output GST and ITC of GST for the period July 2017 to June 2019 for the project Suncity Avenue-102 . (k) List of homebuyers in the project Suncity Avenue-102 along with the details of Input Tax Credit benefit passed on. (l) Ledger Account statement maintained by him for his homebuyers. 6. The DGAP has further reported that a careful examination of the case records has revealed that the main issue for determination is as to whether the Respondent had benefitted on account of input tax credit (ITC) as a result of the implementation of GST w.e.f. 01.07.2017 and if so, whether such benefit was passed on by the Respondent to his homebuyers/ recipients in terms of Section 171 of the Central Goods and Services Tax Act, 2017. 7. The DGAP has reported that based on the examination of case records, especially the Agreement executed between the Respondent and Applicant No. 1 and the Intimation-cum-Demand letters issued by the Respondent to Applicant No.1, the Payment Plan agreed between them is given in Table-'A' below. Table- A' (Amount in Rs.) Sr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 . 9. Citing the above provisions, the DGAP has stated that in the instant case, the ITC in respect of those residential units which were under construction but not yet sold is a provisional input tax credit which may be required to be reversed by the Respondent, if such units remain 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. 10. The DGAP has further reported that in line with the above provisions ITC in respect of the unsold units was kept outside the ambit of this investigation but in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - - - 3. Total CENVAT/Input Tax Credit Available (C)= (A+B) 90,31,262 - - - 4. Input Tax Credit of GST Availed (D) - 1,06,24,296 3,29,97,020 4,36,21,316 5. Turnover for Residential Flats as per Home Buyers List (E) 384477456 19,22,38,774 59,25,53,793 78,47,92,567 6. Total Saleable Carpet Area (Excluding Balcony Area) (in SQF) (F) 3,99,574 3,99,574 7. Total Sold Carpet Area (Excluding Balcony Area) (in SQF) relevant to turnover (G) 3,76,068 3,86,498 8. Relevant ITC [(H)= (C)*(G)/(F)] or [(H)= (D)*(G)/(F)] 84,99,974 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Increase in input tax credit availed post-GST (%) D= 5.38% less 2.21% 3.17% 3.17% 3.17% 5. Analysis of Increase in input tax credit: 6. Base Price raised from July2017 to June 2019 (Rs.) E 19,22,38,774 59,25,53,793 78,47,92,567 7. GST raised over Base Price (Rs.) F=E*B 2,30,68,653 4,74,04,303 7,04,72,956 8. Total Demand raised G=E+F 21,53,07,427 63,99,58,096 85,52,65,523 9. Recalibrated Base Price H= E*(1-D) or 96.83% of E 18,61,44,805 57,37,69,838 75,99,14,643 10. GST @12% or 8% I = ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyers. The records also reveal that in certain cases, the Respondent has passed on more than commensurate benefit while in the case of other homebuyers, the ITC benefit passed on was less than the commensurate benefit that ought to have been passed on by him. A summary of ITC benefit actually passed on vis-a-vis the requisite commensurate benefit that ought to have been passed on to the home buyers, including Applicant No. 1, is furnished in table-'D' below:- Table-'D' (Amount in Rs.) Sr.No. Category of Customers No. of Units Area (in Sq.ft.) Amount in Received Post GST Benefit required to be passed on as per Annex-14 Benefit already passed on by the Respondent Difference (Profiteering) Remark A B C D E F G H=F-G I 1. Applicant No. 1 532 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Applicant No.1, if any, The Respondent and Applicant No.1 were also informed that personal hearing will be held, preferably through video conferencing, only on specific request. However, the Respondent did not make any specific request for a hearing though he furnished his written submissions vide his replies dated 15.06.2020 and 12.08.2020. Applicant No.1 too furnished his submissions vide his letter dated 12.06.2020. 18. The Respondent vide his submission dated 12.06.2020 has, interalia, stated that:- a) He had dully followed the Anti-Profiteering law laid down under Section 171 of the CGST Act, 2017 to the best of his knowledge and belief and accordingly the profiteering element was suo moto passed on by him to his homebuyers by way of commensurate reduction in price; that he had already suo moto passed on ITC benefit amounting to ₹ 2,67,88,794/- to 736 home buyers even before receipt of the 'notice for initiation of investigation' by the Director-General of Anti-Profiteering (DGAP). b) As per para 18 of DGAP Report dated 23.03.2020, the said fact regarding his having passed on the ITC benefit to the tune of ₹ 2,67,88,794/- has been duly veri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project Suncity Avenue 102. The cost of the construction of this commercial complex might have been factored within the overall construction cost of the complete project, i.e. residential and commercial complex and the Respondent could have furnished misleading information regarding the same before the DGAP; that this aspect needed to be checked since the Respondent would have profiteered from the said commercial complex (comprising more than 50 shops that are intended to be sold or leased out separately) that is located within the project and verification of the same was needed to ensure that the benefit has indeed been passed on commensurately to the homebuyers. 21. On receipt of the submissions dated 12.06.2020 of the Respondent and dated 15.06.2020 of Applicant No. 1, this Authority, vide its Order dated 19.06.2020, called for clarifications thereon from the DGAP under Rule 133 (2A) of CGST Rules 2017. In response, the DGAP, vide his letter 09.07.2020, has submitted a point wise reply on the above said submissions made by Respondent and Applicant No. 1, which are as below- (i) The Respondent's contention that the computation of the profiteering should have taken int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the homebuyers has been computed considering total ITC available to the Respondent in respect of the project Suncity Avenue-102' and the said benefit has been allocated amongst the 736 homebuyers, keeping in mind that out of the 761 residential units, only 736 residential units were sold and other units remained unsold in the relevant period. 22. The abovesaid clarification of the DGAP dated 09.07.2020, was forwarded by this Authority vide its Order dated 14.07.2020, to the Respondent and Applicant No. 1, inviting their submissions, if any, by 28.07.2020. However, neither the Respondent nor Applicant No. 1 filed any submissions till the specified date. In the interest of justice, this Authority, vide its Order dated 29.07.2020, gave the Respondent and the Applicant No.1 further time to submit comments on the clarifications dated 09.07.2020 of the DGAP. In response, the Respondent has informed that due to the Corona Virus pandemic, he could not make his submissions in time and requested additional time to make his submission. The Authority allowed the request for the additional time made by the Respondent and accordingly, vide its Order dated 21.09.2020, asked the Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A904 8 Sunil Kumar A908 9 Suraj Devi B004 10 Sheela Devi B1008 11 Rajender Singh B103 12 Bidya Bhushan Bhartiya 81204 13 Gunjan Dewan 81205 14 Devender Yadav B204 15 Suresh Kumar Surinder Kumar B703 16 Jasvir Singh Yadav 8707 17 Ravi Kumar C003 18 Ekta Yadav Jitender Yadava C1002 19 Surender Pahuja Puja Pahuja C1007 20 Sumit Gahlot C108 21 Vidhi Chaturvedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ratnalu Srinivas Rao E401 50 Piyush Sharma E407 51 Akshay Yadav E505 52 Kamlesh Gogia E604 53 Baldev Singh Thakur E702 54 Rahul Goyal E707 55 Sumit Chhabra Neha Chhabra E805 56 Satya Narain F401 57 Prideman Krishen Handoo F604 58 Amar Singh Nirwan F802 59 Somnath Batra F807 60 Hari Chand G007 61 Rahul Gupta G1001 62 Virender Singh Dhakwal G1007 63 Sach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it due to him in respect of the residential unit supplied to him. The adjustment sought by the Respondent, if agreed, would result in depriving the aforementioned 20 homebuyers of the benefit which would be against the legislative intent of Section 171 (1) of the CGST Act, 2017 and is hence not acceptable. 26. We thus observe that whereas the Respondent was required to pass on the ITC benefit of ₹ 2,71,11,917/- (including GST), in respect of the period July 2017 to June 2019, in terms of provisions of Section 171 of the CGST Act, 2017, he has only passed on ₹ 2,67,88,794/- (including GST) to his homebuyers and that the remaining amount of ITC benefit that remains to be passed on to 20 homebuyers (as detailed in Table D of this Order amounts to ₹ 7,14,837/- Hence we take the view that in compliance with the provisions of Section 171 of the CGST Act, 2017, the Respondent is required to pass on ITC benefit amounting to ₹ 7,14,837/- (inclusive of GST) to the twenty homebuyers as detailed at Sr. No. 3 of Table D of this Order. The Respondent is thus directed to pass on the above amount to the said homebuyers within a period of three months of this Order. 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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