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TMI Blog2022 (5) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... lotted to such recipients. Therefore, the total additional amount of Rs. 4,74,54,151/- was required to be returned to the Applicant No. 1 and the other such homebuyers. The Respondent has profiteered an amount of Rs. 4,74,54,151/- during the period of investigation. Therefore, in view of the facts, this Authority under Rule 133(3)(a) of the CGST Rules orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him as has been detailed above. Since, the present investigation is only up to 30.06.2019, any benefit of ITC which shall accrue subsequently shall also be passed on to the buyers by the Respondents. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the buyers of his flats in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he had thus resorted to profiteering. Hence, he has committed an offence for violation of the provisions of Section 171 (1) during the period from 01.07.2017 to 30.06.2019 and therefore, appears to be liable for imposition of penalty under the provisions of Section 171 (3A) of the above Act. However, the provisions of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant no. 1 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 supporting documents. Vide the said Notice, the Respondent was also afforded an opportunity to inspect the non-confidential evidences / information submitted by the said Applicant no. 1 during the period 18.07.2019 to 22.07.2019, which the Respondent did not avail of. 3. The period covered by the current investigation was from 01.07.2017 to 30.06.2019. The time limit to complete the investigation was extended up to 26.03.2020 by this Authority vide order dated 24.12.2019, in terms of Rule 129(6) of the Rules. 4. The DGAP had submitted that in response to the Notice dated 10.07.2019 and subsequent reminders dated 14.08.2019, 20.09.2019 and 07.10.2019, the Respondent submitted his reply vide letters/e-mails dated 24.07.2019, 20.08.2019, 16.09.2019, 25.09.2019, 10.10.2019, 24.10.2019, 08.11.2019, 13.11.2019, 06.12.2019, 17.12.2019, 23.01.2020, 14.02.2020 and 06.03.2020 The reply of the Respondent have been summed up as follows: (a) The Respondent vide his letter dated 10.10.2019 submitted that, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent did not claim confidentiality of any of the details/information furnished by him, in terms of Rule 130 of the Rules. The DGAP had further submitted that vide e-mail dated 02.03.2020, the Applicant no. 1 was also afforded an opportunity to inspect the non-confidential documents/reply furnished by the Respondent on 03.03.2020 or 04.03.2020, which the Applicant no. 1 did not avail of. 7. The DGAP in his report has mentioned that the subject application, the various replies of the Respondent and the documents/evidence on record had been examined by him. The main issues to be examined were whether there was reduction in rate of tax or benefit of ITC on the supply of construction service by the Respondent after implementation of GST w.e.f. 01.07.2017 and if so, whether the Respondent passed on such benefit to the recipients by way of commensurate reduction in prices, in terms of Section 171 of the CGST Act, 2017. 8. The DGAP stated that the Respondent vide his submissions dated 10.10.2019 submitted that only a demand of Rs. 87 Cr. in respect of the units sold up to 30.06.2017 was raised in the GST regime and that the balance amount had already been called up in the pre-GST regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of Section 17(2) Section 17(3) of the CGST Act, 2017, which read as under: Section 17 (2) 'Where the goods or services or both was 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 exempted 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 exempted supply under sub-section (2) shall be such as might 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 . Therefore, ITC pertaining to the unsold units was outside the scope of this investigation and the Respondent was required to recalibrate the selling price of such units to be sold to the prospective buyers by considering the proportionate additional ITC available to him post-GST. 11. The DGAP had further claimed that the present case pertains t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Rs) S. No. Particulars (Pre-GST) (Post-GST) 1 Credit of Service Tax Paid on Input Services (A) 2,92,60,200 2 Input Tax Credit of VAT paid on Inputs (B) 93,27,151 3 Total CENVAT/VAT/lnput Tax Credit Available (C=A+B) 3,85,87,351 4 Input Tax Credit of GST Availed (D) 12,87,16,658 5 Total Turnover from Residential Area (E) 99,16,98,785 98,69,44,454 6 Total Saleable Area (F) 1095951 10,95,951 7 Sold Area relevant to Turnover in Sq Ft. (G) 9,62,776 691459 8 ITC proportionate to Sold Area (H= (C or D)* G/F) 3,38,98,391 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 98,69,44,454 7. Less the Basic demand booked after 01.07.20217. F 10,60,75,892 8. Total Net Basic Demand during July, 2017 to June, 2019 G 88,08,68,562 9. GST @12% H=G*12% 10,57,04,227 10. Total demand I=G+H 98,65,72,789 11. Recalibrated Basic Price J=G*(1-D) or 95.19% of G 83,84,98,784 12. GST @12% K=J*12% 10,06,19,854 13. Commensurate demand price L=J+K 93,91,18,638 14. Excess Collection of Demand or Profiteered Amount L=I-L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst his claim which had been verified by the DGAP. 20. The Respondent vide his reply dated 23.01.2020 to the DGAP had also submitted that he had passed on the benefit of Rs. 3,70,88,000/- to 245 home buyers who had booked their flats up to 30.06.2019. A summary of category-wise profiteering the benefit passed on has been furnished in the Table-'C' below: Table 'C' (Amount in Rs.) S.No. Category of Customers No. of Units Area (in Sqf) Amount Raised Post GST (July, 2017 to June , 2019) Profiteering Amt. as per Annex- Benefit already Passed on by the Respondent Difference Remark A B C D E F G H=F-G I 1. Applicant 1 2,149 22,87,367 1,23,225 1,14,000 9,225 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding the Applicant (Sr. 1, 2 3 of above table) amounting to Rs. 1,03,66,151,/-(Rs. 9,225/- + Rs.1,00,64,401/- + Rs. 2,92,525/-). The benefit already passed on by the Respondent had been verified by the DGAP with the demand invoices/Journal Voucher submitted by the Respondent. Thus, the total additional amount of Rs. 1,03,66,151/- (Rupees One Crore, Three Lakh, Sixty-Six Thousand, One Hundred and Fifty-one only) was required to be returned to the Applicant no. 1 and such eligible recipients. 22. The DGAP further stated that the above computation of profiteering was in respect to 390 units (302 home buyers + 88 EWS customers) from whom construction value had been received by the Respondent during the period 01.07.2017 to 30.06.2019 (excluding flats sold after 01.07.2017 on which agreement was done after adjusting benefit of GST input tax credit). Whereas, the Respondent had booked 462 flats till 30.06.2019, he had claimed that effective from 01.07.2017, he had sold 13 flats at the rates agreed by the customers as all-inclusive price after considering GST ITC benefit and the prices so fixed were mutually negotiated agreed upon as per clause 2.11 of Buyers Agreement. The Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied construction services in the State of Haryana only. 24. As aforementioned, the present investigation by the DGAP covers the period from 01.07.2017 to 30.06.2019. Profiteering, if any, for the period post July, 2019, had not been examined by the DGAP as the exact quantum of ITC that would be available to the Respondent in future cannot be determined at this stage, when the construction of the project was yet to be completed. 25. In view of the aforementioned findings, the DGAP had submitted that the provisions of Section 171(1) of the CGST Act, 2017, requiring that 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 , had been contravened by the Respondent in the present case. 26. The above Report was considered by this Authority in its meeting held on 20.04.2020 and it was decided that the Applicant no. 1 and the Respondent be asked to appear before the Authority on 21.05.2020. The Respondent was issued a notice on 05.05.2020 to explain why the above Report of the DGAP should not be accepted and his liability for violating the provisions of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion to customers, documentary proof of which had already been furnished earlier alongwith his letter dated 22.01.2020 and the same was already addressed in the DGAP's report dated 23.03.2020. The Respondent had while passing on the benefit of GST Input Tax Credit to customers, given due consideration to the provisions of Section 171 of the CGST Act and had worked out the amounts accordingly. (f) The methodology adopted by the DGAP for arriving at the amount of profiteering by the Respondent as per the report dated 23.03.2020, was based on the concept of taxable turnover. The figure of turnover so reported was based on progress made based on milestones achieved for accounting purposes and did not coincide with cash flows I receipt of collections from customers, the timing of which determined the amount of tax to be charged from the customers. To that extent, the comparison of the Input Tax Credit figure to the reported turnover did not reflect in the actual position. Accordingly, there was an amount of Rs. 1,03,66,151/worked out as the amount of additional refund that the Respondent needed to refund to the unit allottees as per the DGAP report dated 23.03.2020. (g) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion would be submitted under Rule 133(2A) of the CGST Rules, 2017. 29. The DGAP had filed his further clarifications dated 24/25.11.2020 to this Authority wherein the DGAP had stated that: i. In continuation of the DGAP letter dated 06.10.2020, the DGAP had asked the Respondent to furnish the email ID's of the home buyers. Out of 390 home buyers, the Respondent had furnished the email IDs of 48 Home buyers only. Emails were sent to the given email IDs of those 48 homebuyers by the DGAP, out of which 40 home buyers had confirmed the receipt of the amounts as claimed by the Respondent. However, the selection of the home buyers for the confirmation of the receipt of benefit of ITC could not be left at the liberty of the Respondent. Therefore, the Respondent was once again asked to furnish the email IDs/ Contact Nos. of all the home buyers. The Respondent had furnished the email IDs of 143 more home buyers. For further verification of the authenticity and veracity of the documents submitted by the Respondent in support of his claim of passing on the benefit of ITC and interest, emails had been sent to 43 of such home buyers on random basis. After getting reply/response to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring Sh. Ankit Gupta and the reply Emails from the other 03 homebuyers confirming the receipt of amounts from the Respondent. Thus, the DGAP stated that he has completed his verification. 32. The proceedings in the matter could not be completed by this Authority due to lack of required quorum of Members in the Authority during the period 29.04.2021 till 23.02.2022, and that the minimum quorum was restored only w.e.f. 23.02.2022 and hence the matter was taken up for proceedings vide Order dated 24.02.2022 and the Respondent as well as the Applicant No. 1 was given an opportunity to be heard in person on 30.03.2022. The Respondent has by email dated 29.033.2022 reiterated his earlier submissions and requested to close the hearing and pass order based on his earlier submissions. The Applicant No. 1 was given further opportunity to file his written submissions, if any, and request for personal hearing if required. However, no such submissions or request was received from Applicant No. 1. Hence, this Authority has taken up the matter for decision. 33. We have carefully considered the Report furnished by the DGAP and the clarifications filed by the him and the records of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included by the DGAP in the aforesaid profiteered amount as the excess price collected from the recipients also included the GST charged on the increased base prices. It is also observed that the Respondent has supplied construction services in the state of Haryana only. 35. The Authority finds that the Respondent vide his letter dated 19.08.2020 stated that he agreed with the amount of profiteering mentioned in the DGAP Investigation Report dated 23.03.2020 and assured the Authority that he would pass on the benefit of ITC to the respective homebuyers. Later, the Respondent had also claimed that he had passed on the said amount of benefit of ITC to his homebuyers and submitted credit notes, statements of accounts and Intimation letters to homebuyers as supporting documents. 36. From the above discussions, it is clear that the Respondent has profiteered an amount of Rs. 4,74,54,151/- during the period of investigation. Therefore, in view of the above facts, this Authority under Rule 133(3)(a) of the CGST Rules orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him as has been detaile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C-1102 73955.91 18 Mr. Rajat Pratap C-504 71895.25 19 Dr. Chandan Arora C-2203 71731.97 20 Mr. Sandeep Seth C-1504 71650.30 21 M/s. French Food India Pvt. Ltd C-703 69887.45 22 Mr. Pankaj Kumar Tyagi C-1403 69884.16 23 Mr. Rajneesh Dutta C-702 64514.20 24 Mr. Rajiv Ranjan Singh C-803 64479.29 25 Mr. Gautam Sharma C-101 63896.99 26 Mr. Inder Dhawan C-1901 61652.36 27 Mrs. Simmi Tyagi C-1501 61635.76 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 65828.51 49 M/s. Saraogi Marketing Pvt. Ltd C-1602 64428.06 50 Mr. Abhinav Jain C-301 63580.11 51 M/s. Monnet Ispat Energy Ltd. C-401 63427.33 52 Mr. Gaurav Rawat C-501 61635.76 53 Mr. Rajeev Pipraiya A-501 4185.48 54 Mr. Dinesh Singal A-1803 1972.90 55 Mr. Rahul Ravi A-2101 1847.81 56 Mr. Ravi Kochar B-702 1847.81 57 Mr. Sanjeev Kumar A-1903 673.40 58 Mrs. Rekha Yadav A-402 428.44 59 Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80 Mrs. Shobha E-2301 80420.39 81 Group Captain Sumesh Krishanlal Gilani C-704 80042.64 82 Mr. Samarth A Kararia C-2004 77837.12 83 Mrs. Neeru Devi Jain F-2601 77092.56 84 M/s. MMX Infrastructure LLP F-1401 76747.83 85 M/s. MMX Infrastructure LLP F-502 76747.83 86 M/s. MMX Infrastructure LLP F-2602 76649.51 87 M/s. MMX Infrastructure LLP F-2502 76647.52 88 Mrs. Rashmi Dewan C-2003 75143.52 89 Mr. Sanjeev Goel C-004 74055.85 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B-1102 9163.73 111 Mr. Sandip Adhikari A-1901 1847.81 112 Mr. Sudhir Kumar Datta A-201 1847.81 113 Mr. Deepak Kumar B-1004 1847.81 114 Mr. Ashish Bangera B-2501 1847.81 115 Mrs. Shashi B-804 1847.81 116 Mrs. Asha Monga A-1402 1578.45 117 Mr. Narendra Kumar Bhatnagar B-1702 1578.45 118 Mr. Prashant Behki B-1804 673.40 119 Mrs. Sonia C. Tewari C-2201 78978.24 120 Mrs. Megha Dhanuka B-1203 15768.71 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C-1502 56045.95 142 Mrs. Nisha Gupta C-1401 55219.34 143 Mrs. Anupama Jain D-1102 54415.68 144 Ms. Rhea Agrawal D-501 54034.80 145 Mr. Vikram Vohra A-1601 17525.96 146 Mrs. Gyarsi B-302 4541.41 147 Mr. Krishan Lal Rinwa A-2201 2037.82 148 Mr. Tarun Lamba A-804 1847.81 149 Mr. Sanjeev Pathania B-801 1847.81 150 Mr. Hars Kumar B-1803 1615.94 151 Mr. Ajay Kumar B-2503 16283.08 152 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Khaitan C-1601 130717.50 174 Mr. Subhendu Mohanty C-402 62574.91 175 Mr. Viraraghavan Sankaran C-2402 81801.72 176 Mr. Vijay Krishna Sandilya B-601 1847.81 177 Mr. Jagjit Kumar Jha D-1604 554044.59 178 Mrs. Ruchi Tiwari C-2403 77190.76 179 Mr. Vijay Singh Dalal C-701 61635.76 180 M/s. Saurabh Metals Pvt. Ltd. E-501 42328.90 181 M/s. Saurabh Metals Pvt. Ltd. E-502 42328.90 182 Mr. Sanjeev Gupta E-602 74096.36 183 Mrs. Chhavi Methi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D-1004 498568.23 205 Mr. Monga Ashmeet Singh C-503 62388.25 206 Mrs. Anita Bansal D-603 448930.57 207 Mrs. Amita Chakrawarti D-803 449757.99 208 Mr. Sharma Nikhil Vijeshwar D-1902 380681 209 Mr. Victor Nameirakpam F-2301 602400 210 Mr. Vincent Nameirakpam F-1801 649176 211 Mr. Pranav Kumar D-904 511445 212 Mr. Nitin Goel D-301 448438 213 Mrs. Neetu Pandey F-1101 764918 214 Mrs. Dipty Raghuvanshi D-1204 51959 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 236 Mrs. Rekha Sharma E-802 639512 237 Mrs, Kuljit Kaur Dhillon F-1102 760039 238 Mr. Ravi Shekhar D-201 175725 239 Mr. Ankit Gupta C-1701 78271 240 Mrs. Swati Aggarwal D-1103 523028 241 Mr. Hernant Kumar Gupta D-203 123225 242 Mr. Gaorav Kapoor D-1104 495033 243 Dr. Meenakshi Thakur D-1704 405357 244 Ms. Pooja Jain F-1001 646670 245 Mr. Surinder Singh Mathur F-701 137011 246 Mr. Puneet Walia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 154815 268 Mr. Suresh Puri D-1801 90514 269 Mr. Tarun Suri C-1103 123104 270 Mr. Ravindra Bisht D-802 109846 271 Mr. Gonglin Faumei D-1203 644085 272 Ms. Priyanka D-2503 103931 273 Air Mshl. Harjit Singh Arora F-2501 72537 274 Mr. Shailender Sharma D-004 59137 275 Ms. Riya Saini F-1201 137248 276 Mr. Surinder Singh Mathur D-703 294083 277 Dr. Syed Musarrat Hussain D-1403 23566 278 Mr. Bijoy Ku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 84126 300 Mrs. Neelam Kumari Shop 1 98025 301 Mr. Saurabh Bhatnagar C-2503 541701 302 Mr. Subhash Chandra Kajala F-902 115399 303 Mr. Rajesh Kumar EWS-I 3232 304 Ms. Rabeena EWS-2 3232 305 Mr. Pawan Kumar EWS-3 3232 306 Mr. Rajesh Kumar EWS-4 3232 307 Ms. Safiya EWS-5 3232 308 Ms. Ram Rati EWS-6 3232 309 Mr. Chhote Lal EWS-7 3232 310 Mr. Kailash Chand EWS-8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ms. Kamla EWS-207 3232 334 Ms. Kashmira EWS-208 3232 335 Ms. Ameena EWS-209 3232 336 Mr. Amit Kumar EWS-210 3232 337 Ms. Laxmi EWS-211 7273 338 Ms. Sunita EWS-212 3232 339 Ms. Saroj Bala EWS-301 3232 340 Ms. Bimla Devi EWS-302 3232 341 Mr. Sunil Kumar EWS-303 3232 342 Ms. Prem EWS-304 3232 343 Ms. Tasviri EWS-305 3232 344 Ms. Sarvesh Devi EWS- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Parveen EWS-505 3232 368 Mr. Ram Kumar EWS-506 3232 369 Mr. Alam EWS-507 3232 370 Mr. Ramavtar EWS-508 3232 371 Ms. Maya Devi EWS-509 3232 372 Ms. Basgar EWS-510 3232 373 Ms. Santosh EWS-511 3232 374 Mr. Sajid EWS-512 3232 375 Ms. Kailash Devi EWS-601 3232 376 Ms. Sumitra Devi EWS-602 3232 377 Mr. Ashwani EWS-603 3232 378 Ms. Rajni EWS-604 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal CGST/SGST Commissioner is directed to ensure compliance of this Order. It may be ensured that, within a period of three months of the date of receipt of this Order, the benefit of ITC is passed on by the Respondent to each homebuyer in accordance with this Order along with interest @18% from the date when the amount was profiteered by the Respondent till the date of payment of such amount to the homebuyers. In this regard an advertisement of appropriate size which is legible to public without extra efforts may also be published in minimum of two local Newspapers/vernacular press in Hindi/English/local language with the details i.e. Name of builder (Respondent) - M/S Dreamhome Infrastructure Pvt. Ltd., Project Heritage Max , Location- Gurugram, Haryana and amount of profiteering Rs.4,74,54,151/- so that the Applicant No. 1 along with non-applicant homebuyers can claim the benefit of ITC which is not passed on to them. Homebuyers may also be informed that the detailed NAA Order is available on Authority's website www.naa.gov.in. Contact details of concerned jurisdictional CGST/SGST commissioners responsible for compliance of the NAA's order may also be advertised through ..... X X X X Extracts X X X X X X X X Extracts X X X X
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