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TMI Blog2020 (3) TMI 1409X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent was discharging his VAT liability as a regular registered dealer or was as a composition dealer. It has also not been stated in the Report whether the Respondent was eligible to charge VAT from the buyers under the Haryana Affordable Policy-2013 and whether he had collected VAT from his buyers or not? Perusal of the supplementary Report dated 19.02.2020 furnished by the DGAP and Table- D of his first Report dated 16.09.2019 shows that the Respondent has passed on the benefit of Rs. 1,21,08,722/- to the flat and shop buyers. In this connection it would be pertinent to mention that the DGAP has not verified even a_ single acknowledgement submitted by the Respondent from the flat or the shop buyers to establish that they have actually received the benefit of GST as has been claimed by the Respondent. The DGAP has also not produced even a single acknowledgement/statement of the buyers obtained/recorded by him to confirm whether the benefit of ITC has been passed on to the buyers or not. In the absence of such acknowledgement/statement the claim of the Respondent that he has passed on the benefit of ITC to his buyers cannot be accepted. - I.O. No. 14/2020 - - - Dated:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt did not avail of the said opportunity. 3. The DGAP has covered the period from 01.07.2017 to 31.03.2019 during the current investigation. The time limit to complete the investigation was extended by this Authority, vide its order dated 19.06.2019. in terms of Rule 129 (6) of the above Rules. 4. The DGAP has stated in his above Report that the Respondent had submitted replies vide his letters/emails dated 16.04.2019, 25.04.2019, 29.04.2019, 07.06.2019, 11.06.2019, 17.06.2019 and 01.08.2019. The submissions of the Respondent were summed up by the DGAP as is mentioned in the subsequent Para. 5. The Respondent has stated before the DGAP that he had informed the above Applicant over telephone and through e-mail regarding passing on the benefit of ITC. He has also stated that a number of changes were taking place in the GST regime, such as, change in the GST rates and applicability of GST on Affordable Housing Projects. The Respondent has further stated that he had ensured that the benefit of actual ITC would be passed on to all his customers. The Respondent, vide his e-mail dated 07.06.2019, had submitted sample copies of letters issued to individual home buyers, informing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent, vide his e-mail dated 07.06.2019 had submitted sample copies of letters issued to the individual flat buyers, informing them about the benefit of ITC as per his calculation and credit of the same to their accounts. The Respondent, vide his e-mail dated 17.06.2019, had also submitted the ledger account of the Applicant No. 1 showing an entry dated 31.03.2019 of Rs. 12,517/- (including 8% GST on Rs. 11,590/-) as GST benefit passed on and copy of the credit note dated 31.03.2019 issued to the above Applicant. 9. The Respondent had submitted a copy of RERA Registration Certificate of his Project Riddhi Siddhi and the payment schedule for the purchase of flats at the basic sale price of Rs. 4,000/- per square feet for the carpet area and Rs. 500/-per square feet for the balcony area. The Respondent, vide letter dated 25.04.2019 and subsequent e -mails, had submitted copies of demand letters issued to the above Applicant. The details of amounts and taxes paid by the Applicant No. 1 to the Respondent were furnished by the DGAP as given is mentioned in Table-A below:- Table- A (Amount in Rs.) Sr. No. Payment Stage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 49,830 Grand Total 100.00% 19,98,000 26,536 62,437 69,930 (12,517) 21,44,296 10. The DGAP has also claimed that para 5 of Schedule-lll of the Central Goods and Services Tax Act, 2017, defining 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 . Further, Clause (b) of para 5 of Schedule II of the Central Goods and Services Tax 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 first occupation, whichever is earlier . In the light of these provisions, the DGAP has contended that the ITC pertaining to the units which were under construction but not sold was provisional ITC that would be required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover, during the pre-GST period from April, 2016 to June, 2017 and post-GST period from July, 2017 to March, 2019 has been furnished by the DGAP as per the Table-B given below:- Table- B (Amount in Rs.) Sr. No. Particulars Total (Pre-GST) April, 2016 to June, 2017 Taxable Turnover @12% GST (01.07.2017 to 24.01.2018) for flats (01.07.2017 to 31.03.2019) for Commercial shops Taxable Turnover @ 8% GST (25.01.2018 to 31.03.2019) Total (Post-GST) 1 CENVAT of Service Tax Paid on Input Services used for Commercial Shops (A) 72,73,736 2 ITC of VAT Paid on Purchase of Inputs (B) 43,75,985 3 Total CENVAT/ITC Available (C)= (A+B) 1,16,49,721 4 ITC of GST Availed (D) 74,57,417 2,16, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profiteering has been examined by the DGAP in two parts i.e. by comparing the applicable tax rates and ITC available in the pre-GST period (April, 2016 to June, 2017) when only VAT@ 4.50% was payable for Residential flats and Commercial shops and Service Tax @ 4.50% on Commercial Shops only with (1) the post-GST period from 01.07.2017 to 24.01.2018, when the effective GST rate was 12% for both residential flats and commercial shops and (2) with the period from 25.01.2018 to 31.03.2019, when the effective GST rate was 12% for commercial shops and 8% for residential flats. Accordingly, on the basis the figures contained in Table- B above, the comparative figures of the ratio of ITC availed/available to the turnover in the pre- GST and the post-GST periods as well as the turnover, the recalibrated base price and the excess realization (profiteering) during the post-GST period, has been tabulated as is given in Table-C below:- Table- C (Amount in Rs.) Sr. No. Particulars Post-GST Period 1 Period A 01.07.2017 to 31-03-2019 (Shops) 01.07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in the base price as well as cum-tax price. Therefore, in terms of Section 171 of the Central Goods and Services Tax Act, 2017, the benefit of the additional ITC was required to be passed on to the recipients. 15. On the basis of the aforesaid CENVAT/ITC availability pre and post- GST and the details of the amount collected by the Respondent from the Applicant and other home buyers during the period from 01.07.2017 to 24.01.2018, the amount of benefit of ITC not passed on or in other words, the profiteered amount has been quantified by the DGAP as Rs. 43,79,311/- for residential units which included GST @ 12%, on the base profited amount of Rs. 39,10,099/-. Further, the amount of benefit of ITC that needed to be passed on by the Respondent to the home buyers during the period from 25.01.2018 to 31.03.2019 has been computed as Rs. 84,45,814/-which included 8% GST on the base amount of Rs. 78,20,198/-. In respect of the commercial shops sold by the Respondent during the period from 01.07.2017 to 31.12.2018, the benefit of ITC that needed to be passed on by the Respondent to the buyers of the commercial shops has been computed as Rs. 11,28,843/- which included 12% GST on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,52,05,183 4,74,261 14760 4,59,501 Further Benefit to be pass on as per Annex-16 4 Commercial Shop Buyers 42 9523 3,47,88,589 6,54,582 16,44,314 09,89,732 Excess Benefit passed on. List Attached as Annex-17 5 Commercial Shop Buyers 2 682 0 0 59,977 -59,977 No Consideration Paid Post- GST, However, Noticee passed on benefit. List Attached as Annex-17 6 Commercial Shop Buyers 66 15263 0 0 0 0 No Consideration Paid Post- GST and No benefit passed on. 7 Total Residential (B) 144 33250 5,99,93,772 11,28,843 17,19051 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 2 commercial shops. 19. The DGAP has also claimed that the benefit of additional ITC of 1.68% of the turnover has, in fact, accrued to the Respondent and the same was required to be passed on to the Applicant and other recipients. The DGAP has stated from the Table- D above that the Respondent has not passed on the additional benefit of ITC @1.68% of the Base Price to (i) One flat of Applicant No. 1 mentioned at Sr. No. 1 of table D involving amount of Rs. 1245/-. (ii) 991 residential flats mentioned at Sr. No. 2 of Table- D involving amount of Rs. 24,34,209/- and (iil) 34 commercial shops mentioned at Sr. No. 3 of Table- D involving amount of Rs. 4,59,501/-.The DGAP has further claimed that the benefit claimed to have been passed on by the Respondent to the buyers mentioned in column-G of Table-D had already been factored in the calculations and it was found that Section 171 of the Central Goods and Services Tax Act, 2017 appeared to have been contravened by the Respondent, inasmuch as the additional benefit of ITC @ 1.68% of the base price, i.e. Rs 28,94,955/- received by the Respondent during the period from 01.07.2017 to 31.03.2019, had not been passed on by the Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was supplied to the DGAP and he was directed to verify the claim 1,21,08,722/- to the flat and shop buyers and submit clarifications under Rule 133 (2A) of the CGST Rules, 2017. 23. The DGAP vide his Report dated 19.02.2020 filed under Rule 133 (2A) has submitted that necessary verification of the data (soft copy) submitted by the Respondent has been done by him. He has also submitted that the copies of the Ledger Accounts have been verified with the list of 992 home buyers submitted by the Respondent during the investigation of this case. He has further submitted that as per the copies of the Ledger Accounts, the Respondent has already passed on the benefit of Rs. 1,03,89,671/- to 992 home buyers. He has also claimed that in respect of 144 commercial shop buyers, the Respondent has submitted copies of Ledger Accounts in respect of 78 commercial shop buyers only. He has further claimed that as per the copies of the Ledger Accounts, the Respondent has passed on the benefit of Rs. 17,19,051/- to these 78 commercial shop buyers. The DGAP has also stated that out of these 78 commercial shop buyers, he has computed profiteering of Rs. 11,28,843/- in respect of 76 commercial shop buy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profiteered amount of Rs. 1,245/- including 12% or 8% GST in respect of the Applicant No. 1. He has also supplied the details of all the buyers who have purchased flats and shops from the Respondent along with their unit numbers and the profiteered amount vide Annexures 15, 16 and 17 attached with his Report. 25: The claim of the Respondent that he has already passed on the benefit of Rs. 1,21,08,722/- to his customers required verification from the DGAP. Therefore, the Respondent, vide order dated 09.12.2019 was directed to submit evidence showing that the ITC benefit has actually been passed on by him to all the eligible buyers. In response, the Respondent has filed written submissions dated 09.01.2020 and has also supplied a softcopy of the Ledger Accounts of the flat and shop buyers which were supplied to the DGAP. The DGAP was directed to verify the claim of the Respondent that he has already passed on an amount of Rs. 1,21,08,722/- to the home and shop buyers. 26. The DGAP vide his Report dated 19.02.2020 has submitted that the necessary verification of the data (soft copy) submitted by the Respondent has been done by him. He has also submitted that the copies of the Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first Report dated 16.09.2019 shows that the Respondent has passed on the benefit of Rs. 1,21,08,722/- to the flat and shop buyers. In this connection it would be pertinent to mention that the DGAP has not verified even a_ single acknowledgement submitted by the Respondent from the flat or the shop buyers to establish that they have actually received the benefit of GST as has been claimed by the Respondent. The DGAP has also not produced even a single acknowledgement/statement of the buyers obtained/recorded by him to confirm whether the benefit of ITC has been passed on to the buyers or not. In the absence of such acknowledgement/statement the claim of the Respondent that he has passed on the benefit of ITC to his buyers cannot be accepted. 29. Based on the above reasons the Reports dated 16.09.2019 and 19.02.2020 furnished by the DGAP cannot be accepted and accordingly, the DGAP is directed to further investigate the present case under Rule 133 (4) of the CGST Rules, 2017 upto 29.02.2020 or till the date of issue of Completion Certificate, whichever is earlier, on the following issues:- (i) Whether the Respondent was eligible to claim ITC on the VAT which he has paid during ..... X X X X Extracts X X X X X X X X Extracts X X X X
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