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TMI Blog2022 (6) TMI 1163X X X X Extracts X X X X X X X X Extracts X X X X ..... ts 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 has 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 29.02.2020 and is therefore, liable to imposition of penalty under the provisions of Section 171 (3A) of the above Act. However, perusal of the provisions of the said Section 171 (3A) shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and hence accordingly the penalty equivalent to ten per cent of the profiteered amount will be imposed upon him for the ,amount collected after 01.01.2020. However, no penalty shall be leviable if the profiteered amount is deposited/passed on by the Respondent within thirty days of the date of passing of this order by the Authority. - Case No. 23/2022 - - - Dated:- 17-6-2022 - SH. AMAND SHAH, CHAIRMAN TECHNICAL MEMBER, SH. PRAMOD KUMAR SINGH, TECHNICAL MEMBER, SH. HITESH SHAH, TECHNICAL MEMBER Present:- 1. None for the Applicants 2. None for the Respondent. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vail the benefit of ITC of VAT. Also, he had collected VAT from the customers under the normal taxation scheme. VI. The Point wise reply of the DGAP on issues raised by the Authority vide IO No.14/2020 dated 19.03.2020 was as follows:- (i) Whether the Respondent was eligible to claim ITC on the VAT, which he had paid during the period 2016-17 to June-2017 as per the provisions of HVAT Act, 2003: DGAP Reply: The Respondent had submitted VAT Returns and VAT Assessment Order for the Assessment Year 2016-17 and 2017-18 (April-2017 to June-2017), wherein the ITC on the purchase of Input was allowed to the tune of Rs. 2,14,55,660/- and Rs. 32,89,447/- respectively. The Assessing Authority had allowed ITC of the VAT paid on purchase of inputs @ 5%, 5.25% and 13.125%. Thus, it appears that the Respondent was eligible to claim ITC of the VAT paid on purchase of Inputs as the same was reflected in VAT returns and had also been allowed in the Assessment Order. (ii) Whether the Respondent was availing benefit of Composition Scheme under HVAT, 2003 or not: DGAP Reply: As per the VAT returns and Assessment Order submitted by the Respondent, it was observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the GST was introduced, as the service of construction of affordable housing provided by the Respondent, was exempted from Service Tax w.e.f. 01.03.2016 vide Notification No. 25/2012-ST dated 20.06.2012, as amended by Notification No. 9/2016-ST dated 01.03.2016, the Respondent was not eligible to avail CENVAT credit of Central Excise Duty paid on the inputs or Service Tax paid on the input services, as per the CENVAT Credit Rules, 2004, which were in force at the material time. However, the Respondent was eligible to avail credit of Service Tax paid on the input services (CENVAT credit of Central Excise Duty was not available) in respect of the commercial shops sold by him. The Respondent was also eligible to avail ITC of VAT paid on the inputs. Further, post-GST, the Respondent could avail ITC of GST paid on all the inputs and input services. It was noted from the data submitted by the Respondent during current investigation as well as previous investigation, that the CENVAT of Service Tax Paid on Input Services was Rs. 58,10,860/-, which was inadvertently taken as Rs. 72,73,736/- in the previous Investigation Report dated 16.09.2019. Therefore, the total CENVAT of Service Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,89,765 6,34,64,498 6,34,64,498.00 7. Total Turnover (G)= (E)+(F) 55,08,18,665 28,26,34,048 53,31,20,400 81,57,54,448 8. Total Saleable Carpet Area (Excluding Balcony Area*) (in SQF) (H) 4,86,338 4,53,088 (Residential) 33,250 (Commercial) 4,86,338 9. Total Sold Carpet Area (Excluding Balcony Area) (in SQF) relevant to turnover (I) 4,33,127 4,39,416 (Residential) 17,450 (Commercial) 4,56,866 10. Relevant ITC [(J)= (C)*(I)/(H)] or [(J)= (D)*(I)/(H)] 90,72,286 3,84,06,523 Ratio of ITC Post-GST [(K)=(J)/(G)] 1.65% 4.71% IX. The ITC as a percentage of the turnover that was available to the Respondent dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.71% 4.71% 4.71% 4.71% 4. Increase in ITC availed post-GST (%) D= 4.71% less 1.65% 3.06% 3.06% 3.06% 3.06% 5. Analysis of Increase in input tax credit: 6. Base Price raised during July, 2017 to February, 2020 (Rs.) E 6,34,64,498 21,91,69,550 53,31,20,400 81,57,54,448 7. GST raised over Base Price (Rs.) F=E*B 76,15,740 2,63,00,346 4,26,49,632 7,65,65,718 8. Total Demand raised G=E+F 7,10,80,238 24,54,69,896 57,57,70,032 89,23,20,166 9. Recalibrated Base Price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Residential Buyers 980 4,47,646 75,22,89,950 2,51,29,942 1,10,51,657 1,40,78,285 Benefit claimed to pass on was to be verified 2 Commercial Shop Buyers 121 27,426 6,34,64,498 21,75,055 18,65,850 3,09,205 Benefit claimed to pass on was to be verified Grand Total (C)=(A)+(B) 1,101 4,75,072 81,57,54,448 2,73,04,997 1,29,17,507 1,43,87,490 XIV. The Respondent vide reply dated 09.01.2021 submitted the email addresses of 754 home buyers only. Emails dated 13.01.2021 were sent to these 754 home buyers. In response to these emails, 164 home buyers responded. Out of 164 home buyers who had responded, 45 home buyers responded positively, and 119 home buyers had denied the receipt of any benefit. XV. It was also mentioned by the DGAP that the computation of profiteering was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit arising due to Section 171 of CGST, 2017, however, due to newly implemented law and frequent changes at initial stage, he was unable to determine the exact amount to be passed on to the customers and hence he had passed an interim amount to the customers in the month of March-2019 through credit notes. Further, he also accepted the DGAP Report dated 30.03.2021 where in total profiteering of Rs. 2.73 Crores was alleged. He also submitted that he had passed on major benefit of ITC to the customers and remaining benefit of ITC will be passed on soon after order of the Authority. No submissions were made by the Applicant No. 1 in the case at any point of time even after repeated opportunities. 4. 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 10.03.2022 and the Respondent as well as the Applicant No. 1 were given an opportunity to be heard in person. None appeared for the hearing. While, the Respondent has accepted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itional Input Tax Credit of 3.06% of the turnover has indeed accrued to the Respondent for the project Riddhi Siddhi . This benefit was required to be passed on to the recipients. However, the same was not done commensurately by the Respondent. Section 171 of the CGST, 2017 has been contravened by the Respondent, in as much as the additional benefit of ITC @3.06% of the base price has not been passed on by the Respondent to 1039 recipients of supply. These recipients were identifiable as per the documents provided by the Respondent, giving the names and addresses along with Unit no. of homebuyers/shopkeepers allotted to such recipients. Therefore, the total additional amount of Rs. 2,73,04,997/- was required to be returned to such recipients. The details of such recipients/customers along with unit numbers and respective profiteered amount are contained in Annexure A B to this order. 8. From the above discussions and acceptance of the DGAP Report dated 30.03.2021 by the Respondent, the Authority finds that the Respondent has profiteered an amount of Rs 2,73,04,997/- during the period of investigation. Therefore, in view of the above facts, the Authority under Rule 133(3)(a) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for compliance of the NAA s order may also be advertised through the said advertisement. 11. Further, this Authority as per Rule 136 of the CGST Rules 2017 directs the concerned jurisdictional CGST/SGST Commissioner shall also submit a Report regarding compliance of this order to the Authority and the DGAP within a period of 4 months from the date of receipt of this order. 12. Further, the Hon ble Supreme Court, vide its Order dated 23.03.2020 in Suo Moto Writ Petition (C) no. 3/2020, while taking suo moto cognizance of the situation arising on account of Covid-19 pandemic, had extended the period of limitation prescribed under general law of limitation or any other specified laws (both Central and State) including those prescribed under Rule 133 (1) of the CGST Rules, 2017, as was clear from the said Order which states as follows:- A period of limitation in all such proceedings, irrespective of the Limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w. e. f 15th March 2020 till further order/s to be passed by this Court in present proceedings. Further, the Hon ble Supreme Court, vide its subsequent Order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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