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TMI Blog2022 (8) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 2017 to April-2020), It was 5.42% for the Project 'The Peaceful Homes'. This confirms that post-GST, the Respondent has benefited from additional ITC to the tune of 2.11% (5.42% - 3.31%) of his turnover, and the same was required to be passed on to the customers/flat buyers/recipients, The DGAP has calculated the amount of ITC benefit availed by the Respondent which needs to be passed on to all the recipients of supply Including the Applicant No. 1 as Rs. 3,52,59,318/-. The details of such calculations are mentioned in Table- B supra. The above amount is Inclusive of profiteered amount of Rs. 48,952/- In respect of the Applicant No. 1. The Authority finds that the Respondent has profiteered by an amount of Rs. 3,52,59,318/- during the period of investigation i.e. July 2017 to April 2020. The above amount that has been profiteered by the Respondent from his home buyers shall be refunded by him, along with interest @ 18% thereon, from the date when the above amount was profiteered by him till the date of such payment, in line with the provisions of Rule 133 (3) (b) of the CGST Rules 2017 - This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of Section 171 of the CGST Act, 2017. 2. Vide the above mentioned Report dated 26.02.2021, the DGAP had stated that:- a. The aforesaid application was examined by the Standing Committee on Anti-profiteering and upon being prima facie satisfied that the Respondent has not passed on the benefit of ITC, the same was forwarded to the DGAP to conduct a detailed investigation in the matter. Upon receipt of the above reference on 06.05.2020, Investigation was initiated against the Respondent to collect evidence necessary to determine whether the benefit of ITC had been passed on by the Respondent to the Applicant No. 1 in respect of construction service supplied by the Respondent or not. b. A Notice under Rule 129 of the CGST Rules was issued by the DGAP on 02.06,2020, calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the Applicant 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, opportunity to inspect the non-confidential evidences/information fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the project The Peaceful Homes along with details of benefit passed on, ix. Brief profile of the Respondent x. Details of applicable tax rates, Pre-GST and Post-GST. xi. Status of Project as on 30.04.2020. xii. Copy of Occupancy Certificate. h. The Respondent informed that all the documents except related to Applicant No. 1 like ledger, demand note, agreement might be treated as confidential, In terms of Rule 130 of the Rules. i. Vide e-mail dated 19.02.2021 an opportunity was given to the Applicant No. 1, to inspect the non-confidential documents/reply furnished by the Respondent on 22.02.2021 and 23.02,2021. The Applicant availed of the opportunity and visited the DGAP on 22.02.2021 and inspected the non-confidential documents. j. Para 5 of Schedule-III of the CGST Act, 2017 (Activities or Transactions which shall be treated neither as a supply of goods nor a supply of services) which read as Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building . Further, clause (b) of Paragraph 5 of Schedule II of the CGST Act, 2017 reads as (b) construction of a complex, building, civil structure or a part thereof, includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnished by the DGAP in Table-A below:- Table 'A' Amount In (Rs.) Sr.No Particulars Total (Pre-GST) April, 2016 to June, 2017 Taxable Turnover (July, 2017 to April,2020) 1. CENVAT of Service Tax Paid an Input Services used for flats (A) 4,10,40,510 - 2. Input Tax Credit of VAT Paid on Purchase of Inputs (B) 56,71,928 - 3. Input Tax Credit of GST Available (C) - 12,09,22,355 4. Total CENVAT/Input Tax Credit Available (D)= (A+B or C) 4,67,12,438 12,09,22,355 5. Turnover for Flats as per Home Buyers list (E) 60,63,62,183 1,49,20,15,805 6. Total Saleable Area (In SQF) (F) 7,48,800 7,48,800 7. Total S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,41,897 8. Total Demand raised HG+F 1,67,10,57,702 9. Recalibrated Base Price I=F*(1-E) or 97.89% of F 1,46,05,34,272 10. GST@12% J = I*B 17,52,64,113 11. Commensurate demand price K=I+J 1,63,57,98,384 12. Excess Collection of Demand or Profiteering Amount L=H-K 3,52,59,318 n. Based on the calculation explained by the DGAP in the Tabie-B above, it is clear that the benefit of ITC which needed to be passed on by the Respondent to the buyers of flats came to Rs. 3,52,59,318/- which included 12% GST on the base amount of Rs. 3,14,81,533/- during the period 01.072017 to 30.04,2020. The homebuyer and unit no. wise break-up of this amount has been furnished by the DGAP in Annex-15 of his Report. This amount was inclusive of profiteered amount of Rs. 48,952/- (including GST) in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H=F-G I 1. Other buyers 04 10,100 2,75,01,312 6,49,911 4,58,371 1,91,540 Further benefit to be passed on as per Annex-18 2. Other buyers including the Applicant 11 20,340 1,99,00,719 4,70,294 5,12,146 (Required to pass on Rs. 4,70,294/-) -41852 Excess Benefit passed on as Annex-19 3. Other buyers (negative reply) 01 2,475 1,47,36,843 3,48,261 0 3,48,261 List attached as Annex-20 4. Other Buyer 04 8790 0 0 0 0 No consideration received in during the period 01.07.2017 to 30.04.2020 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. Hence, the provisions of Section 171 of the CGST Act, 2017 appeared to has been contravened by the Respondent, in as much as the additional benefit of ITC @2.11% of the base price received by the Respondent during the period 01.07.2017 to 30.04.2020, had not been passed on by the Respondent to all the recipients. On this account, the Respondent had realized an additional amount to the tune of Rs. 3,52,59,318/- (including GST). t. The Respondent had claimed that he had passed on the ITC benefit to all buyers. However, since only 15 buyers confirmed through e-mails, the ITC benefit claimed to had been passed on to other buyers had not been accepted. As per table-C above, the Respondent was still required to pass on ITC benefit of Rs. 3,43,30,653/- including GST to 235 buyers. u. That the present investigation covers the period from 01.07.2017 to 30.04,2020. Profiteering, if any, for the period post April, 2020, had not been examined as the exact quantum of ITC that would be available to the Respondent in future could not be determined at this stage. 3. The above Report was considered by this Authority and a Notice dated 08.03.2021 was issued to the Respondent to explain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt of the benefit of ITC resulting in that some buyers could not send confirmation in short span of time, Due to very short period, It was possible that most of the buyers had even not seen the mails and could not revert. Now, post submission of report by DGAP some more customers had responded to the mall and had confirmed that he had received GST Benefit. Mere non receipt of confirmation did not tantamount that the home buyers had not been given the Fit benefit that was clearly shown in his Account statement. The DGAP had received denial from only one customer that he had not received ITC benefit. The Respondent informed that said customer had not made payment of dues but in his Account statement the ITC benefit had been clearly shown. Moreover, the Respondent had received cancellation request for that unit and not making the payment. Further, in respect of sales made during GST Regime, the Respondent had already considered and allowed ITC benefit while finalizing Sale Prices and had issued letters showing the bifurcation of rates charged wherein Rebate/Discount in prices had been shown. Also, post submission of report by DGAP, the Respondent had received direct confirma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. d. The investigation Report was required to be submitted by DGAP in a time bound manner and therefore a reasonable time was given for furnishing the requisite information. In order to ascertain the claim of the Respondent that the ITC benefit had been passed to the buyers, entire were sent on 18.02.2021 to 150 buyers selected on random basis. On the date of submission of Report i.e. 26.02.2021, only 6% confirmations were received. Therefore, that entire claim of passing on of ITC benefit by the Respondent was not accepted as less than 10% confirmations had been received through e-mails However, claim in respect of 15 buyers who had confirmed over e- mail that ITC benefit was received by him was accepted. e. Any confirmation received by the Respondent after issuance of Report by DGAP might be considered by this Authority. The DGAP could consider any such claim of benefit only if so directed by the NAA. 5. Copy of the above clarifications dated 11.06.2021 under Rule 133(2A) of the CGST Rules, 2017 filed by the DGAP were supplied to the Respondent for filing his rejoinder/submissions. The Respondent had filed his rejoinder/submissions dated 30.06.2021 vide which he ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmission of report by DGAP some more customers had responded to the e-mail sent by the DGAP and had confirmed that they had received benefit of ITC and these additional confirmations from buyers must have been received by the DGAP after the report. Few customers had shared copy of email with Respondent. List of Name of the buyers along with his confirmation mail was attached by the Respondent g. In following list of cases, on the basis of credit notes/ledger statement/demand letter the Authority had considered that the builder had passed on the benefit to buyers:- Honey Meeker vs. M/s Pivotal Infrastructure Pvt. Ltd. cited In 2020-TIOL 35-NAA-GST Naresh K Khetan vs. M/s Azeagala Development Pvt. Ltd. cited in 2020 TIOL-31-NAA-GST 6. Since, the quorum of the Authority of minimum three Members, as provided under Rule 134 was not available till 23.012022, the matter was not decided. With the joining of two new Technical Members in February 2022, the quorum of the Authority was restored from 23.2.2022. The Respondent and the Applicant No. I were also granted hearing through video conferencing on 12.04.2022 at 04:00 P.M. However, the Applicant No. 1 has neith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices. It is clear from the plain reading of the above provision that it mentions reduction in the rate of tax or benefit of ITC which means that if any reduction in the rate of tax is effected by the Central or the State Governments or if a registered supplier avails the benefit of additional ITC, the same has to be passed on by him to his recipients since both the above benefits are being given by the above Governments out of their tax revenue. Although there has been no reduction in the rate of tax in the case of Construction Service, however, several taxes and duties which were being levied under the State Acts have been subsumed in the GST under the CGST and State GST Act, 2017 on which ITC is now available to the Respondent. Accordingly, the Respondent has become entitled to ITC as Central Excise Duty, Sales Tax, and Entry Tax which was not available to him in the pre-GST regime, which has been termed a benefit of ITC and is required to be passed on as per Section 171 by Respondent. The above provision nowhere stipulates that the above benefit was to be passed on only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in 2020-TIOL-26 NAA-GST (Order Date: 11.12.2020) and Deepak Kumar Khurana vs. Sattva Developers Pvt. Ltd. cited in 2019 (29) G.S.T.L. 374 (N.A.P.A.) (Order Date: 14.06.2019). In this regard, this Authority upon perusal of VAT Assessment Order for the financial years 2016-17 and 2017-18 filed by the Respondent has observed that the benefit of WCT has not been allowed by the VAT Authorities to the Respondent. Therefore, any credit which was not reflected In VAT Returns could not be considered. 12(b). However, this Authority does not agree with the view taken by the DGAP that the rebate of VAT(WCT) given to a registered person in the State of Haryana is not admissible as credit for the purposes of computing the profiteering as the HVAT Act and Rules don't provide for WCT as any Tax and nor does it fail within the definition of Input Tax as per the relevant Sections. Hence this view of the DGAP is rejected. While this view of the DGAP is rejected, simultaneously the Authority also finds that the contention of the Respondent is also not acceptable in the view of the fact that jurisdictional Assessing Officer of Haryana VAT has himself not allowed any benefit of WCT in the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ payment, as per provisions of Rule 133 (3) (b) of the CGST Rules 2017. 17. We also order that the profiteering amount of Rs. 3,52,59,318/- along with the Interest @ 18% from the date of receiving of advance from the homebuyer till the date of passing the benefit of ITC shall be paid/passed on by the Respondent within a period of 3 months from the date receipt of this order failing which it shall be recovered as per the provisions of the CGST Act, 2017. 18. The complete list of homebuyers has been attached with this Order, with the details of amount of benefit of ITC to be passed along with interest @ 18% as in the Annexure-1. 19. It Is also evident from the above narration of facts that the Respondent has denied the benefit of ITC to his home buyers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171. (3A) of above Act. That Section 171 (3A) of the CGST Act, 2017 has been inserted in the CGST Act, 2017 vide Section 112 of the Finance Act, 2019, and the same became operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ituation arising on account of Covid-19 pandemic, has extended the period of limitations 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 Is 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/vs to be passed by this Court In present proceedings. Further, the Hon ble Supreme Court, vide its subsequent Order dated 10.01.2022 has extended the period(s) of limitation till 28.02.2022 and the relevant portion of the said Order is as follows:- The Order dated 23.03.2020 is restored and in continuation of the subsequent Orders dated 08.03.2021, 27.04.2021 and 23.09.2021, It is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general of special laws in respect of dell judicial or quasi-judicial proceedings. Accordingly this Order having been passed t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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