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TMI Blog2022 (8) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... red amount, if any, in respect of the Applicant nos 1 to 12]. The above amount that has been profiteered by the Respondent from his home buyers shall be refunded/returned/passed on by him, if not already passed on, along with interest @18% thereon, from the date when the above amount was profiteered by him till the date of such payment, in accordance with the provisions of Rule 133 (3) (b) of the CGST Rules 2017. Interest - HELD THAT:- The Respondent is also liable to pay interest as applicable on the entire amount profiteered. i.e. Rs.6,87,58.685/-. Hence the Respondent is directed to also pass on interest to the homebuyers/customers/recipients on the entire amount profiteered, starting from the data from which the above amount was profiteered till the date of passing on/ payment, as per the provisions of Rule 133 (3) (b) of the CGST Rules 2017. Penalty - HELD THAT:- The Respondent denied benefit of ITC to the homebuyers/customers of the units being constructed by him in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act. Section 171 (3A) Of the CGST Act, 2017 has been inserted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST Rules, 2017. b. The Applicant No. 3 has also filed an application dated 31.01.2019 to the Standing Committee on Anti-profiteering and the complaint was forwarded to the DGAP with directions to tag the same with the ongoing investigation. c. On receipt of the recommendation from the Standing Committee on Anti-profiteering, the DGAP had issued a Notice dated 29.01.2020 under Rule 126 (3) of the above Rules, asking the Respondent to intimate as to whether he admitted that the benefit of ITC had not been passed on to the above Applicants by way of commensurate reduction in the price of the flats and in case it was so, to suo-moto compute the quantum of the same and mention it in his reply to the Notice along with supporting documents. d. The DGAP has covered the period from 01.07.2017 to 31.12.2019 during the current investigation. The time limit to complete the investigation was 23.07.2020. However, in terms of Notification 35/2020-Central Tax dated 03.04.2020 read with Notification 55/2020-CentraI Tax dated 27.06.2020, Notification No.65/2020-Central Tax dated 01.09.2020 and Notification No. 91/2020 dated 14.12.2020 where, any time limit for completion/furnishing of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that para 5 of Schedule-III 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 Service 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 buyer, wholly or partly, except where the entire consideration has been received after issuance of the completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier . In light of these provisions, the DGAP has contended that the ITC of the units which were under construction but not sold was provisional ITC that may be required to be reversed by the Respondent, if such units would remain unsold at the time of issue of Completion Certificate (CC), in terms of Section 17 (2) Section 17 {3) of the Central Goods and Services Tax Act, 2017 which read as under:- 17 (2) Where the goods or services or both are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he pre-GST period (April 2016 to June 2017) was 0.87% and during the post-GST period (July 2017 to December 2019), it was 5.12% which clearly confirmed that post-GST, the Respondent has been benefited from additional ITC to the tune of 4.25% [5.12% (-) 0.87%] of the turnover. k. The DGAP has stated that the Central Government. on the recommendation of the GST Council. had levied 18% GST (effective rate was 12% in view of 1/3rd abatement for land value) on construction service, vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The effective GST rate on construction service in respect of affordable and low-cost houses upto a carpet area of 60 square metres per house (affordable units) was further reduced from 12% to Vide Notification No. 1/2018-central Tax (Rate) dated 25.01.2018. In view of the change in the GST rate after 01.07.2017, the issue of profiteering has been examined by the DGAP in three parts:- 1) the post-GST period from 01.07.2017 to 31.12.2019, when the effective GST rate was 12% for units other than affordable units. 2) the post-GST period from 01.07.2017 to 24.01.2018, when the effective GST rate was 12% for affordable units and 3) the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iteered amount in respect of the First Applicant (Rs. 63,736/-), Second Applicant (Rs.59,168/-) and Third Applicant (Rs.95,066/-) o. The DGAP has concluded that the Respondent has been benefitted with additional ITC of 4.25% of the taxable turnover and the same was required to be passed on to the Applicants and other recipients. Thus, the Respondent has contravened the provisions of Section 171 of the CGST Act, 2017 in as much as the additional benefit of ITC @4.25% of the base price received by the Respondent during the period 01.07.2017 to 31.12.2019 for the project Migsun Wynn registered under Uttar Pardesh RERA NO. UPRERAPRJ2769, has not been passed on to the Applicants and other recipients (3 Applicants 1155 home buyers/customers). On this account, it appeared that the Respondent had realized an additional amount to the tune of Rs. 6,87,58,685/- (Rs. Six Crore Eighty Seven Lakh Fifty Eight Thousand Six Hundred and Eighty Five only) (including GST) which inclusive of the amount profiteered from the Applicants. The Applicants and 1155 other recipients were identifiable as the documents provided by the Respondent, giving the names and address along with unit no. allotted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. Clarifications were also sought on the above submissions of the Respondent dated 25.06.2021 from the DGAP under Rule 133(2A) of the CGST Rules, 2017. The DGAP vide dated 03.03.2022 has submitted that the Respondent has not submitted the contact details receipt e.g. mobile no. e-mail etc. of the customers. The verification of the receipt of the ITC benefit could be confirmed once the Respondent submits the above details of his customers. Hence, the DGAP requested for some more time to file his reply. 10. Further, this Authority has received e-mails/letters from the home buyers in respect of the present case vide which it has been alleged that the Respondent has not passed on the benefit of ITC to them as has claimed by him. It has also been alleged that the acknowledgement receipts of ITC benefit passed on to the flat buyers/customers submitted by the Respondent are also fake and the signature on the document i.e. the Acknowledge Receipts are also forged. The allegations levelled were very serious and prima facie lead to believe that the Respondent has not passed on the benefit of ITC to the buyers. Accordingly, the Applicant No. 4 to 12 were ordered to be added as Applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether Input Tax Credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him. 15. The Report dated 28.01.2021 submitted by the DGAP has been carefully examined by this Authority and it is found that:- a. The Applicants had alleged that the Respondent was not passing on the benefit of ITC to them on purchase of the flats the project Migsun Wynn being executed by the Respondent in Greater Noida, Uttar Pradesh. b. The DGAP filed his Report dated 28.01.2021 stating that the ITC as a percentage of the total turnover which was available to the Respondent during the pre-GST period was 0.87% and during the post-GST period this ratio was 5.12%, as per the Table-A mentioned above and therefore, the Respondent has benefited from the additional ITC to the tune of 4.25% (5.12%-0.87%). c. Thus the Respondent has profiteered an amount of:- i. Rs. 2,42,41,721/- including 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of ITC to the 51 customers as per the list provided by him or not. The DGAP gave ample opportunities to the Respondent to submit the details as required by the DGAP so that the above claim of the Respondent can be verified at least for such home buyers /customers on a sample basis. However, the Respondent has not submitted the requisite documents/information before the DGAP. Further. during the course of hearing the Applicants have also submitted that the acknowledgement receipts submitted by the Respondent before this Authority are fake and the signatures of the recipients are forged. Further, upon perusal of the submissions filed by the Respondent, it is revealed that the Respondent has not submitted all the purported acknowledgement receipts received from each and every customer/flat buyer (to whom ITC benefit is claimed to have been passed on) stating that they have received the benefit of ITC from the Respondent. Hence, the claim of the Respondent that he passed on the benefit of ITC to his customers is not substantiated by any verifiable record as to determine the veracity of such claim. Hence, such claim of the Respondent needs proper and in depth verification b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18% thereon, from the date when the above amount was profiteered by him till the date of such payment, in accordance with the provisions of Rule 133 (3) (b) of the CGST Rules 2017. 20. This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent reduce the prices to be realized from the buyers of the Units commensurate with the benefit of ITC received by him as has been detailed above. 21. The Respondent is also liable to pay interest as applicable on the entire amount profiteered. i.e. Rs.6,87,58.685/-. Hence the Respondent is directed to also pass on interest to the homebuyers/customers/recipients on the entire amount profiteered, starting from the data from which the above amount was profiteered till the date of passing on/ payment, as per the provisions of Rule 133 (3) (b) of the CGST Rules 2017. 22. The Authority also orders that the profiteered amount of Rs.6,85,58,685/- along with the interest @ 18%, from the date of receiving such amounts from the homebuyers/customers till the date of passing on/return of such amount, shall be paid/passed on by the Respondent, if not already passed on, within a period of 3 months from the date receipt of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, the Respondent is liable to pass on the benefit of ITC which would become available to him till the date issue of Completion Certificate. Accordingly, the concerned jurisdictional Commissioner CGST/SGST are directed to ensure that the Respondent passes on the benefit of ITC to the eligible home buyers/shopbuyers/customers as per the methodology approved by this Authority in the present case and submit report to this Authority through the DGAP. The Applicant No.1 or any other interested party/person shall also be at liberty to file complaint against the Respondent before the Uttar Pradesh State Screening Committee in case the remaining benefit of ITC is not passed on to them. 28. It appears that the Respondent may have undertaken other construction projects under the GSTIN 09AALCS8695P1ZZ, Hence, the Authority, in terms of Rule 133(5) of the CGST Rules, 2017 also directs the DGAP to investigate profiteering in relation to all other Projects executed by the Respondent if such Projects attract the provisions of Section 171 of the CGST 29. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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