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TMI Blog2022 (8) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... frastructure Pvt. Ltd. under revenue sharing basis at 50:50 ratio. Construction of project was to carried out by the Respondent on his own account and own expenses. Since the entire cost of all purchases of inputs, capital goods and input services for construction of all units of the impugned project was incurred by the Respondent hence he had availed Input Tax Credit on tax paid on said inputs, capital goods and input services during pre and post GST periods. The DGAP had also found that since the Respondent has not reduced the basic prices of his flats/units by 4.80% due to the additional benefit of ITC and had charged GST at the increased rate of 12% on the pre-GST basic prices hence he has contravened the provisions of Section 171 of the CGST Act, 2017 and Rules made thereunder. The DGAP had observed that as mentioned above, the benefit of Rs. 16,49,897/- was required to be passed on to 39 flat buyers/customers/recipients including Applicants by the Respondent for the period from 01.07.2017 to 31.03.2019 if not already passed on. Since, the ratios calculated by the DGAP are based on the factual record submitted by the Respondent, hence the computation made by the DGAP can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GAP. 4. Sh. Mahender Sharma, on behalf of the Respondent. ORDER The present Report dated 30.12.2020, has been furnished by the Applicant No. 03 i.e. the Director General of Anti-Profiteering (DGAP) after a detailed investigation under Rule 129 of the Central Goods and Service Tax (CGST) Rules, 2017. The brief facts of the case are that a reference was received from the Standing Committee on Anti-profiteering on 03.12.2019 to conduct a detailed investigation in respect of applications filed under Rule 128 of the CGST Rules, 2017 by the Applicant No. 1 and 2, alleging profiteering by the Respondent in respect of purchase of Flat Nos. 1002 and 1003 in the Respondent's project The Elegance situated at Partap Nagar, Jaipur. Both the Applicants alleged that the Respondent had not passed on the full benefit of ITC to them by way of commensurate reduction in prices and charged GST @ 12% on the amount due to them against payments. 2. On receipt of the aforesaid reference from the Standing Committee on Anti-profiteering, the DGAP had issued Notice under Rule 129 of the CGST Rules 2017, on 10.12.2019 calling upon the Respondent to reply as to whether he admitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016 to June, 2017. (iv) Tran-1 and Tran-2 has not been filed. Tax rates - pre-GST and post-GST. (v) Copy of audited Balance sheet for FY 2016-17, 2017-18 2018-19. (vi) Copies of Sale agreement/Contract, all Demand Letters, Statement of Accounts and Possession Letter issued to the Applicants. (vii) Copy of Electronic Credit Ledger for the period July, 2017 to November, 2019. (viii) Copy of Electronic Cash Ledger for the period July, 2017 to November, 2019. (ix) Declaration in Annexure-IV to the Notification No. 3/2019-CT (Rate) dated 29.03.20219 along with Calculation of Eligible GST input for the Elegance Project upto 31 st March, 2019. (x) CENVAT/ Input Tax Credit register for the period April, 2016 to November, 2019. (xi) Details of VAT, Service Tax and GST turnover, output tax liability payable and input tax credit availed for the project The Elegance . (xii) Copy of Joint Development Agreement dated 19.05.2014. (xiii) Copy of Completion Certificate no. 2241 dated 31.05.2019. (xiv) Copy of Project Report submitted to RERA. (xv) List of home buyers commercial shop buyers in the project The Elegance along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (the Respondent) had issued following demand notes to the Applicant No. 1 as tabulated below;- Table A' Demand Date Demand Amount Amount Recevied Amount Received in Delay Delayad Amount Received Date 15.07.2017 27,29,575/- 22,60,000/- 4,69,575/- 06.06.2019 20.05.2019 1,40,000/- - - - 23.08.2019 3,08,303/- - - - 09.09.2019 3,08,303/- - - - The above demands were still not been paid by the Applicant No. 1. The Applicant No. 1 was not co- operating consequently the registry of his flat was pending due to his non co-operation. f. the payment schedule for Flat no.1002 measuring 970 sq. feet for base price of Rs.26,89,700/- (including one car parking), which was issued to the Applicant No. 1 by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % + Main Chg. 1,34,485 37,260 1,71,745 Total 100% 26,89,700 2,11,620 29,01,320 7. The DGAP has scrutinised the above said documents/information submitted by the Respondent, to determine the main issues which are:- Whether there was benefit of reduction in the rate of tax or input tax credit on the supply of construction service by the Respondent, on implementation of GST w.e.f. 01.07.2017 and if so, Whether such benefit was passed on by the Respondent to the recipients, in terms of Section 171 of the Central Goods and Services Tax Act, 2017. and observed that as para 5 of Schedule-1H of the Central Goods and Services Tax Act, 2017 (Activities or Transactions which shall be treated neither as a supply of goods nor a supply of services) which reads 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 Central Goods and Services Tax Act, 2017 reads as (b) construction of a complex, building, civil s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rior to 01.07.2017, the Respondent was eligible to avail CENVAT credit of Service Tax paid on Services and no credit was available for Central Excise Duty and VAT paid on the inputs whereas in post-GST, the Respondent could avail input tax credit of GST paid on all inputs input services including the sub-contracts. Hence, on the basis of the details of input tax credits availed, turnovers and saleable sold area of the instant project as furnished by the Respondent to the DGAP for the period from April 2016 to November 2019, DGAP has calculated the ratios of Cenvat/Input Tax Credit to turnovers in respect of instant project as tabulated below:- Table-C S.No. Particulars April,2016 to June 2017 (Pre-GST) July, 2017 to March, 2019 (Post-GST) (1) (2) (3) (4) 1. CENVAT of Service Tax Paid on Input Service (A) 10,07,988 - 2. Input Tax Credit of VAT Paid on Purchase of Inputs (B) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.No. Particulars Post-GST 1. Period A 01.07.2017 to 31.03.2019 2. Output GST Rate (%) B 12.00 3. Ratio of CENVAT credit/ Input Tax Credit to Total Turnover as per table -'C above (%) C 6.39% 4. Increase in input tax credit availed post-GST (%) D=6.39% less 1.59% 4.80% 5. Analysis of Increase in Input tax credit: 6. Total Base Price raised/collected during July, 2017 to March, 2019 (Rs.) E 3,06,90,046 7. GST @ 12% over Base Price F=E*12% 36,82,805 8. Total amount to be collected/raised G=E+F 3,43,72,851 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther, the DGAP in conclusion, has submitted that the Respondent had passed on the benefit of Rs. 19.85/- per sq. ft. to all the home buyers irrespective of their date of booking. The Respondent had passed on Rs. 8,67,902/- to 38 Customers from whom the amount was raised/collected by him during the post GST period from 01.07.2017 to 31.03.2019 and to corroborate his such claim he had submitted copies of Credit Notes and journal ledger entries for all the home buyers vide which the benefit of input tax credit was passed on, which were duly verified by the DGAP and found to be correct The DGAP had also sent e-mails to the Applicant No. 1 and 2 and 30 home buyers other than the Applicants selected randomly on 23.12.2020 to whom benefit was passed on, to confirm whether the amount of benefit of ITC was received from the Respondent. The Applicant No. 1 vide E-mail dated 28.12.2020 submitted that he has not received the benefit of Input Tax Credit. Further, out of 30 home buyers other than the Applicants, 16 have replied and confirmed the receipt of benefit of ITC from the Respondent. Further, it also appears that in some cases, the Respondent had passed on the benefit of input tax credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,219 In view of the above Table E , it is observed that the Respondent was required to pass on the additional benefit of input tax credit of Rs. 1,08,480/- to the Applicant No. 1. The Respondent had passed on the ITC benefit of Rs. 3,70,163/- to 17 buyers including Applicant No. 2 which is less than what he ought to have passed on by an amount of Rs. 8,87,685/-. Further, the benefit passed on by him is higher than what he should have passed on in respect of 68 home buyers mentioned at S. No. 4 to 6 in the above Table, by Rs. 12,33,487/-. Details were given in Annexure-22 of the aforesaid Report of the DGAP. This excess benefit passed on to some recipients, cannot be set off against the additional benefit required to be passed on to the other recipients and it can only be adjusted against any future benefit that might accrue to such recipients. 13. In conclusion, the DGAP has submitted that the Respondent had benefitted to additional ITC to the tune of 4.80% of the turnover during the post GST period from 01.07.2017 to 31.03.2019, which was required to be passed on to the respective flat buyers. Accordingly he had realized th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deo conferencing, the Applicant No. 1 has raised his objection that he had not received even a single penny from the Respondent in the form of ITC benefit or otherwise. The Respondent has accepted and stated that he will pass on the aforesaid benefit along with interest within 15 days and furnish the payment particular to this authority. But even after lapse of more than 02 months he failed to provide any documents corroborating the payment/passed on ITC benefit to the flat buyers. 19. The Authority has carefully considered the Report of the DGAP, the submission filed by the Respondent and the other material placed on record including arguments made during hearings and finds that the Applicant No. 1 and 2 had filed complaint against Respondent alleging that the Respondent had not passed on the benefit of ITC to them by way of commensurate reduction in prices on the purchase of Flat No.s 1002 1003 respectively in his The Elegance Project which was being executed by the Respondent at Partap Nagar in Jaipur. The said complaint was examined by the Standing Committee on Anti-Profiteering and forwarded to the DGAP for detailed investigation, who vide his investigation Report dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the computation made by the DGAP can be relied upon while computing the profiteered amount. The above methodology has been approved by this Authority in all the cases where the benefit of ITC was required to be passed on to the flat buyers / customers / recipients. The above methodology is appropriate, logical, reasonable, and in consonance with the provisions of Section 171 of the CGST Act, 2017. 21. Since the home buyers/customers/recipients are identifiable as per the documents placed on record, the Respondent is directed to pass on an amount of Rs. 16,49,897/- to 39 home buyers/customers/recipients, out of which the amount required to be passed on to the Applicant No. 1 and 2 is Rs. 1,08,480/- and 1,55,904/- respectively if already not passed on. Such amount shall be passed on/ returned along with the interest @ 18% per annum from the dates from which the above amount was collected by him from them till the payment is made, as prescribed under Rule 133 of the CGST Rules, 2017 within a period of 3 months from the date of passing of this order as per the details mentioned in Annexure-21 22 attached with the Report dated 31.12.2020. The details of the homebuyers/customers/ re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 171 of the CGST Act 2017 in respect of the subject project The Elegence and hence there is every possibility that same is the case, with his other projects. 26. Contact details of concerned Jurisdictional CGST/SGST Commissioner may also be advertised through the said advertisement. A report in compliance of this Order shall be submitted to this Authority and the DGAP by the Commissioners CGST /SGST within a period of 4 months from the date of receipt of this Order. 27. In view of the prevailing Covid 19 pandemic, the Hon'ble Supreme Court had by its Order dated 10.01.2022 passed in M.A. no, 21/2022 in M.A. no. 665/2021 in Suo Moto Writ Petition (C) No. 3 of 2020 ordered as under:- (I). 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 or special laws in respect of all judicial or quasi-judicial proceedings. (II). Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available ..... X X X X Extracts X X X X X X X X Extracts X X X X
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