9911796707
TMI Blog2022 (10) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... ject at Kamayani Nagar at Rau, Indore. This confirms that post-GST, the Respondent has benefited from additional ITC to the tune of 5.92% [5.92% (-) 0%] of his turnover for the said Project, and the same was required to be passed on to the customers/flat buyers/recipients. The DGAP has calculated the amount of ITC benefit to be passed on to all the flat buyers/customers/recipients as Rs. 26,33,536/- for the Project of the Respondent at Kamayani Nagar at Rau, Indore, the details of which are mentioned in Annexure-16 of the Report, which includes the amount of Rs. 52,873/- of the Applicant No. 1. The Authority finds no reason to differ from the above-detailed computation of profiteering in the DGAP's Report or the methodology adopted and hence, the Authority determines the profiteered amount for the period from 01.07.2017 to 30.11.2020, in the instant case, as Rs. 26,33,536/- for the Project of the Respondent at Kamayani Nagar at Rau, Indore. This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him. Interest - HELD THAT:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Goods Service Tax (CGST) Rules, 2017. The brief facts of the present case are that a reference was received from the Standing Committee on Anti-profiteering on 16.12.2020 under Rule 129 of the CGST Rules, 2017 to conduct a detailed investigation in respect of an application filed by the Applicant No. 1 under Rule 128 of the Rules, alleging that he purchased an EWS House in the Project at Kamayani Nagar at Rau, Indore from the Respondent in May, 2019 and the Respondent charged GST @ 12% from him instead of 1%. 2. The DGAP in his Report dated 15.12.2021, inter-alia stated that i. The said complaint of the Applicant No. 1 was earlier received by the Authority, which was forwarded by Authority to Commissioner of State Tax, Indore for necessary action with the remarks Since, the issue doesn't seem to be pertaining to profiteering but might involve wrong charging of GST . However, the Madhya Pradesh State Level Screening Committee examined the said application and observed that since the Applicant's No. 1 house was an EWS House, the applicable GST rate levied on EWS Houses was 8% under affordable Housing Scheme whereas the Respondent had charged 12% GST from the Applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 665/2021 in SMW(C) No. 3/2020. Further, the above relief had been extended and the period from 02.10.2021 shall had limitation period of 90 days from 03.10.2021 as per the Hon'ble Supreme Court's Order dated 23.09.2021 passed in Miscellaneous Application No. 665/2021 in SMW(C) No. 3/2020. vi. The period covered by the current investigation was from 01.07.2017 to 30.11.2020. vii. The Respondent replied vide letter and e-mail dated 08.09.2021 and among other documents, furnished the copy of agreement entered by him with the developer M/s. Shekhar Construction, Flat No. 3, 5 Geeta Bhawan Road, Indore and submitted that in the Project at Kamayani Nagar, the development work of the Project was assigned to M/s. Shekhar Construction. viii. On the basis of the above submission of the Respondent, an addendum to the notice of initiation of investigation was issued on 30.09.2021 for including M/s. Shekhar Construction as a Co- Respondent in the ongoing investigation. ix. In response to the notice dated 22.01.2021 and subsequent reminders/summons/e-mails, the Respondent submitted the following documents/information/reply vide his letters/e-mails dated 08.09.2021 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the said amount of tax. Since the liability of VAT Tax was discharged by the contractor so the Respondent was not required to pay any VAT Tax, so no return of VAT was filed by the Respondent. Further, no amount was recovered by the Respondent from his customers on account of VAT. d. During the period from April, 2016 to June, 2017, as Service Tax was applicable, so the Respondent had collected the Service Tax and paid to the Service Tax department. e. The Respondent had not taken any CENVAT/ITC, so there was no ITC Register maintained by the Respondent. f. During the period from July, 2017 to November, 2020, GST was applicable so the Respondent collected the same and paid to the GST Department. However, he had not taken any ITC of GST paid by the contractor, as the work was issued during the pre-GST regime and contract was given inclusive of tax and the contractor had not issued any separate GST invoice due to which the Respondent was not able to take credit of the same. g. About availment of GST, in pre-GST regime, the Respondent was having practice of giving tender/contract to the developer on inclusive basis, but under GST regime, he was giving contract on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f unit was also not fixed as development cost was also not available at that time so only a tentative value was shown or disclose the allottee/customers. j. After receiving some registration, the competent authority had accorded consent for development of project vide his letter dated 08.12.2017, wherein he had specified that tender could be called and it was further specified that before start of work all necessary permission was required to be taken from the competent authority. k. After receiving the permission of competent authority of the Respondent, his division had obtained the development permission of local authority for development of project. Local Authority had granted the development permission for development of the project on 01.01.2018. Development work was assigned to different contract in the GST regime where in it was clearly mentioned that GST would be separately paid. l. In the application form for seeking allotment of unit in the project, it was clearly mentioned that the allottee was required to make the payment of GST separately and in the present case the GST had been charged accordingly. m. The Respondent was being a Govt. Organisation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as started in the GST regime only. s. Effect of ITC was already taken in the account as GST was paid separately to the developer. So, the ITC of GST paid to the developer was taken by his head office and if for any reason if ITC was not taken then it would be loss of THE RESPONDENT but in any case, it does not create any additional burden on the allottee, so in that case also there was no case of any profiteering to the Respondent. t. In the interest of justice and in order to avoid any uncalled litigation, it was requested to this Authority to provide an opportunity of hearing by via virtual mode so that his case could be decided on merit considering all the facts and figures. xi. In response to the addendum to notice dated 30.09.2021 and subsequent reminders/e-mails, the Co-Respondent submitted the following documents/information/reply vide his letters/e-mails dated 01.11.2021 02.11.2021 and 11.11.2021. a. Copy of all agreements and tender documents for the construction of 02 HIG 'B' Type Duplex, 11 MIG 17 EWS houses at Kamayani Nagar . b. Copy of Electronic Credit Ledger for the period July, 2017 to November, 2020. c. Copy of Tran-1. d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there was no complaint with regard to second phase having different registration No. P-IND-18-1738. Accordingly, the present investigation had been restricted to the phase registered under Registration No. P-IND-18-1569 involving construction of the 17 EWS, 11 MIG Junior and 02 HIG Type 'B' houses at Kamayani Nagar at Rau, Indore only. xvi. As per the copy of Agreement dated 01.01.2018 entered between Respondent and Co- Respondent, it revealed that the Co-Respondent agreed to construct 02 H.I.G B type complex, 11 M.I.G and 17 E.W.S houses at Kamayani Nagar (23.35 Acre land). Also, Work Order dated 01.01.2018 was issued to the Co-Respondent by the Respondent for commencement of construction work. Further, the allotment letters for flats had been issued by the Respondent and Respondent had raised the demands (including Service Tax/GST) from the Applicant No. 1 and other buyers of the Project at Kamayani Nagar . Hence, the Co-Respondent was the sub-contractor while the Respondent was the actual owner of the Project. xvii. The Respondent had contended that during the period from April, 2016 to June, 2017, as Service Tax was applicable, so the Respondent had collecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also incorrect. However, it was revealed from the submission made by the Co-Respondent that the amount of Rs. 2,23,19,780/-(exclusive of GST) was estimated cost of the work/Project whereas the actual amount paid by the Respondent to the Co-Respondent for work as completed was Rs. 1,95,88,052/-(exclusive of GST). xx. Further, it was pertinent to mention here that the Respondent vide his reply dated 30.11.2021, also confirmed that the development work was given to the contractor at the rate exclusive of GST and ITC of the GST paid was duly taken by his Head Office and also during Pre-GST regime all the Returns and other compliances were made in his division only but after post-GST regime all the compliances were made at HO Level, so he requested that his previous letter might please be treated as amended in the light of information provided in his letter dated 29.11.2021, submitted through email dated 30.11.2021. Therefore, the contention of the Respondent that he had not taken any ITC of GST paid by the contractor, as the work was issued during the pre-GST regime and contract was given inclusive of tax, was incorrect in entirety. xxi. Furthermore, the Respondent had also cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total: 1,95,88,052 12% 23,50,566 2,19,38,618 Hence, this contention of the Respondent that the contractor had not issued any separate GST invoice due to which the Respondent was not able to take credit, was also incorrect. xxii. Further, the contention of the Respondent that since the Project was initiated post GST, the input tax credits had already been factored in while fixing the per unit price to be charged from the home buyers reducing the same commensurately, appears to be incorrect. In this regard from the details of home buyers list provided by the Respondent, it was clear that there was no change in the total agreement value excluding taxes determined in 2016 (as demands were raised as early as prior to 31st March 2016) and total demands raised in pre-GST and post GST period. Therefore, the contention of passing on the benefit to the home buyer by adjusting the agreement value due to additional input credit getting available post GST was not tenable. xxiii. Further the contention of the Respondent that since no tax was recovered during the pre-GST period so there was no question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Respondent was eligible to avail the ITC of GST paid on all the inputs and input service including sub-contracts. However, on perusal of statutory Returns submitted by the Respondent, it was observed that the Respondent had not availed any CENVAT of Service Tax or ITC of VAT during the period 01.06.2016 to 30.06.2017 (pre-GST). Further, during the period from 01.07.2017 to 30.11.2020 (post-GST), the Respondent had availed ITC of GST to the tune of Rs. 53,74,91,787/-, out of which he had utilised Rs. 29,26,06,703/- for payment of GST. From the data submitted by the Respondent and Co- Respondent covering the period April, 2016 to November, 2020, details of the ITC availed by him, his turnover from the 17 EWS; 11 MIG Junior and 02 HIG Type B houses, the ratios of ITCs to turnovers,' during the pre-GST' (April, 2016 to June, 2017) and post-GST (July, 2017 to November, 2020) periods, are furnished in Table- B' below: Table- B' (Amount in Rs.) S.No. Particulars April, 2016 to June, 2017 (Pre-GST) July, 2017 to November, 2020 (Post-GST) 1. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... home buyers of EWS Houses. Accordingly, on the basis of the figures contained in Table-'B' above, the comparative figures of the ratios of ITCs availed/available to the turnovers in the pre-GST and post-GST periods as well as the turnover, the recalibrated base price and the excess realization (profiteering) during the post-GST period considering GST @12%, has been tabulated in Table-'C' below. Table-'C' (Amount in Rs.) S. No. Particulars Post- GST 1 Period A July, 2017 to November, 2020 2 Output tax rate (%) B 12.00% 3 Increase in ITC availed post-GST (%) C 5.92% 4 Net Turnover during July, 2017 to November, 2020 D 3,97,19,111 5 GST @12% E= D*12% 47,66,293 6 Total dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reased from 4.5% in the pre-GST period to 8% in the post-GST period (from 25.01.2018). Hence there was no rate reduction in post GST period. xxx. Further, it was observed that Applicant No. 1 had alleged that the Respondent had charged GST @12% instead of 1%. On perusal of the application of Applicant No. 1, the documents submitted by the Respondent and the relevant provisions of the CGST Act, 2017 and the Rules, the allegation of the Applicant No. 1 appeared to be partially correct. It was observed that the Respondent had charged GST @12% from the Applicant No. 1 whereas the actual applicable rate of GST was 8% in the cases of all EWS houses as stated in above para. Hence the Respondent had charged GST at the wrong GST rate from the Applicant No. 1 and other home buyers of EWS Houses. Therefore, the issue of charging of GST at wrong rate does not fall under the scope of Section 171 of the CGST Act, 2017. In this situation, the remedial measures as prescribed under the CGST Act, 2017, might be taken recourse to before the appropriate authority so that the Applicant No, 1 might get refund of the extra GST amount paid by him. Hence, the matter was being referred to the jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y paid. Further, in the application form for seeking allotment of unit in the Project, it was clearly mentioned that the customers/homebuyers was required to make the payment of taxes and in the present case the taxes had been charges accordingly. The Respondent, being a Govt. Organization, is keeping his record systematically and entire amount of GST collected from the customers/homebuyers had been properly deposited along with GST Return. iii. At the time of registration, value is not fixed as the development cost is not available so only tentative value is disclosed to the allottee, which include service tax paid at various stages during construction, which included cost and those element of cost, the input credit foregone due to the abetment, etc. the total cost of the project is discounted @60% and only 40% of the estimated cost is eligible for collection of service tax. iv. Work order for Phase Registration No. P IND-18*1569 involving 17 EWS, AA, MIG JUNIOR, 02 HIG Type 13' Houses at Kamayani Nagar at Rau, Indore was issued 01.01.2018. The investigation has concluded that ITC has created surplus due to change in tax policy. However, there has not been any change of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... misinterpreted the investigation Report submitted by the DGAP. Further, it was pertinent to mention here that the Respondent had raised demands/received advance from the home buyers in pre-GST period i.e., 01.04.2016 to 30.06.2017. Therefore, it was amply clear that the base price of the units fixed by the Respondent in pre-GST regime (considering the loss of ITC) should had been commensurately reduced by the Respondent in the GST regime and due benefit of ITC must had been passed on to the customers/buyers of the units in terms of Section 171 of the CGST Act, 2017. Hence, it was concluded that in the instant case, during the period of investigation, the Respondent was benefitted with the additional ITC of GST which was required to be passed on to the eligible recipients in terms of Section 171 of the CGST Act, 2017. Therefore, the investigation carried out against the Respondent on the basis of data and information submitted by the Respondent, was well within the confines of law and hence it was incorrect to say that the basic foundation taken to determine profiteering was not based on the periods of business of the Respondent and the investigation was faulty. ii. In the insta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor so the Respondent was not required to pay any VAT Tax, so no VAT Returns were filed by the Respondent and also no amount was recovered by the Respondent from the home buyers on account of VAT. It was further pertinent to mention here that despite receiving advances/payments from home buyers in pre-GST period, the Respondent entrusted the construction to the Co- Respondent in GST regime, there was no VAT involved in the work order. v. However, the Respondent in his submissions had claimed Rs. 46,209 as ITC of VAT paid on inputs in his hypothetical Table-B prepared by the Respondent which was incorrect. Moreover, the ratio arrived as 7.2% at Sl. No. 9 for pre-GST period in his Table was also incorrect. Hence, it appeared that the Respondent was trying to mislead the ongoing proceedings by putting false and imaginary figures/data which had got nothing to do with the actual and correct figures/data. Therefore, on the basis of above, it was submitted that the assertions made by the Respondent was not tenable and computation of profiteering had been done by the DGAP within the scope of Section 171 and Rules made thereunder and same was correct and entirely based on the data/inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the work has commenced after GST introduction. It is also informed that there is no change in the GST rate during the said period, hence the provision of Section 171(1) are not applicable on him. It is also submitted by the Respondent that they are an organisation of the State government and before launching any new scheme, survey of the respective area is conducted to ascertain the actual housing requirement and invite pre-launch booking of the proposed scheme. If sufficient number of bookings are received the approval of the competent authorities is taken for launching of the scheme. It is also submitted by the Respondent that the total investigation is based on wrong data as mentioned in Table-B and Table-C of the Report. In this regard the Authority finds that Section 171 (1) of the CGST Act, 2017 which governs the anti-profiteering provisions under GST, reads as Any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices. Therefore, Section 171(1) of the CGST Act, 2017, requires every supplier to pass on the benefit of reduction in rate of tax or the benefit of ITC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Respondent which is incorrect. Moreover, the ratio arrived as 7.2% at Sl. No. 9 for pre-GST period in his Table was also incorrect. The Authority holds that the DGAP has computed the profiteered amount by taking ITC to turnover ratios in the pre-GST GST periods into account which is correct, reasonable and logical and in accordance with the mandate of Section 171 of the Act. 11. The Respondent has also referred to CAG study report titled as Implementation of Value Added Tax in India - Lessons for transition to Goods and Services Tax -A Study Report . It is claimed by the Respondent that, in the said CAG report, the suggested measure to get the true and fair value of anti-profiteering has been mentioned. Hence, the DGAP report lacks the mechanism suggested and is based on assumption not enforceable in law and should be dropped. The Respondent has not produced copy of the said CAG study report. The efforts to find out the said study report did not give any result, however, as suggested by the name itself, the topic of the report was implementation of value added tax in India. As such, any such report and its suggestions are suggestive in nature. In the case in hand, the DG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yani Nagar at Rau, Indore. This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him as has been detailed above. 14. Given the above discussions, the Authority finds that the Respondent has profiteered by Rs. 26,33,536/- for the Project at Kamayani Nagar at Rau, Indore during the period of investigation i.e. 01.07.2017 to 30.11.2020. The above amount that has been profiteered by the Respondent from his home buyers/customers/recipients in the above said Project shall be refunded/returned/passed on by him, along with interest @18% thereon, from the date when the above amount was profiteered by him till the date of such payment, under the provisions of Rule 133 (3) (b) of the CGST Rules, 2017. 5. The Respondent is also liable to pay interest as applicable on the entire amount profiteered, i.e. Rs. 26,33,536/- for the Project at Kamayani Nagar, Rau. Indore. Hence the Respondent is directed to also pass on interest @18% to the customers/ flat buyers/ recipients on the entire amount profiteered, starting from the date from which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26,33,536/- so that the concerned home buyers/customers/recipients can claim the benefit of ITC if not passed on. Homebuyers/customers/recipients may also be informed that the detailed NAA Order is available on Authority's website www.naa.gov.in. Contact details of the concerned Jurisdictional CGST/SGST Commissioner may also be advertised through the said advertisement. 20. The concerned jurisdictional CGST/SGST Commissioner shall also submit a Report regarding the compliance of this Order to this Authority and the DGAP within a period of 4 months from the date of this Order. 21. Further, on perusal of the Report, it is also observed that the Respondent appears to have charged GST at the wrong GST rate from the Applicant No. 1 and other homebuyers of EWS Houses. As the issue of charging of GST at wrong rate does not fall under the scope of Section 171 of the CGST Act, 2017, the concerned jurisdictional CGST/SGST Commissioner may like to take necessary action in this matter, as deemed fit. In this regard, a letter dated 10.05.2022 has already been written to the Commissioner of Commercial Taxes Indore, Madhya Pradesh by the Additional Director General, DGAP, New Delhi. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 52123 6 Kuldeep Bhawsar FL-46 52123 7 Shivangi Ram Puria FL-47 59389 8 Mekal Dubey FL-48 56963 9 Rakesh Chaudhary FL-49 58820 10 Rohit Pandey FL-51 56963 11 Archana Chaudhary W/O Sanjay Chaudhary FL-52 53051 12 Vivah Pandey W/o Krshan Datt Dwivedi Ji FL-53 52873 13 Kishor figde FL-54 59492 14 Reena sharma FL-56 54937 15 Mina kapur W/O Hehant Kapur CM 39 (2HIG) 332336 16 Tushar Soni ..... X X X X Extracts X X X X X X X X Extracts X X X X
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