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TMI Blog2022 (10) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... dent during the pre-GST period (April 2016 to June 2017) was 0.80%, whereas, during the GST period (July 2017 to October 2020), it was 7.78% for the project JKG Palm Court . This confirms that during the GST period, the Respondent has benefited from additional ITC to the tune of 6.98% (7.78% - 0.80%) of his turnover for the project JKG Palm Court and the same was required to be passed on to the customers/flat buyers/recipients. The Authority finds that, neither the Applicant no.1 nor the Respondent has contested the said Report in spite of several opportunities being given to them. They, also, did not attend the personal hearing on the scheduled date - The Authority finds no reason to differ from the above-detailed computation of profiteering in the DGAP s Report. Interest - HELD THAT:- The Authority finds that the Respondent has profiteered by an amount of Rs. 5,14,06,920/- during the period of investigation i.e. 01.07.2017 to 31.10.2020. The Authority determines an amount of Rs. 5,14,06,920/- (including 12% GST) under section 133 (1) as the amount profiteered by the Respondent from his home buyers/shop buyers/customers/recipients of supply in the impugned Project (as per Annexure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for initiation of investigation under Rule 129 of the Rules was issued by the Director General of Anti-profiteering on 20.11.2020, calling upon the Respondent to reply as to whether he admit that the benefit of ITC had not been passed on to the recipients 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 documents in support of his reply. Further, the Respondent was afforded an opportunity to inspect the non-confidential evidences/information which formed the basis of the said Notice, during the period 03.12.2020 to 04.12.2020. The authorized representative of the Respondent availed of the said opportunity on 04.12.2020. ii) Vide e-mail dated 17.08.2021, the Applicant was also given an opportunity during 19.08.2021 & 23.08.2021 to inspect the non-confidential documents/reply furnished by the Respondent. The Applicant availed of the said opportunity on 19.08.2021. The Applicant vide email dated 20.08.2021 submitted his observation on the documents inspected and made his submission. iii) The period covered by the current investigation was from 01.07.2017 to 31.10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial cum commercial complexes. The Company was engaged in business of construction of Residential cum commercial properties at Greater Noida. The main project carried by the company was JKG Palm Court, which was being constructed in 02 phases. viii) The Respondent had claimed that he had already passed on the benefit of Rs. 1,86,112/- to the Applicant and Rs. 6,13,37,994/- to the other customers in terms of Section 171 of the CGST Act, 2017. Thus, the Respondent claimed that he had passed on total benefit of Rs. 6,15,24,106/-. ix) Vide the aforementioned letters/e-mails, Respondent submitted the following documents/ information: (a) Copies of GSTR-1 returns for the period July, 2017 to October, 2020. (b) Copies of GSTR-3B returns for the period July, 2017 to October, 2020. (c) Copies of Tran-1 return for transitional credit availed by the Noticee. (d) Copies of VAT & ST-3 returns for the period April, 2016 to June, 2017. (e) Electronic Credit Ledger for the period July, 2017 to October, 2020. (f) CENVAT/ITC register for the F.Ys. 2016-17 to 2020-21 (upto October, 2020). (g) Status of project- Architect Certificate as on 30.09.2020 for Phase 1 & 2 tower wise. (h) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s". Section 17 (3) "The value of exempted supply under sub-section (2) shall be such as might be prescribed and shall include supplies on which the recipient was liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building". Therefore, the ITC pertaining to the unsold units might not fall within the ambit of this investigation and the Respondent was required to recalibrate the selling price of such units to be sold to the prospective buyers by considering the net benefit of additional ITC available to him post-GST. xii) As regards the allegation of profiteering with regard to Project- JKG Palm Court, it was observed that prior to 01.07.2017, i.e., before the GST was introduced, the Respondent were eligible to avail CENVAT credit of Service Tax paid on input services. However, CENVAT credit of Central Excise duty paid on inputs was not admissible, as per the CENVAT Credit Rules, 2004, which was in force at the material time. Moreover, the Respondent were paying VAT under Uttar Pradesh VAT Scheme, wherein he were required to discharge his output VAT liability on deemed va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the post-GST period (July, 2017 to October, 2020) when the effective GST rate was 12% (GST @18% along with 1/3rd abatement for land value) on construction service, vide Notification No.11/2017-Central Tax (Rate), dated 28.06.2017. xiv) On the basis of the figures contained in Table-'A' above, the comparative figures of the ratio of ITC availed/available to the turnover in the pre-GST and post- GST periods as well as the turnover, the recalibrated base price and the excess realization (profiteering) from the home buyers who booked flats during the pre-GST period, was tabulated in Table-'B' below:- Table-'B' (Amount in Rs.) S.No. Particulars Post- GST 1. Period A 01.07.2017 to 31.10.2017 2. Output GST Rate (%) B 12.00% 3. Ratio of CENVAT credit/ ITC to Total Turnover as per table - 'B' above (%) C 7.78% 4. Increase in ITC availed post-GST (%) D=7.78% less 0.80% 6.98% 5. Analysis of Increase in input tax credit: 6. Base Price raised/collected during July, 2017 to October, 2020 (Rs.) E 65,75,79,319 9. GST @ 12% over Base Price F=E*12% 7,89,09,518 10. Total amount collected/raised by Noticee G=E+F 73,64,88,836 11. Recali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... summary of category-wise ITC benefit that was required to be passed on and the benefit already passed on by the Respondent was furnished in Table-'C' below. Table-'C' (Amount in Rs.) Sr.No. Category of Customers No. of Units Saleable Area (in Sqf) Demand Raised Post GST Profiteering Amt. as per Annex- 17 of the Report dated 31.08.2021 Benefit claimed to be Passed on by the Respondent Difference Remark A B C D E F G H=F-G I 1. Home buyer (Residential) 1 1,185 36,73,500 2,87,179 3,10,935/- (-) 23,756 Excess Benefit passed on 2. Other Buyers 691 9,10,755 65,39,05,819 5,11,19,741 0 5,11,19,741 Further Benefit to be passed on as per Annex-17 of Report dated 31.08.2021 Total 692 9,11,940 65,75,79,319 5,14,06,920 3,10,935 xvii) From the Table 'B' and Table 'C' above, it was observed that the benefit already passed on by the Respondent was less than what he ought to had passed on by an amount of Rs. 5,11,19,741/- (including Applicant). xviii) Thus, on the basis of the aforesaid CENVAT/input tax credit availability pre and post-GST and the details of the amount during the period 01.07.2017 to 31.10.2020, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was again given the opportunity of filing written submissions, if any, vide order sheet dated 29.03.2022. The Respondent requested vide letter dated 11.04.2022 for three weeks' time to file his written submissions. The request of the Respondent was allowed and was again directed to file his written submissions vide order sheet dated 26.04.2022 and 13.07.2022 but no written submission have been filed by the Respondent. 4. The hearing in the matter was scheduled to be held on 16.08.2022 via video conferencing. No one appeared on behalf of the Respondent and the Applicant. It may be seen from the above that enough opportunities were provided to interested parties to file their submissions and personal hearing, yet, they did not participate in the proceedings. Therefore, the hearing was closed vide order dated 16.08.2022. 5. The Authority has carefully considered the Reports filed by the DGAP, all the submissions and the documents placed on record. It is clear from the plain reading of Section 171 (1) that it deals with two situations: - one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that, such verification is not comprehensive, complete, definite or conclusive and hence cannot be accepted. 8. The Authority finds that the Respondent has profiteered by an amount of Rs. 5,14,06,920/- during the period of investigation i.e. 01.07.2017 to 31.10.2020. The Authority determines an amount of Rs. 5,14,06,920/- (including 12% GST) under section 133 (1) as the amount profiteered by the Respondent from his home buyers/shop buyers/customers/recipients of supply in the impugned Project (as per Annexure-A to this Order), including Applicant No. 1, which shall be refunded by him along with interest @18% thereon, as prescribed, from the date when the above amount was profiteered by him till the date of such payment, as per the provisions of Rule 133 (3) (b) of the GCST Rules 2017. The amount profiteered is Rs. 1,99,182/- in respect of Applicant No.1. 9. 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/shop buyers/customers/recipients of supply commensurate with the benefit of ITC received by him as has been detailed above. 10. The Respondent is also liable to pay int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -174, 1st Floor, Yojna Vihar, New Delhi-110092, Project- "JKG Palm Court" (Greater Noida) and amount of profiteering: Rs. 5,14,06,920/- so that the concerned home buyers/shop buyers/customers/recipients of supply can claim the benefit of ITC if not passed on. Home buyers/shop buyers/customers/recipients of supply may also be informed that the detailed NAA Order is available on Authority's website wvvw .naa .gov.in Contact details of concerned Jurisdictional CGST/SGST who are nodal officers for compliance of the NAA's order may also be advertised through the said advertisement. 15. The concerned jurisdictional CGST/SGST Commissioner shall also submit a Report regarding the compliance of this Order to the Authority and the DGAP within a period of 4 months from the date of receipt of this order. 16. Further, the DGAP is also directed to monitor the compliance of the order by the concerned jurisdictional CGST/SGST Commissioner. 17. The present investigation has been conducted up to 31.10.2020 only. However, the Respondent is liable to pass on the benefit of ITC which would become available to him till the date of issue of the Completion Certificate. Accordingly, the concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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