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TMI Blog2023 (10) TMI 468X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent as is also stated in the Report of the DGAP. It is also revealed that the Respondent has passed on an amount of Rs. 17,26,772/- to the 56 home buyers whereas he was required to pass on benefit of Rs. 1,03,143/- only. The instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017 as the benefit of ITC has already been passed on to the Applicant No. 1 and other home buyers - the present proceedings launched under Section 171 of CGST Act, 2017 are not maintainable and are hereby dropped. - SMT. RAVNEET KAUR, CHAIRPERSON, SH. ANILKUMAR AGRAWAL, MEMBER, MS. SWETA KADDAD, MEMBER ORDER 1 The Director General of Anti Profiteering (hereinafter referred to as the DGAP ) vide its investigation report dated 26.02.2021 stated that the Standing Committee on Anti-profiteering received an application filed under Rule 128 of the CGST Rules, 2017 (hereinafter referred to as the Rules ), by Sh. Pruthviraj Vijay Dhavale, resident of 348, Ganesh Peth, Flat No. 23, Swami Sankul Building, 3rd Floor, Near New Milak Market, Opposite Laxmi Road, Pune- 411002 (hereinafter referred to as the Applicant No. 1 ) alleging profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y DGAP was extended upto 31.03.2021. 7. In response to the Notice dated 02.06.2020 and various reminders, the Respondent replied vide letters/e-mails dated 26.06.2020, 04.09.2020, 02.11.2020, 26.11.2020, 12.12.2020, 18.01.2021, 08.02.2021, 10.02.2021 and 24.02.2021. 8. Vide the aforementioned letters/e-mails, the Respondent submitted the following documents/ information: (a) Brief profile. (b) Copies of GSTR-1, GSTR-3B, and GSTR-9 Returns for the period from July 2017 to April 2020. (c) Copies of Tran-1 and TRAN-2 statements for the period from July 2017 to December 2017. (d) Copies of VAT ST-3 Returns for the period from April 2016 to June 2017. (e) Electronic Credit Ledger for the period from July 2017 to April 2020. (f) CENVAT/ITC Register for the FY 2016-17 to April 2020, reconciled with VAT, ST-3, and GSTR-3B Returns along with details of credit reversals. (g) Copy of Architect Certificate showing the stage of construction for Tower-1 as of 30.04.2020. (h) Copies of all demand letters issued, sale agreement/ contract, and supplemental agreement executed with the Applicant No. 1. (i) Details of applicable Tax rates, pre-GST an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 P52100007401 From a perusal of the above Table, the DGAP observed that each Tower developed by the Respondent was registered independently with RERA. As the complaint was with respect to Tower-1 only, the DGAP limited its investigation to Tower-1 of the project VTP Beaumonde . 11. Further, the DGAP stated that 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) 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 CGST 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 a buyer, wholly or partly, except where the entire consideration had been received after issuance of the completion certificate, where required, by the competent authority or after his first occupation, whichever was earlier . Thus, the ITC pertaining to the residential units and commercial shops which were under construction but not sold was a provisional ITC whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calculated on them. In any case, the Respondent had passed on a further benefit of about 7% on these contracts. 13. The DGAP observed from the Service Tax Returns for the period from 2016-17 and April 2017 to June 2017, that the Respondent had not rendered any service related to the construction of residential complexes. Also, from the perusal of information and the home buyers list submitted by the Respondent, the Respondent had not raised any demand to the home buyers during the period from 2016-17 to 2018-19, as the project was on hold during this period. Therefore, for the purpose of computation of the ratio of CENVAT/ Turnover, the entire pre-GST period from March 2013 to June 2017 had been considered. 14. The DGAP stated that as there was no turnover reported during the period 2016-17 and April 2017 to June 2017, the ratio of ITC to turnover for this period would be 0/0 i.e. Indeterminate. Therefore, the turnover reported by the Respondent in the home buyers list in the pre-GST regime was the turnover for the entire duration of the project. Hence, the turnover considered for the pre-GST period was the total turnover for the period from March 2013 to June 2017, as submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Relevant CENVAT/Input Tax Credit (H)= [(C)*(G)/(F)] or [(D)*(G)/(F)] 12,07,490 39,97,851 9. Ratio of CENVAT/ ITC to Taxable Turnover [(I)=(H)/(E)] 2.14% 2.38% 16. The DGAP stated that from Table - 'B' above, it was clear that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period was 2.14% and during the post-GST period (July 2017 to April 2020), it was 2.38%. This clearly confirmed that post-GST, the Respondent had benefited from additional ITC to the tune of 0.24% [2.38% (-) 2.14%] of the turnover. Accordingly, the profiteering was examined by comparing the applicable tax rate and ITC available in the pre-GST period when effective Service Tax @4.50% was payable with the post-GST period (July 2017 to April 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. 17. On the basis of the figures contained in Table 'B above, the comparative figure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as cum-tax price. Therefore, in terms of Section 171 of the CGST Act, 2017, the benefit of such additional ITC was required to be passed on by the Respondent to the respective recipients. 18. The DGAP stated that from Table-B and C above, it was clear that the Respondent was required to pass on the additional benefit of ITC to the tune of 0.24% of the turnover. However, the Respondent had submitted that he had already passed on the benefit @4.5% to the home buyers, who had booked flats in the pre-GST period and @7% to the home buyers, who had booked flats in the post-GST period. The Respondent had booked 59 units in the pre-GST period (excluding 08 units cancelled subsequently) and 62 units in the post-GST period. Further, 88 units remained unsold as of 30.04.2020. There were 3 home buyers, who had booked flats in the pre-GST period but no demand had been raised against them in the post-GST period. Profiteering for such home buyers cannot be computed as there was no demand to substantiate the claim of passing on the benefit to these home buyers. The Respondent had claimed that he had passed on the benefit of Rs. 17,26,772/- to 56 home buyers, who had booked flats in the pre-GS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 20 home buyers having received the benefit, it appeared that the ITC benefit was passed on to him. 21. The DGAP stated that the Respondent was required to pass on an amount of Rs. 1,03,143/- to his home buyers. However, the Respondent had passed on Rs. 17,26,772/- to the home buyers who had booked flats in the pre-GST period. As the Respondent had passed on more amount than the additional benefit available to the Respondent, the provisions of Section 171 were not contravened by the Respondent. 22. The Respondent had supplied construction services in the State of Maharashtra only. 23. The DGAP concluded that Section 171 (1) of the CGST Act, 2017, requires that any reduction in the 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 , had not been contravened by the Respondent in the present case. 24. The National Anti-Profiteering Authority (NAA) issued Notice to the Applicant No. 1 on 09.03.2021 informing that the DGAP has alleged nil' profiteering against the Respondent and directed him to intimate why the said Report should not be accepted and also to file written ..... X X X X Extracts X X X X X X X X Extracts X X X X
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