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TMI Blog2023 (12) TMI 1404X X X X Extracts X X X X X X X X Extracts X X X X ..... rification of the passing on of ITC benefit to homebuyers/customers be carried out afresh. Conclusion - The DGAP is directed to submit a fresh investigation report under Rule 133(4) of the CGST Rules, 2017 on all the issues mentioned. X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of instalments and therefore the GST amount had been paid by the Respondent out of his own packet. The GST amount had been paid only by 650 allottees later on at the time of getting the possession of the flats. The Respondent informed that he had passed on the benefit of ITC to all these 650 customers at the time of getting the possession of the flats when he had paid the amount of GST and other pending dues also. The Respondent also submitted that total amount of benefit of ITC passed on to such customers was Rs. 3,81,70,416/- and except the above said 650 customers no other customer including the complainant/ Applicant No. 1 i.e. Mrs. Sudha had paid the amount of GST and other pending dues. iv. The Respondent vide e-mail dated 06.03.2023, submitted copies of demand letters, for the sale of Flat no. 1-604 of Type- 3B to the Applicant No. 1, measuring 807.36 square feet, at total base price of Rs. 24,36,500/- (including one car parking). v. DGAP submitted that prior to 01.07.2017, i.e., before the GST was introduced, the Respondent was eligible to avail Credit of Service Tax paid on input services but no CENVAT Credit was available/ availed in pre-GST era, as per the V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (Amount in ₹) Sr. No. Particulars 1 Period A July, 2017 to 31.10.2022 2 Output GST rate (%) B 12% 3 Ratio of CENVAT credit/ ITC to Total Turnover as per table - 'B' above (%) C 0.55%/5.98% 4 Increase in ITC availed post-GST (%) D= 5.98% less 0.55% 5.43% 5 Analysis of Increase in input tax credit: 6 Base Price raised during July, 2017 to 26.09.2019 (Rs.) E 208,08,46,816 7 GST raised over Base Price (Rs.) F= E*B 24,97,01,618 8 Total Demand raised G=E+F 233,05,48,434 9 Recalibrated Base Price H= E*(1-D) or 94.57% of E 196,78,56,834 10 GST @12% 1 = H* B 23,61,42,820 11 Commensurate demand price J = H+I 220,39,99,654 12 Excess Collection of Demand or Profiteering Amount K=G-J 12,65,48,780 vii. From Table-'B' above, the DGAP has claimed that the additional ITC of 5.43% of the turnover should have resulted in the commensurate reduction in the base price as well as cum-tax price. Therefore, in terms of Section 171 of the Central Goods and Services Tax Act, 2017, the benefit of such additional ITC was required to be passed on by the Respondent to the respective recipients. viii. The Respondent vide his email dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... home buyers has been received regarding the ITC benefit of Rs 42,11,007/- passed on by the Respondent as mentioned in above Table-C and this amount could be deducted from the total profiteered amount. From the above facts DGAP submitted that the Respondent was yet to pass on an additional amount of Rs. 12,23,37,773/- (Rs. 12,65,48,780/- (-) Rs. 42,11,007/-) to the 1333 home buyers which included the profiteered amount and GST on the said profiteered amount. xi. Regarding Applicant No. 1, the DGAP submitted that the Respondent has realised an additional amount of 66,680/- from the Applicant No. 1. Further, the investigation revealed that the Respondent was required to pass on the additional benefit of ITC amounting to 12,22,71,093/- to other recipients in the present proceedings. These recipients are identifiable as per the documents provided by the Respondent, giving the names and addresses along with Unit No. allotted to such recipients. xii. In view of the aforementioned findings, DGAP concluded that Section 171(1) of the Central Goods and Services Tax Act, 2017, requiring that "any reduction in rate of tax on any supply of goods or services or the benefit of ITC shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the post-GST period was not legally valid and justified The Respondent submitted that 534 no. of flats in the project were booked and sold post-GST wherein the buyer and builder had mutually agreed upon at the then prevailing prices and agreement to sell was also signed post-GST only. Therefore, it was safe to assume that buyers were well aware of the implementation of GST, the then prevailing market prices and thereafter the agreement to sell were signed by them. As the agreements were signed post- GST, there was no question of application of provision of anti- profiteering on these flats since the buyers were well aware about the amount of GST they were required to pay. The Respondent also relied upon the case of M/s DRA Aadithya Projects Pvt. Ltd wherein the Hon'ble Delhi High Court had granted an interim stay on an anti-profiteering investigation by DGAP on a complaint filed by home buyers who had booked units on or after 1 July 2017. The key argument advanced by the writ petitioner was that there was no element of passing of benefit under Section 171(1) of the CGST Act/ SGST Act for unit buyers whose agreement had been entered into during the introduction of G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and recovered by the respondent on the base price had already been paid to the GST Department which was not recoverable back to the Respondent in any manner. Therefore, it would cause double incidence of GST on the Respondent causing huge loss to him/it which was not legally justified and against the natural justice also. v. The Respondent had alleged that as per the DGAP's report the emails were sent to all the 650 home buyers to whom the benefit of ITC had been passed on by the Respondent for verification. 23 customers had denied and said that they had not received any benefit of ITC and 15 customers had said that they were not sure about it. The Respondent argued that in respect of above 38 customers, he had already given benefit of ITC to and therefore, the fact of denial as well as of uncertainty of receiving of benefit of ITC by all these 38 customers was not correct. vi. The Respondent argued that no penalty under section 171(3) read with Rule 133(3)(d) might be imposed as the respondent was complying with the provisions of Section 171 of the GST. 4. Copy of the above submissions dated 11.10.2023 filed by the Respondent was supplied to the DGAP for providing cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not been considered in the report. b. Respondent raised an issue that after submission of report nine numbers of affordable flats had been cancelled so profiteering in respect of those flats might be reduced. In this regard the DGAP has clarified that since the investigation report had already been submitted to the Commission, the Commission might decide on this issue. c. Respondent's contention regarding non-applicability of anti-profiteering provisions on the bookings of flats in post-GST period was held incorrect by the DGAP. d. Respondent's contention regarding inflated profiteering amount due to addition of GST on the profiteered amount was also held unsustainable by the DGAP. v. (Reply of Para 5) The Respondent has alleged that verification process carried out by the DGAP for ascertaining the amount of passing on the benefit of ITC, the denial and the uncertainty of receiving the benefit of ITC by the 38 customers was not correct. The DGAP here clarified that it had adopted a uniform practice of verifying the passing on of benefit of ITC from customers/homebuyers through emails only, therefore, the contention of the Respondent in this regard was not co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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