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TMI Blog2023 (12) TMI 1411X X X X Extracts X X X X X X X X Extracts X X X X ..... DGAP to prove his above claim. The claim of the Respondent regarding passing on the benefit of ITC to the customers/home-buyers shall be verified by the DGAP by contacting the customers/home buyers and seeking their replies regarding receipt of benefit of ITC. The Commission is of the view that on the basis of the documents submitted by the Respondent, the DGAP has not tried to investigate whether the Respondent had sold the flats to the post-GST home- buyers at the rates lower than the rates charged from the pre-GST home-buyers. Further, during the course of investigation, the Respondent has not provided the details to the DGAP. The DGAP has already submitted his investigation report to the Commission. The Commission under Rule 133(4) of the CGST Rules, 2017 directs the DGAP to further investigate the claim of the Respondent regarding passing on the benefit of ITC and charging lower rates from the post-GST buyers than the pre-GST buyers and recalculate the profiteered amount, if required. The Respondent is also directed to extend all necessary assistance to the DGAP and furnish him with necessary documents or information as required during the course of the investigation. Conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nput services. From the data submitted by the Respondent for the period from April, 2016 to May, 2022, the details of the input tax credit/VAT availed by him, his turnovers from the project "Vasavi GP Trends", the ratios of input tax credits to turnovers, during the pre-GST (April, 2016 to June, 2017) and post-GST (July, 2017 to May, 2022) periods, has been furnished by the DGAP in Table-A below:- Table-A (Amount in Rs.) Sr. No Particulars Total (Pre- GST) April, 2016 to June, 2017 Taxable Turnover (July, 2017 to May, 2022) 1 CENVAT of Service Tax Paid on Input Services used for flats (A) 19,53,398 2 Input Tax Credit of VAT Paid on Purchase of Inputs (B) - 3 Input Tax Credit of GST Availed (C) 21,30,27,134 4 Total CENVAT/Input Tax Credit Available (D)= (A+B) or C 19,53,398 21,30,27,134 5 Turnover for Flats as per Home Buyers List (E) 5,74,64,586 1,83,93,07,073 6 Total Saleable Area (in SQF) (F) 6,32,000 6,32,000 7 Total Sold Area (in SQF) relevant to turnover (G) 1,09,524 4,27,828 8 Relevant ITC [(H)= (D)*(G)/(F)] 3,38,519 14,42,07,235 Ratio of Input Tax Credit to turnover [(I)=(H)/(E)*100] 0.59% 7.84% c. Thus, as per the above Tab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irm the claim of the Respondent as per the amount mentioned in Agreements of Sale. Out of above 4 homebuyers 2 homebuyers replied affirmatively vide e- mails dated 21.02.2023, therefore, they were excluded from the calculation of profiteering. 2 homebuyers out of said 4 homebuyers have not replied so far therefore they were also not considered. Further, the Respondent did not provide any document in respect of 22 post-GST homebuyers in support of his claim hence they were also not considered. Thus, in respect of 157 post-GST homebuyers out of 159 post-GST homebuyers the benefit of passing of ITC was not considered. e. Accordingly, on the basis of the figures contained in Table- 'A' 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 turnovers, the recalibrated base price and the excess realization (profiteering) during the post-GST period, has been furnished by the DGAP in Table-B below:- Table-B Sr. No. Particulars 1 Period A July, 2017 to May, 2022 2 Output GST rate (%) B 12 3 Ratio of CENVAT Credit/Input Tax Credit to Total Turnover as per table - 'B' above (% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt @7.25% of the base price and GST on the said profiteered amount from the 211 Homebuyers. These 211 recipients are identifiable as per the documents provided by the Respondent, giving the names along with unit allotted to such recipients. 3. The above report of the DGAP dated 24.02.2023 was considered by the Commission and it was decided to allow the Respondent and the Applicants to file their consolidated written submissions in respect of the above report of the DGAP. Notice dated 21.07.2023 was also issued to Respondent directing him to explain why the above Report furnished by the DGAP should not be accepted and his liability for violation of the provisions of Section 171 of the CGST Act, 2017 should not be fixed. 4. The Respondent has filed submissions dated 21.09.2023 vide which he has inter-alia stated that:- a. The profiteered amount of Rs. 14,81,25,853/- included GST of Rs. 1,58,70,627/- (Rs. 21,89,05,201- RS. 20,30,34,574) which could not be considered as profiteered amount. Hence, the finding that the Respondent has profiteered on the GST portion is only an assumption by the DGAP and without any basis. b. The Respondent had constructed total 313 units for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of extension of the ITC benefit to such customers did not arise, when the selling price itself was less than the pre GST period average selling price. f. Hence, the alleged ITC benefit of Rs. 1,86,00,671/- pertaining to such customers is unsustainable and the same has to be excluded from the computation. g. The Respondent has passed on the ITC benefit to all the post GST customers, where the sale price was more than the average sale price of the pre GST era to the extent of Rs. 3,74,95,217/. On the above basis the alleged profiteering amount was reworked as NIL by the Respondent and the details of the same have been furnished in below Table:- Amount worked out by DGAP Basic Value 13,22,55,226 GST 1,58,70,627 Total 14,81,25,853 Adopting correct ITC alleged profiteering amount 13,13,43,122 Less: Exclusion from Computation a) Natco Pharma Ltd 4,77,11,460 b) Post GST Buyers where the rate is less than Rs. 3,623/- per Sq. ft. 1,86,00,671 c) Other Post GST Buyers to whom GST Benefit has been passed on 3,74,95,217 d) Pre-GST Buyers to whom ITC benefit Passed on 1,68,45,817 12,06,53,164 Balance 1,06,89,957 Less: Exclusion on GST Input Services & Escalation In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it, as each recipient is entitled to get the commensurate benefit. d. The profiteered amount has been calculated on the basis of methodology accepted by the erstwhile NAA. Therefore, the contention of the Respondent could not be accepted, as the DGAP has only submitted its investigation report to the Commission, which is an adjudicating Authority that can adjudicate the matter according to its merits. As far as the details of home buyers submitted vide submission dated 21.09.2023 by Respondent are concerned, it could not be taken of cognizance at this stage. Since the DGAP has already submitted his investigation report to the Commission further submissions at later stage could not be included until the Commission orders to investigate the veracity of the documents. e. On scrutiny of the sale deed/Agreement to Sale or any other documents, provided by the Respondent during the period of investigation, it could not be ascertained, at which rate the flat has been sold to the customer. Therefore, the contention of the Respondent that he has sold the flats to his customers at the rate of Rs. 3,930/- sq. ft. and Rs. 3,623/- sq. ft. to pre-GST and post-GST customers respectively coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at he has passed on benefit of additional ITC to 55 home-buyers who have purchased flats in pre- GST period. The DGAP had contacted all these home-buyers to confirm the receipt of benefit of additional ITC. Out of these 55 buyers, only 9 have confirmed the receipt of benefit, 19 buyers have denied the receipt of benefit and 27 buyers did not respond. Hence, the benefit of ITC claimed to have been passed on to 46 (27+19) buyers has been rejected by the DGAP. In this regard, the Commission observes that the DGAP should have ascertained as to why 27 homebuyers have not responded. b. The Respondent has also contended that he has passed on benefit of additional ITC amounting to Rs. 521.93 Lakhs in respect of the 41 apartments/flats purchased by M/s Natco Pharma Ltd. In this regard, the DGAP has submitted that during the course of investigation, the Respondent has not submitted any documents regarding passing on the benefit of ITC to the 41 flat buyers and thus the claim of the Respondent cannot be verified. With respect to the above contentions of the Respondent, the Commission is of the view that the claim of the Respondent regarding passing on the benefit of additional ITC to hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od average rate) and Annexure-IV (list of the post-GST buyers where the price is more than ITC benefit passed on to them) provided by the Respondent, claiming that he has sold the flats to the customers at the above mentioned rates and passed on the benefit to these customers itself, could not be established from these three Annexures. However, the same could not be considered as the investigation report had already been submitted to the Commission under Rule 129 of CGST Rules, 2017. d. With respect to the above contention of the Respondent, the Commission is of the view that on the basis of the documents submitted by the Respondent, the DGAP has not tried to investigate whether the Respondent had sold the flats to the post-GST home- buyers at the rates lower than the rates charged from the pre-GST home-buyers. Further, during the course of investigation, the Respondent has not provided the details to the DGAP. The DGAP has already submitted his investigation report to the Commission. The DGAP has also submitted that further submissions at later stage could not be included until the Commission orders to investigate the veracity of the documents e. Hence, the Commission direct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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