TaxTMI 
TaxTMI 
2019 (5) TMI 785
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.... 1 had alleged profiteering by the Respondent while he had purchased Flat No. T4-2B in the Anand Vilas Project, Sector-81, Faridabad, Haryana-121006 launched by the Respondent. Initially Sh. Dinesh Kumar Madan, H. No. 86/L, Ward No. 10, New Colony, Palwal, Haryana and Shri Ravi Kumar were jointly allotted this flat which was transferred to the Applicant No. 1, however, the Respondent had not allegedly passed on the benefit of Input Tax Credit (ITC) to the above Applicant although he had charged GST @ 12% w.e.f. 01.07.2017. 2. The DGAP has stated in his Report that the above Applicant had booked the flat on 09.05.2017 before the GST had come in to force and following demands had been raised on him by the Respondent as per the Table-'A' given below:- Table-"A" (Amounts in Rs.) Particulars BSP DEV Service Tax & VAT GST@12% Total Agreement Value 72,75,000 8,73,000 4,39,410 - 85,87,410 Paid in Pre-GST era B 43,65,000 5,23,800 2,63,646 - 51,52,446 Balance to be paid Post GST (C) = (A)-(B) 29,10,000 3,49,200 1,75,773 - 34,34,973 Demanded by the Respondent (D) 29,10,000 3,49,200 - 3,91,1....
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....2018 to 14.08.2018 however, he through his letter dated 13.08.2018 had informed the DGAP that the matter had been discussed by him with the Respondent and after being fully satisfied with the clarification given by the Respondent he had no grievance left and therefore, his complaint should be treated to have been withdrawn. The DGAP has also submitted that the present investigation had been conducted from 01.07.2017 to 30.06.2018 and the period for completing the investigation was extended upto 27.08.2018 by this Authority, vide its order dated 15.05.2018, as per the provisions of Rule 129 (6) of the CGST Rules, 2017. 7. The DGAP has further submitted that the Respondent had filed replies to the Notice vide his letters dated 28.03.2018, 12.04.2018, 27.04.2018, 07.05.2018, 17.05.2018, 29.05.2018, 07.06.2018, 12.06.2018, 20.07.2018, 25.07.2018, 31.07.2018, 03.08.2018, 09.08.2018 and 13.08.2018. The contents of the replies given by the Respondent have been given in brief by the DGAP as under:- I. That the Respondent had intimated his buyers that he intended to compute the benefit of additional ITC at the time of handing over the possession so that correct amount of benefit....
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....to June, 2018 (b) Copies of GSTR-3B returns for July, 2017 to June, 2018 (c) Copies of Tran-I returns for transitional credit availed (d) Copies of VAT & ST-3 returns for April, 2016 to June, 2017 (e) Copy of ST-2 (Certificate of Service Tax Registration) (f) Copies of all demand letters and sale agreement/contract issued in the name of Applicant No 1 (g) Tax rates - pre-GST and post-GST (h) Copy of Cost Audit report for the FY 2016-17 (i) Details of cost indices and cost escalation. (j) Abridged Cost Statement along with pre-GST impact of input tax credit on cost. (k) Copy of Electronic Credit Ledger for 01.07.2017 to 25.07.2018 (l) CENVAT/Input Tax Credit register for April, 2016 to June, 2018 (m) List of home buyers in the project "Anand Vilas" 9. The DGAP after investigation has stated that the main issues for determination was whether there were benefits of reduction in the rate of tax or additional ITC on the supply of construction service provided by the Respondent after coming in to force of the GST w.e.f. 01.07.2017 and whether the Respondent had passed on the abo....
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.... so far had to be taken into consideration for determining profiteering. The DGAP has further submitted that the contention of the Respondent that a customer might cancel or transfer the booking before taking possession after availing the benefit of additional ITC was valid, however, in such cases the benefit already availed by such a customer would be taken into account while determining the price to be paid by the prospective customer. Therefore, the above contention of the Respondent had no bearing on his legal liability of passing on the benefit of ITC to the Applicant No. 1, the DGAP has stated. 11. The DGAP has also intimated that another claim made by the Respondent was that the above Applicant had withdrawn his complaint and hence, the investigation should be closed, however, he has submitted that although the proceedings must flow from an application but there was no legal provision under which it could be withdrawn. He has further intimated that as per the provisions of Rule 129 of the CGST Rules, 2017, he was legally bound to complete the investigation in case of any reference having been received from the Standing Committee on Anti-profiteering and hence withdrawal o....
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.....91%) of the total turnover. He has further argued that the issue of profiteering had been examined by comparing the applicable tax and the ITC available for the pre-GST period when Service Tax @4.5% and VAT@ 1% was payable (total tax rate of 5.50%) with the post-CST period when the prevalent GST rate was 12% (GST @18% alongwith 1/3^rd abatement on value) on construction service imposed vide Notification No. 11/2017-Central Tax (Rate), dated 28.06.2017. He has also computed the comparative figures of ITC availed/available during the pre-GST period and the post-GST period as per the Table-'D' given below:- Table-"D" (Amount in Rs.) S. No. Particulars Pre-GST Post- GST 1 Period A April, 2016 to June, 2017 July, 2017 to June, 2018 2 Output tax rate % B 5.50% 12.00% 3 Total input tax credit availed (Rs.) C 371,10,647 616,64,604 4 Taxable turnover (Rs.) D 5370,46,198 4501,24,622 5 Ratio of input tax credit to taxable turnover (%) E=C/D 6.91% 13.70% 6 Increase in tax rate post-GST (%) F=GST Rate less pre-GST Tax rate - 6.50% 7 Increase in input tax credit availed post....
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....s vide Annexure-22 attached with the Report. The DGAP has further stated that the above amount was inclusive of Rs. 1,65,975/- (including 12% GST over the basic amount of Rs. 1,48,192/-) which the Respondent had profiteered from the Applicant No. 1. He has also intimated that the construction service was supplied in the State of Haryana only. 16. The DGAP has also stated that the benefit of additional ITC (6.79%) was more than the increase in the rate of tax (6.5%) which showed that net benefit of ITC had accrued to the Respondent and the same was required to be passed on to the above Applicant and therefore, the provision of Section 171 of the CGST Act, 2017 had been violated by the Respondent as the additional benefit of ITC @6.79% of the basic price received by the Respondent from the above Applicant during the period from 01.07.2017 to 30.06.2018, had not been passed on to him and the Respondent had collected an additional amount of Rs.l,65,975/- from the Applicant No. 1 which included both the profiteered amount @6.79% of the taxable amount and the GST on the said profiteered amount @12%. The DGAP has further stated that the Respondent had also realized an additional amount....
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.... of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly was deemed to be supply of service liable to GST, however, the said entry specifically excluded the cases where the entire consideration had been received after issuance of completion certificate or after its first occupation. He has further pleaded that 'Schedule III' of the CGST Act listed the activities or transactions which should be treated neither as a supply of goods nor a supply of services which covered, sale of land and subject to clause (b) of paragraph 5 of Schedule II, sale of building and accordingly, in case the building/ flat was sold post completion, it would be considered neither supply of goods nor supply of services. He has also contended that as per section 17 (2) of the CGST Act in case the goods or services or both were used by the registered person partly for effecting taxable supplies and partly for effecting exempt supplies the amount of credit shall be restricted to so much of the input tax as was attributable to the taxable supplies. He has further contended that the value of the exempt supply included sale of....
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....ed in the last instalment. 21. The respondent has also submitted that the Real Estate Sector had unique complexities due to long turnaround time unlike manufacture of goods and construction of a building was a long drawn process. He has further submitted that the manufacturing of goods took short time and hence computing of the benefit per unit was easy due to availability of exact quantities and prices of the inputs used per unit and the time taken for manufacturing but it took substantial period of time to construct a building. He has also claimed that the input output ratio varied considerably since the start of the project till its completion due to various factors which included change in the tax rate and change in the prices of the inputs as construction period extended from 4-5 years and therefore, it was difficult to compute the benefit/ loss merely for the impugned period. 22. The Respondent has further claimed that the rate of GST had been changed on various goods/ services during the last one year of its implementation and the Government had reduced rates on over 200 products on 15th Nov 2017 and about 50 products on 27th Jul 2017 and therefore, in case there was a....
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....hlighted that the prices of the goods procured by him had not reduced post GST. He has also claimed that as per the provisions of Section 171 of the CGST Act, any reduction in the rate of tax on any supply of goods or services or the benefit of input tax credit had to be passed on to the recipients by way of commensurate reduction in prices and it was the duty of the supplier to do so and the law did not require the recipient to pass on the benefit and hence the Respondent would be in a position to pass on the benefit only if the same had accrued to him, however, there was no benefit of Excise Duty to the Respondent as he was purchasing goods from the traders and therefore, the benefit which had not accrued to him could not be passed on by him. 25. The Respondent has also pleaded that he was a bonafide and law abiding dealer who was filing his Statutory Returns and he had not violated any provisions of the law and had never denied to pass on the benefit, however the accurate computation of the same was required as he would not be able to recover the wrongly passed on benefit and therefore, he had been requesting to allow him to pass it on the completion of the project. He has fu....
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....onduct or a conscious disregard to an obligation is established in the facts of a case". He has also cited the judgement passed in the case of Assistant Commercial Taxes Officer v. Rishab Special Yarns Limited (2008) 011 VST 0032J, in which the Hon'ble Rajasthan High Court has held as under:- "In my considered opinion, mere contravention of provisions of Section 78 (2) of the Act of 1994 cannot authorise the assessing officer to impose penalty under Section 78 (5) of the Act of 1994 unless there is mens rea on the part of the trader. Apart from this, mens rea is an essential ingredient for imposing penalty. The word "mens rea" does not bear a literal meaning i.e. "bad mind" or quality mind) because one who breaks the law even with the best of motives still commits a crime. The language is no longer meant to convey the idea of general malevolence characteristic of early common law usage. The true translation is criminal intention or recklessness. Words typically imposing a mens rea requirement include wilfully, maliciously, fraudulently, recklessly, negligently, corruptly: feloniously and wantomly. The fundamental principle pertaining to mens rea is based on....
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....e reversed however, the DGAP had calculated the benefit on the assumption that the whole area would be sold therefore, the calculation of the benefit made by the DGAP was incorrect. He has also contended that as per the RERA guidelines he could not increase the prices of the flats and in case the benefit was passed on at this stage the wrongly passed benefit could not be recovered. He has further contended that he vide the payment schedule (Annexure-4) had stated that "all other additional charges and taxes as applicable, in terms of application form, shall be payable along with last instalment" therefore, bona-fide intention of the Respondent to pass-on the benefit was clear. The Respondent has also submitted that the reversal of the ITC should be taken in to account while computing the benefit to be passed on and accordingly, he had computed the benefit on the basis of the area sold i.e. 58% of the total saleable area vide Annexure-5. He has also mentioned that the benefit accruing to him was due to the ITC which pertained to all the buyers as the construction was being undertaken in respect of all the units and the inputs were also being used for all of them whether the instalme....
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....buyers who had purchased flats. He has also contended that without prejudice to the disagreement on the methodology of computation of the benefit, he had passed on the benefit on account of ITC subject to modification and credited the same to all the buyers and intimation had also been given to them as per Annexure-5. He has further submitted that he had also passed on the benefit accuring to the customers of his other projects also in respect of which OCs had been applied post GST on a non-prejudice basis. He has also pleaded that there was no mens rea or malafide intent in the instant case and imposition of penalty was not sustainable. He has further pleaded that he had never refused to pass on the benefit which was evident from the correspondence made between him and his customers, however it was his contention that the benefit could be passed only at the time of completion of the project as accurate computation of the benefit was required to be done. 33. The Respondent has also argued that the anti-profiteering clause had been recently introduced in the law and in the absence of any mechanism/timeline, the Authority ought to act leniently in respect of imposition of penalty.....
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.... India; W. P. (C) No. 41 OF 2013 decided on 14.10.2015 which was later on affirmed by the Hon'ble Supreme Court on the grounds of excessive delegation since the parent statute i.e. the Lottery Regulation Act, 1998 did not envisage such a fee. Similarly, the Hon'ble Madras High Court had struck down Rule 3 (ee) of the Gold Control Rules, 1969 since it did not contain any guidelines for the licensing authorities to determine "too low a turnover" holding that the Rule would work differently for different individuals depending upon the particular officer, as per the law settled in the case of B. Narasimhalu Chettiar v. Government of Tamil Nadu 89 LW 55. He has also contended that in his case even if the profiteering was established maximum penalty of Rs. 25000/- under Section 125 of the CGST/SGST Act could be imposed. 34. The Respondent has also submitted that the Show Cause Notice issued to him had merely mentioned the provisions of Section 122-127 of the CGST Act and Rule 133 of the CGST Rules, without specifying the exact allegations against him and the above Sections were not attracted in his case except for Section 125 which was general in nature. It was further submitt....
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....#39;ble Supreme Court in the case of CCE v. HMM Ltd., 1995 (76) ELT 497 (SC), wherein the Hon'ble Court has ruled as under:- "2. ...... There is considerable force in this contention. If the Department proposes to invoke the proviso to Section 11A(1), the show cause notice must put the assessee to notice which of the various commissions or omissions stated in the proviso is committed to extend the period from six months to 5 years. Unless the assessee is put to notice, the assessee would have no opportunity to meet the case of the department. The defaults enumerated in the proviso to the said sub-section are more than one and if the excise department places reliance on the proviso it must be specifically stated in the show cause notice which is the allegation against the assessee falling within the four corners of the said proviso. In the instant case that having not been specifically stated the Additional Collector was not justified in inferring (merely because the assessee had failed to make a declaration in regard to waste or by-product) an intention to evade the payment of duty. The Additional Collector did not specifically deal with this contention of the assessee....
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....ereas the GST on the outward supply of his product was 5% which was not sufficient to discharge his tax liability. Moreover in this case the rate of tax has been increased from 0% to 5% instead of reduction in the same. Therefore, there appears to be no reason for treating the price fixed by the Respondent as violation of the provisions of the Anti-Profiteering clause." 37. The Respondent has also claimed that there was no nexus between the instalments received and the ITC as the ITC was dependent on the goods and services purchased by the Respondent and the taxable turnover was based on the instalments received from the buyers. He has further claimed that the Respondent might not have received any instalment from the buyers during a specific period however, the construction would have continued and therefore, ITC would be available. He has also contended that in case instalments were due from lesser number of buyers, it would always increase the ratio of ITC to the taxable turnover and vice-versa. He has further contended that in this case also no instalment was due from 01-07-2017 to 30-06-2018 from the buyers of 130 flats however, it could not be stated that the inputs and th....
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....nd reasons for difference between the area sold of the projects in his submissions dated 11.10.2018 vide Annexure-4. He has also stated that out of the total 11 projects OCs had been received in respect of 8 projects and the buyers had occupied them after registration of the conveyance deeds. He has further stated that sale of land as per Schedule III of the CGST Act and clause 5 (b) of Schedule II was not to be treated as supply of goods or services therefore, ITC would not be available on the sale of the flats of 6 projects after receipt of OCs and hence, the provisions of Section 171 of the CGST Act should not be applicable on these projects. He has also claimed that the difference in the area sold in annexures furnished through his letter dated 11-Oct-2018 was due to inadvertent error while calculating the total area pertaining to the buyers who had paid instalments post GST. 40. The submissions dated 26.11.2018 and 05.11.2018 filed by the Respondent were forwarded to the DGAP for his counter replies and he vide his Reports dated 16.11.2018 and 12.11.2018 respectively has stated that all the issues raised by the Respondent pertained to the Authority and hence, no Report was ....
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....iteering had to be computed on a case to case basis analysis by devising appropriate method as per the nature and facts of each case and no uniform methodology could be prescribed for determination of the quantum of benefit to be passed on. He has further stated that in Rule 126, the word used was 'determine' and not 'prescribe'. c. On the issue of the CGST Act, 2017 that it does not contemplate levy of penalties: The DGAP has submitted that this issue pertained to the proposal of the Authority to impose penalty on the Respondent which was the exclusive domain of the Authority and he being the investigative arm could not file any Report on the same. d. On the issue that the NAA had travelled beyond its scope of investigation: The DGAP has claimed that this issue did not pertain to him hence, no Report was being filed. 41. The DGAP after examination of the documents submitted by the Respondent during the hearing held on 05.11.2018, has stated that a notice was issued to the Respondent on 04.12.2018 asking him to furnish details of the home buyers along with the area sold and in response, the Respondent had submitted further documents on 11.12.201....
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.... S. No. Particulars Pre-GST Post- GST 1 Period A April, 2016 to June,2017 July,2017 to June, 2018 2 Output tax rate (%) B 5.50% 12.00% 3 Ratio of CENVAT/ Input Tax Credit to Taxable Turnover as per Table - A above (%) C 2.21% 4.00% 4 Increase in tax rate post-GST (%) D =12% less 5.50% - 6.50% 5 Increase in input tax credit availed post-GST (%) E= 4.00% less 2.21% - 1.79% 6 Analysis of Increase in input tax credit: 7 Base Price raised during July, 2017 to June, 2018 (Other Than Cancelled Units) F 44,37,82,127 8 Other than Base Price raised during July, 2017 to June 2018 G 5,72,78,156 9 Total Taxable Value raised during July, 2017 to June, 2018 H=F+G 50,10,60,283 10 GST Collected 12% over Basic Price I=F*12% 5,32,53,855 11 GST Collected@ 18% over other than Basic Price J=G*18% 1,03,10,068 12 Total GST Collected K=I+J 6,35,63,923 13 Total Demand collected L=H+K 56,46,24,206 14 Recalibrated Basic Price M= F....
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....ect of these 148 units should be calculated when the consideration had been received post-GST by taking into account the proportionate taxable turnover in respect of these 148 Units. He has also intimated that in view of the details of outward supplies of the construction service furnished by the Respondent, it was found that the service was supplied in the State of Haryana only. The DGAP has further mentioned that the Respondent vide Annexure-2A attached to his submissions dated 05.11.2018 had submitted before the Authority that he had passed on the benefit of Rs. 1,97,77,419/- to the 303 flat buyers including the units under cancellation and accordingly, a summary of the category wise profiteering & the benefit passed on has been furnished by him in the Table-'G' given below:- Table-"G" (Amount in Rs.) S. No. Category of Customers No. of Units Area (in Sqf) Amount Received Post GST Profiteering Amt. as per Annex-22 Benefit claimed to have been Passed on by Respondent Difference Remark A B C D E F G H=F-G I 1 Applicant 1 1,940 24,38,844 49,169 53,994 (4,825) Excess Benefit passed on. ....
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....9/- from the Applicant No. 1 which included both the profiteered amount @1.79% of the taxable amount (base price) and the GST on the said profiteered amount, however, the Respondent has claimed to have passed on Rs. 53,994/- during the hearings therefore, the Respondent has passed on excess amount of Rs. 4,825/- (53,994/- (-) 49,169/-) which might be adjusted against the future demands from the above Applicant. He has also claimed that the investigation had revealed that the Respondent had realized an additional amount of Rs. 15,90,239/- which included both the profiteered amount @1.79% of the taxable amount (base price) and the GST on the said profiteered amount from 92 other recipients who were not Applicants in the present proceedings and since they were identifiable as per the documents furnished by him therefore, this additional amount of Rs. 15,90,239/- was required to be returned to such eligible buyers. 46. The revised Report filed by the DGAP was considered by the Authority and it was decided that the Applicants and the Respondent be asked to appear before the Authority on 15.01.2019. Since, the Respondent had asked for adjournment of the hearing scheduled on 15.01.2019....
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....e allowed to adjust the same against the amount which was payable by the Respondent. 47. The Authority, during the hearing held on 21.01.2019, had directed the Respondent to submit the details of the instalments received by him from the buyers from 01.07.2018 to 31.12.2018 and the ITC benefit passed on by him to them on these instalments. He was also asked to submit compliance of Section 171 of the CGST Act, 2017 in case of his other on going projects and Occupation/Completion Certificates in case of the completed projects as he had himself admitted during the course of the hearings that he was executing other projects also and had taken suo moto initiative to pass on the benefit of additional ITC which he had received on these projects. The Respondent, vide his submissions dated 04.02.2019 has submitted the following points and documents:- a. Detail of instalments received post GST till 31st Dec 2019 as per Annexure-A b. OCs of the completed projects as per Annexure-B c. The Respondent has further submitted that he had not sold any unit under the Project Anand Vilas after 30th June, 2018. 48. The submissions of the Respondent were forwarded to the ....
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....port on 27th August, 2018 which included the unsold area and the Revised Report on 28^th Dec., 2018 which excluded the unsold area and he had already passed on the ITC benefit to all the buyers on the basis of the area sold while the DGAP, vide his revised Report dated 28th Dec., 2018, had adopted different methodology and computed amount of profiteering by excluding the unsold area as compared to the original Report dated 27th August, 2018. He has further submitted that in view of this matter may be concluded. 51. We have carefully considered all the Reports filed by the DGAP, submissions of the Respondent and the other material placed on record and find that the Applicant No. 1 had booked Flat No. T4-2B on 09.05.2017 with the Respondent in his Anand Vilas Project located in Sector 81, Faridabad, Haryana for total consideration of Rs. 85,87,410/- as per the details furnished by the DGAP in Table A of his Report. It is also revealed from the record that the above Applicant vide his complaint dated 22.01.2018 had alleged that the Respondent was not passing on the benefit of ITC to him inspite of his request made through email dated 28.08.2017 although he had completed 60% of the ....
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.... which it was alleged that the Respondent had not passed on the benefit of ITC to him, on being satisfied with the clarification given by him on the issue of benefit of additional ITC and hence the investigation conducted against him should have been dropped. However, this contention of the Respondent is not acceptable as there is no provision in the above Act or the Rules framed under it to withdraw the complaint once it has been made by following the prescribed procedure and despite withdrawal the offence of profiteering remains and therefore, the DGAP has rightly persued the investigation. Moreover, once violation of the provisions of Section 171 (1) of the above Act had come to the notice of the DGAP he was legally bound to ascertain the truth of the allegation after conducting detailed investigation as per the provisions of Rule 129 (1) of the CGST Rules, 2017 as it not only adversely affects the interests of the common buyers but also amounts to wrongful appropration of the concession which has been granted by the Central as well as the State Government by sacrificing their own revenue and hence no illegality has been committed by him by launching the present investigation ag....
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....e details of which have also been furnished by him through his subsequent submissions. 55. The Respondent has also pleaded that as per entry 5 (b) of 'Schedule II' and 'Schedule III' of the CGST Act, 2017 where a building/flat is sold after issuance of the OC the ITC availed on it was required to be reversed and since he had sold only 58% of the total saleable area he would have to reverse ITC in respect of the balance 42% area and he also could not increase the prices of the flats as per the RERA guidelines and hence the exact benefit of ITC could not be determined at this stage. However, the above argument of the Respondent is not correct as the benefit was required to passed on only to those buyers who had paid the instalments after coming into force of the GST and on the sold area only as the unsold area was not to be taken into consideration while computing the benefit. 56. The Respondent has also claimed that the Real Estate Sector had long gestation period and the rates of tax were being changed frequently due to which the benefit of ITC could not be calculated periodically. However, the claim of the Respondent can not be accepted as the buyers can not ....
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....supply by commensurate reduction in the prices. Since the Respondent is a person duly registered under the above Act he is legally liable to pass on the benefit and he cannot deny the same on the ground that he had not received the benefit from his suppliers. The Respondent can always claim the benefit from his suppliers if he thinks that it is due to him by following the legal options but he cannot contend that he would not pass on the benefit to his recipients on this ground and hence his claim is ultra vires of the above Section. 59. The Respondent has also stated that no penalty should be imposed on him as he had voluntarily passed on the benefit which had accrued to him to his customers subject to the modification/recalculation at the time of completion of the project. He has further stated that no malafide intention had been established on his part and he had discharged his obligation as per the provisions of Section 171 (1) of the CGST Act and hence penalty was not attracted in his case. However it is apparent from the record that the Respondent had not released the benefit for a period of about one year and tried to avoid its release on various grounds viz. that it would....
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....o ensure that the rate rationalization benefit was passed on to the society and only cases of mass impact were to be investigated. He has further contended that the CGST Act, 2017 did not provide for imposition of penalty under Section 122-127 read with Rule 133 of the CGST Rules. He has further pleaded that since there was no corresponding provision in the Act to impose penalty for contravention of Section 171, no penalty could be imposed as it was well settled that a penalty has to be prescribed in the main statute/Act itself and therefore, imposition of penalty would amount to excessive delegation. The Respondent has also submitted that the Show Cause Notice issued to him on 29.08.2018 has merely mentioned the provisions of Section 122-127 of the CGST Act and Rule 133 of the CGST Rules, without specifying the exact allegations against him and the above Sections were not attracted in his case except for Section 125 which was general in nature. Perusal of the notice dated 29.08.2018 issued to the Respondent shows that he has been intimated that it was proposed to impose penalty under Section 122127 of the CGST Act, 2017 read with Rule 133 of the CGST Rules, 2017 and also to cancel....
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....e allegation made by the Respondent in this regard is false and cannot be accepted. 64. It is also apparent from the record that the DGAP has submitted revised investigation Report dated 28.12.2018, in which he has stated that after taking in to account the revised details of the area sold by the Respondent, the ITC availed and the Respondent's taxable turnover during the period from April, 2016 to June, 2017 (i.e. pre-GST) and during the period from July, 2017 to June, 2018 (i.e. post-GST), the ratio of CENVAT/ITC to the taxable turnover, pre-GST was 2.21% and during the post-GST period, it was 4.00% which shows that post-GST, the Respondent has benefited from the additional ITC to the tune of 1.79% [4.00% (-) 2.21%] of the taxable turnover which was required to be passed on to the buyers by the Respondent. It would be appropriate to mention here that vide his Report dated 27.08.2018 the pre-GST ratio had been computed as 6.19% and the post-GST ratio had been shown as 13.70% as per Table C mentioned above and the Respondent was held to have availed additional ITC to the tune of 6.79%. The revised ratio calculated by the DGAP has not been challenged by the Respondent, moreov....
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....count the proportionate taxable turnover in respect of these 148 Units. It is observed from the documents placed on record as well as the above submissions of the DGAP that there are total 512 flats out of which 209 flats have remained unsold and 303 flats have been sold by the Respondent. Out of the above 303 flat buyers the Respondent has received consideration post GST, only from 155 flat buyers. Therefore the ITC benefit is required to be passed on to the 155 buyers only at this stage and benefit should be passed on to the other buyers at a later stage when demands would be raised against them and payments received. 67. The DGAP has further mentioned that the Respondent vide Annexure- 2A attached to his submissions dated 05.11.2018 had submitted before the Authority that he had passed on the benefit of Rs. 1,97,77,419/- to the 303 flat buyers including the units under cancellation. The DGAP has also stated that the benefit claimed to have been passed on by the Respondent was less than what he should have passed on in respect of 92 cases (Sr. 2 of the Table G mentioned in para supra) amounting to Rs. 15,90,239/- (Annexure-24 of the Report) and the benefit claimed to have been....
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.... supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices." 70. It is established from the perusal of the above facts of the case that the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has profiteered an amount of Rs. 1,01,06,773/- inclusive of CST @12% or 18% on the base profiteered amount of Rs. 89,68,979/-. The Respondent has also realized an additional amount to the tune of Rs. 49,169/- from the Applicant No. 1 which includes both the profiteered amount @1.79% of the taxable amount (base price) and GST on the said profiteered amount. The Respondent has also realized an additional amount of Rs. 15,90,239/- which includes both the profiteered amount @1.79% of the taxable amount (base price) and GST on the said profiteered amount from 92 other flat buyers who were not Applicants in the present proceedings as per Annexure-24 of the Report. These buyers are identifiable as per the documents placed on record and therefore, the Respondent is directed to pass on this amount of Rs. 15,90,239/- along with interest @18% per annum to these 92 flat buyers f....