TaxTMI 
TaxTMI 
2019 (5) TMI 1366
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....Applicant No. 1 had stated that the Respondent had resorted to profiteering in respect of supply of construction service related to purchase of Apartment No. 041305, Tower-04, 13th Floor, in the project "Shriram Chirping Woods", Kasavanahalli Village, Varthur Hobli, Bangalore East Taluk, Bangalore. The Applicant No. 1 had also alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) by way of commensurate reduction in the price of the apartment purchased by him, on implementation of GST w.e.f. 01.07.2017. 2. The Standing Committee on Anti-profiteering vide the minutes of its meeting held on 07.08.2018 & 08.08.2018 had referred the application to the DGAP for investigation under Rule 129 (1) of the CGST Rules, 2017 to determine whether the benefits of reduction in the rate of tax or ITC had been passed on by the Respondent to his recipients. 3. Meanwhile, the Karnataka State Screening Committee on Antiprofiteering received 3 more applications on 27.07.2018, 01.07.2018 and 05.10.2018 respectively. The Applicant No. 2 had purchased Flat No. 020904, Applicant No. 3 had purchased Flat No. 011503 and Applicant No. 4 had purchased Flat No. 041806 in the ab....
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..../loss account) for the period 2016-17 & 2017-18, copy of Electronic Credit Ledger for the period July, 2017 to August, 2018, CENVAT/ITC register for the period April, 2016 to June, 2017, details of turnover, output tax liability, GST payable and ITC availed, copy of Project report submitted to RERA and the entire list of home buyers in the above said project. The Respondent had also submitted that except Financial Statements for the year 2016-17 & 201718, all other details/ information were to be treated as confidential in terms of Rule 130 of the CGST Rules, 2017. 7. The DGAP in his Report has stated that the Respondent vide letter dated 09.10.2018, had submitted a copy of the agreement to sell dated 16.03.2016, agreement to build and demand letters for the sale of Flat No. 041305, to the Applicant No. 1, measuring 1,634 square feet, at the basic sale price of Rs. 5, 168/- per square feet. The details of amounts and taxes paid by the 1st Applicant to the Respondent are given in the Table A given below:- Table-'A' (Amount in Rs.) S.No. Payment Stages Due Date Basic Selling Price Other Charges 6% Service Taxon Construction 10.15% VAT on Construction ....
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.... has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier". Based on this the report stated that the ITC pertaining to the residential units which were under construction but not sold was provisional ITC which may be required to be reversed by the Respondent if such units remain unsold at the time of issue of completion certificate, in terms of Section 17(2) & Section 17(3) of the CGST Act, 2017, which read as under: Section 17 (2) "Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies" Section 17 (3) "The value of exempt supply under sub-section (2) shall be such as may be prescribed, and shall include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of ....
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....7 Saleable Area relevant to turnover (in sq. ft.) (G) 6,77,325 9,13,885 8 Relevant CENVAT/INPUT TAX CREDIT (H) = D*G/F 6,70,69,930 12,95,68,695 9 Ratio of Input Tax Credit Post-GST [(I)=(H)/(E)] 7.56% 7.09% 10. The DGAP has also claimed that from the Table-'B' above, the ITC as a percentage of the turnover available to the Respondent during the pre-GST period (April, 2016 to June, 2017) was 7.56% and during the post-GST period (July, 2017 to August, 2018), it was 7.09%, which showed that the Respondent had not benefited from any additional ITC. The Report further claimed that the Respondent post introduction of GST had availed lesser ITC to the extent of 0.47% [7.56% (-) 7.09%] of the turnover, as compared to the pre-GST period. 11. The DGAP has also claimed that the Central Government, on the recommendation of the GST Council, had levied 18% GST (effective rate 12% in view of 1/3rd abatement on value of land) on construction service vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (Annex-24). The Report has stated that the allegation of profiteering was not established against the Respondent from the rate of tax angle, ....