TaxTMI 
TaxTMI 
2019 (6) TMI 763
X X X X Extracts X X X X
X X X X Extracts X X X X
....off Tumkur road, Bangalore and alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) by way of commensurate reduction in the price, on introduction of GST w.e.f. 01.07.2017. The Karnataka State Screening Committee on Anti-profiteering on prima facie having satisfied itself that the Respondent had not passed on the benefit of ITC forwarded the said application with its recommendation, to the Standing Committee on Anti-profiteering on 04.07.2018 for further action, in terms of Rule 128 of the Rules. 2. The above reference was examined by the Standing Committee on Anti-profiteering and vide its minutes dated 08.08.2018 it had forwarded the same to the DGAP for detailed investigation. The application was forwarded to the DGAP along with the payment details as is given in the Table A below:- Table-A (Amount in Rs.) Particulars Basic Sale Price Other Charges Service Tax VAT GST Total Land Other than Land Agreement Value (A) 14,83,750 26,70,200 4,55,182 1.41,285 1,06,808 - 48,57,225 Paid in Pre-GST era (B) 12,61,188 22,69,670 - 1,23,732 90,786 - 37,45,376 Balance to be paid Po....
X X X X Extracts X X X X
X X X X Extracts X X X X
....de by the above Applicant along with the taxes are shown in the Table B below:- Table -B (Amount in Rs.) Sl.No. Payment Stages Due Date Basic Other Charges VAT Service Tax GST Total Land Other than Land 1 At the time of Booking 10.12.2014 1,30,000 66,702 - - 3,298 - 2,00,000 2 EMD 31.12.2014 1,66,750 4,67,338 - - 23,105 - 6,57,193 3 On or before completion of Basement Roof 11.05.2015 1,33,538 2,40,318 - - 11,881 - 3,85,737 4 On or before completion of 2^nd floor Roof 17.09.2015 1,18,700 2,13,616 - - 11 ,963 - 3,44,279 5 On or before completion of 4nd floor Roof 23.10.2015 1,18,700 2,13,616 - - 11 ,963 - 3,44,279 6 On or before completion of 6^nd floor Roof 22.11.2015 1,18,700 2,13,616 - - 11 ,963 - 3,44,279 7 On or before completion of 8nd^ floor Roof 19.12.2015 1,18,700 2,13,616 - - 12,390 - 3,44 706 8 On or before completion of 10^nd floor Roof 21.01.2016 1,18,700 2,13,616 - - 12,390 - 3,44 706 9 On ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s share. 7. The DGAP in his report submitted that the Respondent prior to 01.07.2017 was eligible to avail Cenvat credit of Service Tax paid on input services and deduction of the payment made to the registered contractors and sub-contractors on which VAT @4% was being levied and he was not eligible for the benefit of Cenvat credit on Central Excise Duty paid on inputs. During the post GST period the Respondent was eligible to avail ITC benefit of GST paid on all the inputs and input service including the GST levied on the sub-contractors. Accordingly based on the documents submitted by the Respondent for the period April 2016 to August 2018 the ITC ratio to the total turnover for the project 'Laurel Heights' for the pre GST period (April 2016 to June 2017) and post GST period (July 2017 to August 2017) was arrived at by the DGAP. The report stated that the ITC ratio to the turnover during the pre GST period was 5.13% as compared to 7.79% during the post GST period as is given in the Table D below:- Table -D (Amount in Rs.) Sl. No. Particulars April, 2016 to March, 2017 April, 2017 to June, 2017 Total (Pre-GST) Balance Base price to be Collected as on 3....
X X X X Extracts X X X X
X X X X Extracts X X X X
....efore receiving Completion Certificate) F 5,42,20,048 8 Turnover reported for JDAs during 01.07.2017 to 07.03.2018 (before receiving OC) G 5,93,95,00 9 Total Turnover Post-GST H=E+F+G 32,98,01,668 10 GST @12% over Base Price (Customers) I=(E+F)*12% 3,24,48,800 11 GST @18% over Base Price (JDAs) J=(G*18%) 1,06,91,100 12 Total GST K=I+J 4,31,39,900 13 Total Demand L=H+K 37,29,41,568 14 Re-calibrated Base Price (Customers) M=(E+F)*(1-D) or 97.34% of (E+F) 26,32,13,851 15 GST @12% N=M*12% 3,15,85,662 16 Re-calibrated Base Price(JDAs) O= G*(1-D) or 97.34% of G 5,78,15,093 17 GST @18% P=O*18% 1,04,06,717 18 Commensurate demand price Q=M+N+O+P 36,30,21,323 19 Excess Collection of Demand or Profiteering Amount R=L-Q 99,20,246 9. The DGAP in his report vide Annexure-16 has enclosed the details of 232 units with individual profiteered amounts and the total profiteered am....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aleable area 4,83,055 sq. ft.) under the Joint Developer Agreement where he enjoyed 70.81% share and the land owner enjoyed 29.19% share. He has also stated that 73% of the project was complete and 84% of the total units were sold. He had obtained completion certificate on 07.03.2018. 13 The Respondent has also submitted that the major and substantial portion of work was executed through registered subcontractors and hence the direct purchase of goods and services was done by these sub-contractors, though at times he had made direct purchases of certain materials. Based on his estimated cost of the project the following details were provided:- Cost of the Project (Amount in crores) Particulars Rs. In crores % Incurred upto 30.06.2017 Incurred after 01.07.2017 Overall project cost 109.86 72 98 36.88 Composition Sub-contractors 65.84 60% 41.12 24.72 Direct purchase of materials 30.80 28% 25.28 5.52 Services 5.72 5% 3.11 2 61 Statutory approvals 4.05 4% 3.18 0.87 Admin. cost 3.45 3% 0.29 3.16 Based on the above data the Res....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lso stated that out of a total saleable area of 4,83,055 sq. ft. of the project in the year 2014-15 only 1,56,762 sq. ft., in the year 2015-16 61,474 sq. ft., in the year 2016-17 29,590 sq. ft. and in the year 2017-18 (till 07.03.2018) only 16 899 sq ft. was sold. Based on this data he has claimed that the total turnover, taxable turnover and corresponding output tax was lower and could not be compared to the ITC on year-on-year basis. He has also claimed that after obtaining the occupancy certificate any flat sold will not be liable to GST and hence he would have to reverse the ITC availed against such unsold flats. He has further claimed that any contract for sale of residential flats consisted of undivided share in land and sale of constructed portion, while the land was immovable only the constructed portion was liable to tax. He has further stated that amounts received from the buyers were towards land and construction but the taxable turnover took into account only the construction value. Based on the above reasons the Respondent has claimed that the methodology adopted in the case of Pyramid Infratech Pvt. Ltd. or in his case was incorrect and should not be adopted. However ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... account the estimated reversals on the unsold flats and accordingly arrived at the profiteered amount. Therefore the above contention of the Respondent is irrelevant and cannot be accepted. 18. The second contention of the Respondent is that in the case of Pyramid Infratech Pvt. Ltd. decided by this Authority, the Hon'ble High Court of Delhi while granting stay has observed that the methodology to calculate the quantum of anti-profiteering needed more detailed and further examination. The above submission made by the Respondent is absolutely incorrect. The Hon'ble High Court of Delhi in the W.P. (C) No. 10999/2018 dated 20.11.2018 = 2019 (3) TMI 149 - DELHI HIGH COURT has stated that: "Be that as it may, as an interim arrangement, we direct the petitioner to deposit Rs. 5,11,60,450/- with the respondent authorities within 3 weeks from today. On the deposit being made, the same would be converted into an interest bearing FDR for a period of nine months. The FDR amount and the interest accrued thereon would abide by further orders of this court. It is made clear that this is only an interim arrangement and the court has not expressed any firm and final view". Ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as also to pass on the benefit of profiteered amount of Rs. 18,64,290/to the land owner who will in turn pass on the benefit to his buyers. 21. In view of the above facts this Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him as has been detailed above. The Authority hereby determines the profiteered amount as Rs. 99,20,246/- and directs the Respondent to pass on the benefit of Rs. 18,563/- to the above Applicant, Rs. 80,37,392/- to the 231 buyers as given in the Annexure-16 of the DGAP report and Rs. 18,64,290/- to the land owner, along with interest @18% per annum to these 232 flat buyers from the dates from which the above amount was collected by him from the buyers till the payment is made. 22. It is also evident from the above narration of facts that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his Project 'Laurel Heights' in contravention of the provisions of Section 171 (1)(i) of the CGST Act, 2017 and has thus realized more price from them than what he was entitled ....