TaxTMI 
TaxTMI 
2019 (10) TMI 197
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....he brief facts of the case are that vide his application dated 30.05.2018 (Annexure-I of the Report) submitted to the Maharastra Screening Committee on Anti-profiteering under Rule 128 (2) of the CGST Rules, 2017, the Applicant No. 1 had alleged profiteering by the Respondents while he had purchased Flat No. 704, Building-2, Lodha Eternis, Andheri East, Mumbai, in "Lodha Eternis" project launched by the Respondents. The above Applicant had also alleged that the Respondents had not passed on the benefit of Input Tax Credit (ITC) although they had charged GST @ 12% w.e.f. 01.07.2017 from him. The Maharashtra State Screening Committee had examined the above application and after its prima facie satisfaction that the Respondents had violated the provisions of Section 171 of the CGST Act, 2017, had sent the same with its recommendations for necessary action to the Standing Committee on Anti-profiteering on 13.07.2018 as per the provisions of Rule 128 of the CGST Rules, 2017. This application was duly considered by the Standing Committee on Anti-profiteering in its meetings held on 07.08.2018 & 08.08.2018 and was referred to the DGAP for conducting detailed investigation on the allegatio....
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.... stated that all the transactions, subsequent to the above assignment in respect of Lodha Eternis residential project, were to be maintained in the books of account of the Respondent No. 1 and therefore, he was also made a co-noticee vide Notice F.No.22011/API/80/2018 dated 24.10.2018 issued by the DGAP. The Applicant No. 1 was also afforded an opportunity of inspecting the evidence produced by the Respondents between 19.11.2018 to 20.11.2018 however, he had requested vide his email dated 14.11.2018 to send him the copies of the evidence by post which were accordingly sent to him by the DGAP. The DGAP has also submitted that the present investigation has been conducted from 01.07.2017 to 31.08.2018 and the period for completing the investigation was upto 29.11.2018 as per the provisions of Rule 129 (6) of the CGST Rules, 2017. 5. The DGAP has also intimated that the Respondent No. 2 had filed replies to the Notice vide their letters dated 18.09.2018, 26.09.2018, 12.10.2018, 22.10.2018, 23.10.2018, 24.10.2018, 01.11.2018, 06.11.2018 and 12.11.2018. The contents of the replies given by the above Respondent have been given in brief by the DGAP as under:- I. That the Respon....
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....of GST benefit as Rs. 196/- per sq. ft., vide his possession demand letter dated 18.08.2018 to the above Applicant. II. That the benefit of ITC due to reduction in the cost incurred post 01.07.2017 as a result of elimination of taxes like VAT/Excise Duty/CVD & SAD applicable on the materials on which the Respondent No. 1 was not entitled to take credit during the erstwhile regime, worked out as Rs. 170/- per sq. ft. in building No. 2 and Rs. 196/- per sq. ft. in the "Lodha Eternis" Project, whereas the Respondent No. 1 had already given the benefit to the applicant by way of reduction in price @ Rs. 196/per sq. ft. amounting to Rs. 1,90,316 & Rs. 23,273/- on account of excess Maharashtra VAT (MVAT) paid @1% on total agreement value at the time of agreement registration. III. That the above benefit of Rs. 170/- per sq. ft. & Rs. 196/- per sq. ft. had been calculated without considering the reversal of the credit on account of credit attributable to unsold units post receipt of occupancy certificate. IV. That the GST benefit of Rs. 196/- per sq. ft. included transition credit of Rs. 48,74,677/- of which Rs. 36,70,830/- pertained to the goods lying in stock ....
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.... 7. On initiation of RCC work for level 2 27.09.2016 12,63,106 - 56,840 - - 13,19,946 8. On initiation of RCC work for level 3 14.10.2016 12,63,106 - 56,840 - - 13,19,946 9. On initiation of RCC work for level 4 28.10.2016 25,26,212 - 1,13,680 - - 26,39,892 10. On initiation of RCC work for level 5 11.11.2016 18,94,660 - 85,260 - - 19,79,920 11. On initiation of RCC work for level 6 24.11.2016 18,94,660 - 85,260 - - 19,79,920 12. On initiation of RCC work for level 7 07.12.2016 18,94,660 - 85,260 - - 19,79,920 13. On initiation of RCC work for level 8 16.12.2016 18,94,660 - 85,260 - - 19,79,920 14. On initiation of facade work external 14.02.2017 12,63,106 - 56,840 - - 13,19,946 15. Final Possession Demand Letter 18.08.2018/13.09.2018 12,63,106 - 56.840 - - 13,19,946 16. Amount yet to be Demanded - 25,263 - - 3,032 - 28,295 Total 2,52,62,127 12,71 ,629 10,37,112 2,91,433 1,90,316 2,76,71,985 10.....
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....bound to complete the investigation in case of any reference having been received from the Standing Committee on Anti-profiteering and hence withdrawal of an application could legally not be a valid reason for closing the investigation. 13. The DGAP has also stated that the Respondents had submitted that the on-going business of Lodha Eternis residential project was demerged into M/s. Lodha Developers Ltd. w.e.f. 20.02.2018 (Respondent No. 1), vide National Company Law Tribunal order dated 02.02.2018. It was also submitted that all the transactions, subsequent to demerger, in respect of Lodha Eternis residential project would be accounted for and recorded in the books of M/s. Lodha Developers Ltd. and hence the Respondent No 1 had legal obligation to pass on any benefit in respect of the units sold by him to the buyers of the project Lodha Eternis. It was further submitted by the DGAP that prior to 01.07.2017 i.e. in the Pre-GST era, the Respondents were eligible to avail CENVAT credit of Service Tax paid on input services only and no credit was available in respect of the Central Excise Duty paid on the inputs, of VAT paid on inputs and of VAT (WCT) paid to the subcontractors. ....
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....le during the Pre-GST period (April, 2016 to June, 2017) when Service Tax @4.5% and VAT@ 1% was payable (total tax rate of 5.5%) with the Post-GST period (July, 2017 to August, 2018) when the effective GST rate was 12% (GST @18% alongwith 1/3rd abatement on value) on construction service, fixed vide Notification No. 11/2017-Central Tax (Rate), dated 28.06.2017. On the basis of the figures contained in the above table, the comparative figures of ITC availed/available during the pre-GST period and post-GST period and the profiteered amount/excess collection have been furnished by the DGAP as under:- Table- "D" (Amount in Rs.) S.No. Particulars Pre-GST Post- GST 1 Period A April, 2016 to June, 2017 July, 2017 to August, 2018 2 Output tax rate (%) B 5.50% 12.00% 3 Ratio of CENVAT/ Input Tax Credit to Taxable Turnover as per Table - D above (%) C 1.57% 7.32% 4 Increase in tax rate post-GST (%) D=12% less 4.75% - 6.50% 5 Increase in input tax credit availed post-GST (%) E=7.32% less 1.57% - 5.75% 6 Analysis of Increase in input tax credit: 7 Base Price co....
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....d to Rs. 81,364/-, however, the Respondents had already passed on the benefit of Rs. 1,90,316/-, vide their possession demand letters dated 18.08.2018 & 13.09.2018 to him but the excess amount passed on by the Respondents to the above Applicant could not be adjusted against the profiteered amount to be passed on to other customers. It was also submitted by the DGAP that the Respondent had supplied the construction services in the State of Maharashtra only. 17. The above Report was considered by the Authority in its sitting held on 11.12.2018 and it was decided that the Applicants and the Respondents be asked to appear on 26.12.2018. Since, the Respondents had asked for adjournment of the hearing scheduled on 26.12.2018, it was decided to grant next hearing on 10.01.2019. During the course of the hearing the Applicant No. 1 did not appear, the DGAP was represented by Sh. R. A. Rajneesh, Assistant Commissioner and the Respondents were represented by Sh. Mangal Prabhat Lodha, Authorised Representative, Sh. Rakesh Gupta, Sr. Vice President (Taxation), Sh. Timish Salot, Vice President (Taxation), Sh. Surendra S Gupta, Consultant, Sh. Santosh Thapliyal, Authorised Representative and S....
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....ame period as the construction took place gradually. The builder could raise the demand only when milestone was achieved but ITC would accrue to him continuously. The Respondents have also added that the milestone-based payment schedule was the general policy adopted by them due to which the demand for recovery of the instalments based on the milestones could only be raised for premises which had been sold, although the expenses were incurred on the entire project. Therefore, if the proportion of the premises sold was lesser than the total area to be constructed, the utilization of the credit would be higher and distorted. b) That there could be a number of other factors which affected the computation of the ITC benefit like the credit and the taxable value did not synchronize in the same month or same period, increase in the ITC due to increase in the rate of tax chargeable to the services, recovery of maintenance charges and increase in the credit on account of increase in the cost of construction due to increase in the tax rates imposed in the GST period which might lead to the distorted figures of additional ITC. 21. The Respondents have also claimed that the credit....
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....han the pre-GST regime and hence, impact of the additional ITC @3% for services should have been considered by the DGAP. The Respondents have further averred that due to the increase in the rate of tax on services the additional ITC available to him for the period from July-2017 to August-2018 was, as follows, which had not resulted in additional benefit to them as they were already getting it in the pre-GST period:- Sr.No. Particular Amount (Rs.) 1 Taxable Value of Input Services (pure service contracts) A 3,99,33,848 2 ITC availed on these services (18%) B 71,86,071 3 Service Tax if leviable - 15% C=A*15% 59,90,077 4 Additional input tax credit D = (B-C) 11,95,994 24. The Respondents have also submitted that the DGAP had ignored the increase in the cost of construction during the Post-GST period due to which the ITC had also increased whereas the sale price had not increased. The Respondents have submitted the following data to support their argument to claim that there has been increase in the ITC but no increase in the turnover and hence the calculation made by the DGAP in Table-D of his Report was incorrect:- Sr. N....
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....ndents have further submitted that despite increase in the cost of construction, they had reduced the price of flats as the average selling price per sq. ft. during the period from April 2016 to June 2017 was Rs. 23,485/- whereas during the period from July 2017 to August 2018 it was Rs. 23,286/-. The Respondents have also claimed that reduction in the price itself demonstrated that they had already passed on the ITC benefit to all the new customers by commensurate reduction in the selling prices. 28. The Respondents have also stated that the turnover considered by the DGAP for the Post-GST era pertained only to the sale of flats made by the Respondents, however, the pre-GST turnover included income other than these sales also including the maintenance charges for which service had been provided in the earlier periods, cheque bounce charges and cancellation charges etc. The Respondents have further submitted that these incomes amounting to Rs. 21,02,761/- should not form part of the turnover considered for computing the profiteered amount. 29. The Respondents have also contended that the turnover considered by the DGAP in certain cases in the Pre-GST regime was more than the ....
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....6,23,743 50,15,381 Ratio 1.20% 0.77% 31. The Respondents have further submitted that the amount collected as GST should not be considered as a benefit to the Respondents as the excess collection had duly been deposited with the Government and the Respondents had not retained the same. The Respondents have further added that the term 'profiteering' was described in various dictionaries as follows:- • Black's Law Dictionary - Taking advantage of unusual or exceptional circumstances to make excessive profits • Law Lexicon - To seek or obtain excessive profits, one who is given to making excessive profits • Shorter Oxford English Dictionary - Make or seek to make an excessive profit • Mount v. Welsh - Any conduct or practice involving the acquisition of excessive profit • Islamic Academy of Education v. State of Karnataka - Profiteering would mean taking advantage of unusual or exceptional circumstances to make excessive profits They have submitted from the above definitions that only those amounts which had been collected and kept by the Respondents could be termed as "profiteering" and the amount of Rs....
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....fication No. 11/2017-CT (Rate) dated 28.06.2017. Therefore, in order to make the rates in the Pre and Post GST period comparable, the rate of tax in the Pre-GST period needed to be determined on the same basis i.e. after permitting abatement of 33% from the total value. The abatement of 70% from the total value was permitted under Notification No. 26/2012-ST dated 20.6.2012, thus, tax at the rate of 15% was payable on 30% of the total value and therefore, Service Tax of Rs. 4.5 (15% on Rs. 30) was payable on Rs. 100/- which included value of land. If the value of land was excluded the rate of Service Tax would be 6.72%. (4.5/67 x 100). They have also stated that the rate of VAT was 1% in Maharashtra, therefore, to determine the rate of VAT after abatement of 33% (by reducing value of land) from the total value the VAT rate would be 1.49% [1/67 x 100]. Thus, the total rate of tax on construction service in the pre-GST regime based on the principle laid in the GST regime was 8.21% (6.72% + 1.49%) and hence, the increase in the rate of tax on comparing the same with the GST regime was 9.79% (18-8.21). 33. The Respondents have also submitted that the increase in the rate of tax on t....
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....ever, the DGAP had not correctly computed the same as he had not considered the VAT paid by the Respondents by charging the said amount to the above Applicant. The DGAP had also failed to mention the Service Tax amount to be borne by the above Applicant on the "Other Charges". They have also claimed that the amount of GST to be paid as had been mentioned by the DGAP in Table-A was also incorrect. The Respondents have submitted the revised Table-A as under:- Particulars BSP Other Charges Service Tax VAT GST Total Agreement Value (A) 2,52,62,127 12,71,629 12,50,343 2,63,158 - 2,80,47,257 Paid in Pre-GST era (B) 2,39,73,758 - 10,37,112 2,63,158 - 2,52,74,028 Balance to be paid Post GST (C) = (A) - (B) 12,88,369 12,71,629 2,13,231 - - 27,73,229 Amount demanded by Respondents during 01.07.2017 to 31.08.2018 (0) 12,63,107 - - - 1,51,573 14,14,680 Amount to be demanded by Respondents (E) = (C-D) 25,263 12,71,629 - - 1,60,088 14,56,980 Total Amount demanded by Respondents post GST (F) = (D+E) 12,88,370 12,71,629 - - 3,11,661 28,71,660 The Res....
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....n Report dated 22.01.2019, the brief facts of which are as follows:- a. On the issue of incorrect method adopted to quantify the demand: The DGAP has submitted that the Respondents had argued that the total area sold by them upto August, 2018 was 1,56,002 Sq. ft. but during the period from 01.07.2017 to 31.08.2018 (period under investigation Post-GST), they had raised demands only in respect of 88,100 Sq. ft. area (92 home buyers) and no demand letter was issued to the other buyers of area totalling 67,902 Sq. ft. (74 home buyers), which was also evident from the home buyer's list submitted by them. b. On the Issue of the turnover having no relevance to CENVAT Credit during the period should not be considered: The DGAP has stated that the Respondents have submitted that other charges collected in the Pre-GST period towards cancellation of flat bookings and other miscellaneous services should not be considered during the computation of turnover for the Pre-GST period as it had no relevance with the ITC. The reconciliation of the same was submitted by the Respondents on 11.01.2019. c. On the issue of the Turnover considered by DGAP in the Pre-GST regime is ....
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....1,19,364.00 - 88,100.00 8. Relevant CENVAT/Input Tax Credit (H)=[(C)*(G)/(F)] or [D)*(G)/F)] 2,83,54,883 - 2,67,70,349 9. Ratio of CENVAT/Input Tax Credit to Taxable Turnover [(I)=(H)/(E)] 1.51% - 4.13% 40. The DGAP has also stated that the ITC as a percentage of the total turnover that was available to the Respondents during the Pre-GST period (April, 2016 to June, 2017) was 1.51% and during the Post-GST period (July, 2017 to August, 2018), it was 4.13% which clearly confirmed that Post-GST, the Respondents had benefited from additional ITC to the tune of 2.62% [4.13% (-) 1.51%] of the taxable turnover. On the basis of revised details of the comparative figures of ITC availed/available during the Pre-GST period and the post-GST period, the DGAP has computed the excess collection or the profiteered amount as under:- Table-F (Amount in Rs.) S. No. Particulars Pre-GST Post- GST 1. Period A April, 2016 to June, 2017 July, 2017 to August, 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 1.51% 4.13....
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.... mentioned that out of the 166 booked flats, 74 customers who had booked the flats till 31.08.2018 had not paid any consideration during the period from 01.07.2017 to 31.08.2018 (Post-GST period under investigation), therefore, if the ITC in respect of these 74 units was calculated in respect of the 92 units where payment had been received after GST, the ITC as a percentage of taxable turnover would be distorted and erroneous. Therefore, he has stated that the benefit of ITC in respect of these 74 units should be calculated when the consideration was received Post-GST by taking into account the proportionate taxable turnover in respect of these 74 Units. 44. The DGAP has further stated that on the basis of the details of outward supplies of the construction service submitted by the Respondents, it was clear that the service was supplied in the State of Maharashtra only. He has also added that the Respondents had submitted vide their letter dated 10.01.2019 that they had passed on the benefit of Rs. 3,06,25,327/- to 166 home buyers who had booked their flats upto 31.08.2018, the details of which were enclosed as Annex-19 to the Report dated 28.11.2018. A summary of category-wise ....
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.... but may be adjusted against the further demands from such home buyers. 46. The DGAP has also submitted that the additional ITC of 2.62% of the taxable turnover had accrued to the Respondents which was required to be passed on to the above Applicant and the other recipients. He has further submitted that the provisions of Section 171 of the CGST Act, 2017 had been contravened by the Respondents as the additional benefit of ITC @2.62% of the base price received by the Respondents during the period from 01.07.2017 to 31.08.2018, had not been passed on to the above Applicant and other recipients and the Respondents had realized an additional amount to the tune of Rs. 37,065/-, from the above Applicant which included both the profiteered amount @2.62% of the taxable amount (base price) and GST on the said profiteered amount. The DGAP has also claimed that the Respondent had passed on Rs. 1,90,316/- to the above Applicant, therefore, the Respondents had passed on excess amount of Rs. 1,53,251/- (Rs. 1,90,316/- (-) Rs. 37,065/-) which may be adjusted against the further demands from the applicant. The DGAP has further claimed that the investigation revealed that the Respondents had re....
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....as the Respondents had passed on more benefits to all the customers, they should not be asked to pay the amount to the customers on individual basis, to whom less benefit had been passed on. The Respondents have relied on the interpretation of the Hon'ble CESTAT given in the case of M/s. Schwing Stetter (India) Pvt. Ltd. v. 2016-TIOL-1895-CESTAT-MAD = 2016 (6) TMI 239 - CESTAT CHENNAI on the provisions of the Finance Act, 1994 in the pre-GST regime in respect of Rule 6(4A) of the Service Tax Rules, 1994, vide which an assessee was allowed to adjust excess amount paid by him against his service tax liability for the succeeding "month" or "quarter". The Department had disputed that the succeeding month or quarter meant immediately following the month or the quarter, however, the Appellate Tribunal based on the provisions of the General Clause Act, 1897 had interpreted that the term "month" has to be read as "months". The relevant extract of the said order has been quoted by the them as follows:- "4. Heard both sides and perused the records. The short issue to be decided is whether the appellant has short paid the service tax during the month of July, 2011 by wrongly adjustin....
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....ked to pass on the benefit of Rs. 1,00,18,637/- 49. During the hearing held on 11.02.2019, the Respondents were directed to submit the list of all the flat buyers to whom ITC benefit was passed on by the Respondents and copies of the credit notes and customer ledger accounts of some flat buyers on sample basis to prove their argument. The Respondents vide their submissions dated 20.02.2019 have submitted the details of the 92 buyers on whom demands were raised during the period between 01.07.2017 to 31.08.2018 as per Annexure-A and list of 74 customers on whom no demand was raised during the above period as per Annexure-B. During the hearing held on 25.02.2019, the Respondents have filed written submissions dated 25.02.2019 and also filed further written submissions on 18.03.2019. 50. The Respondents have submitted in their above submissions that the DGAP had not filed reply on the following objections raised by them: i. The increase in credit due to increase in rates of GST. ii. The increase in credit due to increase in cost of input material. iii. In the calculation, non-construction related turnover was also considered, which should be excluded. ....
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....have passed on to the Respondents by way of reduction in the prices of the materials, iii. On the issue of Consideration of Non-construction related turnover in the Pre-GST period:- The DGAP has stated that the turnover taken for computation of ITC percentage in the Pre-GST period had excluded non-construction related turnover. iv. On the issue of Increase in ITC due to increase in rate of GST chargeable on services:- The DGAP has stated that in the Report dated 28.11.2018, the ITC availed by the Respondents as a percentage of the Respondents total turnover, both in the Pre-GST and Post-GST periods, had been quantified and compared to determine whether there was any benefit of ITC. The input or input service wise availability of ITC, either prior or post implementation of GST, had not been examined by the DGAP. 53. The Respondents vide their submissions dated 09.04.2019 have stated that they had already supplied the required information and explanation regarding the Pre-GST and the Post-GST data/figures from time to time and the matter may be decided in view of their previous submissions. 54. We have carefully considered all the Reports filed by the DGAP, th....
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....d not be accepted and their liability for violating the provisions of Section 171 of the CGST Act, 2017 should not be fixed along with imposition of penalty as per Sections 122-127 of the above Act read with Rule 133 of the CGST Rules, 2017 and their registration under the above Act should also not be cancelled. 56. It is also apparent from the record that the DGAP has submitted revised investigation Report dated 22.01.2019 in which he has stated that after taking in to account the revised details of the area sold by the Respondents, the ITC availed and the Respondents taxable turnover during the period from April, 2016 to June, 2017 (i.e. Pre-GST) and during the period from July, 2017 to August, 2018 (i.e. Post-GST), the ratio of CENVAT/ITC to the taxable turnover, Pre-GST was 1.51% and during the Post-GST period, it was 4.13% which showed that PostGST, the Respondents have benefited from the additional ITC to the tune of 2.62% [4.13% (-) 1.51%] of the taxable turnover which was required to be passed on to the buyers by the Respondents. The revised ratio calculated by the DGAP has not been challenged by the Respondents, moreover the same is based on the information supplied by ....
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....2 flats out of which 46 flats have remained unsold and 166 flats have been sold by the Respondents. Out of the above 166 flat buyers the Respondents have received consideration Post-GST, only from 92 flat buyers. Therefore, the ITC benefit is required to be passed on to the 92 buyers only at this stage and benefit should be passed on to the other buyers at a later stage when payments are received from them. 59. The DGAP has further mentioned that the Respondents had passed on the benefit of Rs. 3,06,25,327/- to the 166 flat buyers (Table G supra). The DGAP has also stated that the benefit claimed to have been passed on by the Respondents was less than what they should have been passed on in respect of 31 cases (Sr. 2 of the Table G mentioned supra) amounting to Rs. 1,00,18,637/- (Annexure-20 of the revised Report) and the benefit claimed to have been passed on by the Respondents was higher (Annexure-21 of the revised Report) as compared to what they should have passed on in respect of the 60 recipients of the flats (Sr. 3 of Table G mentioned above) amounting to Rs. 87,06,360/-. He has further contended that the Respondents have also stated to have passed on the benefit amountin....
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....e not Applicants in the present proceedings and since they were identifiable as per the documents furnished by them therefore, an amount of Rs. 1,00,18,637/- required to be returned to such eligible buyers after deducting an amount of Rs. 60,20,130/- which had been paid by the above Respondents as discount to them. As already mentioned supra discount cannot be considered as the benefit of ITC and hence the above amount of Rs. 1,60,38,767/- is ordered to be returned to the above buyers with interest. Similarly an amount of Rs. 29,28,624/(Table G) profiteered by the Respondents from 60 house buyers is also required to be returned to them without deducting the amount which has been passed as discount. An amount of Rs. 1,29,33,148/(Table G) which has been claimed to have been passed on as benefit of ITC to 74 house buyers and which has been mentioned as discount by the Respondents in their submissions and the credit notes shall also not be considered as such benefit as it has been given by the above Respondents from their own profit margins and shall not be adjusted against the benefit of ITC which may accrue to them in future. 62. The Respondents have also contended that they were ....
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....ments received after 01.07.2017. Further the Authority under Rule 126 of the CGST Rules, 2017 has already notified the 'Procedure & Methodology' for determination of the profiteered amount vide its Notification dated 28.03.2018 however, as has been stated above the same has to be applied on case to case basis. It would also be appropriate to mention here that this Authority has power to 'determine' the methodology and not to 'prescribe' it as per the provisions of the above Rule and therefore, no set prescription can be laid while computing profiteering. Accordingly, the claims made by the Respondents that the profiteered amount could not be computed by applying ratio of ITC to turnover as both could not be matched as they accrued at different periods of time is incorrect. Hence the objection raised by the Respondent on this ground is frivolous and without legal force. 64. The Respondents have also submitted copies of the credit notes and the ledger account of the above Applicant and other house buyers vide their submissions dated 20.02.2019 to whom they have claimed to have passed on the additional benefit of ITC. The details of these house buyers are as under:- Sr.No. Na....
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....so not be taken to be the passing on of the benefit of ITC as there is no evidence to support the same nor it has been verified by the DGAP. The Respondents have also not furnished the details of the computations of the above amount nor explained the methodology adopted by them while calculating the above amount. The entry in these credit notes also does not state that the above amount has been passed on account of the benefit of additional ITC and hence, the claims made by the Respondents in this behalf cannot be accepted. 66. The Respondents have also cited the order passed by this Authority in the case of M/s. KRBL supra and claimed that increase in the cost leading to additional ITC could not be considered as additional benefit. In this connection it would be pertinent to note that the above case pertained to the sale of Basmati Rice on which there was no tax and after coming in to force of the GST, 5% tax was imposed on it. Therefore. It was not a case of reduction in the rate of tax and hence it did not fall in the ambit of Section 171 of the above Act, whereas in the present case additional benefit of ITC has accrued to the Respondents and hence they are liable to pass on....
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....charges which should not have been included. Perusal of Table-A of the revised Report dated 22.01.019 shows that the DGAP has changed the figures of Total Taxable Turnover in Col No. 5 from Rs. 180,84,26,434/- to Rs. 187,59,54,901/- for the Pre-GST period and hence the objection of the Respondents has been resolved. 69. The Respondents have also contended that the DGAP had wrongly taken in to account the turnover in respect of the house buyers which was more than the contract value and had also wrongly calculated VAT and Service Tax on such turnover. The DGAP in his revised Report dated 22.01.2019 has stated that there was no direct relation of turnover reported during the Pre-GST period with the amount collected from the house buyers as the Respondents were paying VAT @1% without ITC on inputs and were not collecting it from the house buyers and hence the value shown in the returns was the total agreement value and was not related to the actual amount collected, therefore, the VAT turnover has not been considered while computing the ratio of ITC to turnover. The explanation given by the DGAP appears to be correct and therefore, this contention of the Respondents cannot be given....
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....t has also cited the definitions of Profiteering given in the dictionaries to claim that he had not taken advantage of unusual or exceptional circumstances to make excessive profit and hence he had not profiteered. In this connection it would be pertinent to quote the explanation attached to Section 171 (3A) of the above Act which states as under:- "For the purposes of this section, the expression "profiteered" shall mean the amount determined on account of not passing the benefit of reduction in rate of tax on supply of goods or services or both or the benefit of input tax credit to the recipient by way of commensurate reduction in the price of the goods or services or both." It is clear from perusal of the above provisions as well as the facts of the present case that the Respondents have not passed on the benefit of additional ITC to the house buyers by commensurate reduction in the prices and hence it is established that they had resorted to profiteering. 73. The Respondents have also claimed that the DGAP had wrongly taken increase in the rate of tax from 5.5% (Service Tax 4.5% +VAT 1%) in the Pre-GST period to 12% GST in the Post-GST period and hence total incr....
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....3) (b) of the CGST Rules, 2017. 77. In view of the above facts this Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondents shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by them as has been detailed above. Since the present investigation is only up to 31.08.2018 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondents. In case this benefit is not passed on the Applicant No. 1 or any other buyer shall be at liberty to approach the State Screening Committee Maharastra for initiating fresh proceedings under Section 171 of the above Act against the Respondents. The concerned CGST or SGST Commissioner shall take necessary action to ensure that the benefit of additional ITC is passed on to the eligible house buyers in future. 78. It is also evident from the above narration of facts that the Respondents have denied benefit of ITC to the buyers of the flats being constructed by them in their Lodha Eternis Project in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and have thus resorted to profiteering. Hence, they have....
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.... benefit of additional ITC to the eligible house buyers, accordingly, the DGAP is directed to investigate the issue of passing on the benefit of additional ITC in respect of the above seventeen projects and submit his Report in terms of Rule 133 (5) of the CGST Rules, 2017 which reads as under:- "(5)(a) Notwithstanding anything contained in sub-rule (4), where upon receipt of the report of the Director General of Anti-profiteering referred to in sub-rule (6) of rule 129, the Authority has reasons to believe that there has been contravention of the provisions of section 171 in respect of goods or services or both other than those covered in the said report, it may, for reasons to be recorded in writing, within the time limit specified in sub-rule (1), direct the Director General of Anti-profiteering to cause investigation or inquiry with regard to such other goods or services or both, in accordance with the provisions of the Act and these rules. (b) The investigation or enquiry under clause (a) shall be deemed to be a new investigation or enquiry and all the provisions of rule 129 shall mutatis mutandis apply to such investigation or enquiry." 80. The Authority ....