TaxTMI 
TaxTMI 
2019 (11) TMI 466
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....he CGST Rules, 2017, the Applicant No. 1 had alleged profiteering by the Respondent in respect of purchase of Flat No. 1605, 16th Floor Avenue-6 in his project "One Park Avenue", Patlipada Junction, Ghodbundar Road, Thane, Maharashtra-400607. The above Applicant had also alleged that the Respondent had increased the price of the flat after introduction of the GST w.e.f. 01.07.2017 and had not passed on the benefit of Input Tax Credit (ITC) availed by him by way of commensurate reduction in the price of the above flat. The Maharashtra State Screening Committee on Anti-profiteering had found that the Respondent had not passed on the benefit of ITC to the above Applicant as the same should have been computed against the instalments paid by the above Applicant as price of the flat. The above Screening Committee had forwarded the said application with its recommendation to the Standing Committee on Anti-profiteering for further action, in terms of Rule 128 (2) of the above Rules. The aforesaid reference was considered by the Standing Committee on Anti-profiteering, in its meeting held on 06.09.2018, wherein it was decided to forward the same to the DGAP to conduct detailed investigation....
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....8 to 24.10.2018 in accordance with Rule 129 (5) of the above Rules which the Respondent had not availed. Vide e-mail dated 28.03.2019, the above Applicant was also given an opportunity to inspect the non-confidential documents/reply submitted by the Respondent on 01.04.2019. The Authorized Representative of the Applicant had visited the office of the DGAP on 01.04.2019 and inspected the non-confidential data as was provided by the Respondent. 5. The DGAP has covered the period from 01.07.2017 to 30.09.2018 during the current investigation. The time limit to complete the investigation was extended up to 03.04.2019 by this Authority, vide its order dated 31.12.2018, in terms of Rule 129 (6) of the above Rules. 6. The DGAP has also stated that the Respondent had not submitted the required documents even after repeated requests and hence summons under Section 70 of the CGST Act, 2017 read with Rule 132 of the above Rules were issued on 16.10.2018 to Sh. Ramesh Chandra Mansukhani, Chairman of the Respondent to appear on 26.11.2018 and produce the relevant documents, in response to which Sh. Rohit Mansukhani and Sh. Sayyad Mehboob, Authorised Representative of the Respondent had ap....
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.... GST (D) 665 Rs. 92,27,211 2,21,730 New Flat Cost 665 Rs. 90,05,481 Rs. 82,630 Rs. 18,362 Rs. 5,40,329 Rs. 8,87,186 Rs. 1,80,000 Rs. 1,07,13,988 Consideration Amount less Installment demanded Rs. 71,69,266 Rs. 8,60,312 Post GST cost with Tax Rs. 90,05,481 Rs. 82,630 Rs. 18,362 Rs. 5,40,329 Rs. 8,87,186 Rs. 1,80,000 Rs. 1,07,13,988 d) That the Respondent had mutually revised the agreements executed by him with his home buyers by offering them discount @ 2-3%, on account of GST benefit, post-GST implementation and the same was offered to the above Applicant also. The Respondent had also submitted documents to support his above claim. The Respondent had provided the trail of emails to show that the revised price was offered to the above Applicant after discussion, but he had not accepted the same. e) That with the RERA coming into force, it was mandatory for the developers to execute agreements for sale with the home buyers, and the same was ....
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....ormation to the DGAP vide his above mentioned letters/e-mails during the course of the investigation:- a) Copies of GSTR-1 Returns for the period from July, 2017 to September, 2018. b) Copies of GSTR-3B Returns for the period from July, 2017 to September, 2018. c) Copies of Tran-1 & Tran-2 statements for the period from July, 2017 to December, 2017. d) Copies of VAT & ST-3 Returns for the period from April, 2016 to June, 2017. e) Copies of all demand letters, Sale Agreement/Contract issued to the Applicant. f) Tax rates - pre-GST and post-GST. g) Copy of Balance Sheets for the FY 2016-17 & FY 2017-18. h) Copy of Electronic Credit Ledger for the period from 01.07.2017 to 30.09.2018. i) CENVAT/Input Tax Credit register for the period from April, 2016 to June, 2017 and July, 2017 to September, 2018. j) Details of turnover, output tax liability/GST payable and input tax credit availed. k) Copy of Project report submitted to the RERA. I) List of home buyers in the project One Park Avenue'', 9. The DGAP has also stated that all the documents placed on record were carefully exami....
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.....2017 5.00% 4,61,361 20,761, 4,82,122 1,00,000 3,82,122 2. On initiation of work 14.03.2017 15.00% 13,74,854 61,868 14,36,723 0 14,36,723 3. MVAT Demand @1% paid amount 31.09.2017 3,62,622 4.427 4. MVAT @1% Demand raised 31.09.2017 18,362 Total 20.00% 18,36,215 82,269 19,18,845 4,62,622 18,362 14,74,585 12. The DGAP has further intimated that the claim of the Respondent that on account of GST, he had already offered a discount @ 2-3% of the basic price, as was agreed upon by his customers and therefore, he had passed on the benefit that might accrue to him on account of the GST, may have merit but whether the reduction made or discount offered was commensurate with the increase in the benefit of ITC had to be determined in terms of Rule 129 (6) of the above Rules. He has also contended that the additional ITC available to the Respondent and the amount received by him from the above Applicant and the other home buyers, pre and post implementation o....
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....ction in rate of tax on any 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." Thus, the legal requirement was that in the event of benefit of ITC or reduction in the rate of tax, there has to be commensurate reduction in the prices of the goods or services and the above Section did not provided a supplier of the goods or services any other means of passing on the benefits of ITC or reduction in the rate of tax to his customers. The DGAP has also averred that the Respondent had submitted that the benefit of ITC had been passed on by offering discount @ 2-3% of the agreed upon base price, to all the existing customers, post introduction of GST. The DGAP has further averred that the same discount was also offered to the above Applicant who had opted to cancel his booking and was not a customer of the Respondent any more. He has also claimed that the Applicant had defaulted in his payments even before coming in to force of the GST and requested for cancellation of his booking which was done as per the terms of the agreement. The DGAP has further claimed that as the Applicant was no more a cust....
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..../ Input Tax Credit to Turnover [(J)=(I)/(F)] 2.11% 8.10% 16. The DGAP has claimed from the Table-'E' mentioned above that the ITC as a percentage of the total turnover of the Respondent during the pre GST period (April, 2016 to June, 2017) was 2.11% and during the post GST period (July, 2017 to September, 2018), was 8.10%, which clearly confirmed that post GST, the Respondent had benefited from the additional ITC to the tune of 5.99% [8.1% (-) 2.11%] of the turnover. He has further claimed that the Central Government, on the recommendation of the GST Council, had levied 18% GST on construction service (after one third abatement toward the cost of land, effective GST rate was 12% on the gross value), vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. Accordingly, he had contended that the profiteering had been computed by comparing the applicable tax and the ITC available to the Respondent during the pre GST period from April, 2016 to June, 2017 when the Service Tax @ 4.5% and VAT@ 1% was payable (total tax rate was 5.5% on the basic price) with the post GST period from July, 2017 to September, 2018 when the GST rate w....
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....ged by the Respondent during the period from 01.07.2017 to 30.09.2018, the amount of benefit of ITC not passed on to the recipients or in other words, the profiteered amount came to Rs. 1,27,84,694/- which included GST on the base profiteered amount of Rs. 1,14,14,905/-. The names of the home buyers of flats sold up to 30.09.2018 and unit no. wise break-up of the profiteered amount has been given in Annexure-18 of the DGAP's Report. The DGAP has further contended that since no demand was raised on the above Applicant and no payment was made by him during the post GST period, no benefit of additional ITC was required to be passed on to him, as had been mentioned at Serial No. 90 of Annexure-18 of the Report. It was also intimated that the Respondent had supplied construction services in the State of Maharashtra only. 19. The DGAP has also stated that the Respondent had claimed to offer discount of 2-3% of the original cost of the flats to 81 home buyers aggregating to 56,905 Sq. ft. and thereby benefit to the tune of Rs. 1,11,61,0901-, had already been passed on, however, the eligibility of such benefit, claimed to have been passed on by the Respondent to the home buyers, was sub....
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....total output GST liability of Rs. 2,25,17,438/- during the investigation period from 01.07.2017 to 30.09.2018, as per GSTR-3B returns filed by him from July 2017 to August 2018, as per the Annexure-1 attached by the Applicant. He has also stated that based on the above amount of ITC claimed by the Respondent and his total taxable value, the profiteering was 11.99% of the turnover. He has further stated that after commensurate reduction in the prices of the flats, the actual amount of profiteering worked out to be Rs. 2,07,64,080/- as against Rs. 1,27,84,694/- calculated by the DGAP which was refundable to all the buyers along with 18% interest including those buyers who had surrendered their units, till the date of cancellation, as they were identifiable. 23. Raising objection against the contents of para 12 (a) of the DGAP's Report the above Applicant has submitted that the Respondent had not raised any demand vide his letter dated 04.03.2017 attached as Annexure-2 by him as no such letter was received by him nor this letter was mentioned in any subsequent communications by him and hence the same appeared to be forged in the back date. He has further submitted that he had booke....
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....ease in the size of the flat by 1.37% the overall increase in the base price was 3.22%. 25. The above Applicant has also submitted that he had received the cost sheets pre GST and post GST periods in which GST discount @ 3% had been allowed (Annexure-5) which showed that the Respondent had increased the basic price by 3.2% and allowed GST discount @ 3%. He has further submitted that the revised agreement value I base price demanded by the Respondent with the revised quote dated 27.11.2017 was Rs. 92,27,2111- which was also mentioned in the Booking Form and which was supposed to include the agreement value of Rs. 89,39,548/- and all other charges like 2 year maintenance charges, Gas, Electricity & Water connection charges and Registration charges amounting to Rs. 2,78,909/- (Annexure-6). He has also stated that in the final cost sheet sent vide his email dated 18.11.2018 (Annexure-7 of his submissions), the Respondent had converted the above amount as revised agreement value / base price and was also charging other charges separately which were earlier included in Rs. 92,27,211/- and thus the total price of the flat had been increased by Rs. 6,57,290/- from Rs. 1,03,18,340/- to R....
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....uld also approach the concerned authorities of GST in case the benefit of ITC had not been passed on to him. Accordingly, the Respondent had provided a fresh quote on 25.05 2018 (Annexure-10) which did not pass any ITC benefit and on the contrary increased the overall base price illegally. 28. The above Applicant has also claimed that he had sought an appointment with the Respondent to discuss the matter but his request was ignored and hence he had approached this Authority. He has also alleged that without waiting for the order of the Authority under Section 171 of the Act the Respondent instead of refunding the booking amount had unilaterally cancelled his booking and forfeited the booking amount which amounted to vendetta as was clear from Bullet No. 4 of second page of the cancellation letter dated 24.11.2018 (Annexure-8). He has also contended with respect to para 12 (g) of the Report that unilateral cancellation of the booking by the Respondent was illegal as it was done due to the reason that he had approached this Authority. 29. Contesting the contents of para 12 (h) of the Report the above Applicant has stated that the Respondent has claimed that total discount of Rs....
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.... been sold at different rates as per the normal practice where there was no ceiling fixed by the regulatory authorities and hence, any consideration of ITC based on the sq. ft. area would not be justified and the best way would be to allow ITC benefit based on the amount, as the GST was also charged on the amount and not on the sq. ft. area. The above Applicant has also stated that the Respondent had shown lesser amount of GST payable in the GSTR-3B return for the month of November, 2017 by an amount of Rs. 1,02,508/-. The above Applicant has further stated that the Respondent had issued demand letter dated 21.09.2017 to him and to the other buyers (Annexure 13) in which the GSTIN and the dates were mentioned but the same were not in the appropriate format as per the CGST Act, 2017 and it had not been mentioned in them that they were "Tax Invoices" though GST had been demanded through them and hence action against the Respondent should be taken for violation of the above Act. 33. The above Applicant has also claimed that in Row No. 4 of Table E of the Report the ITC availed has been shown as Rs. 4,92,86,561/- which was the ITC available as per the monthly GSTR-3B returns filed b....
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.... would have enough ITC to pay the output GST and they should not recover any GST payable on the flats from the buyers. They could recover GST from the buyers only if they recalibrated the prices of the flats after factoring in the full ITC available in the GST regime and reduced the ex-GST prices of flats. He has further claimed that the Respondent has been persistently demanding GST @ 12% despite the provisions of the Anti-profiteering measures in the CGST Act, 2017 and the Rules and despite repeated media reports, objections by the buyers and also numerous number of mails etc. he had not re-calibrated the price of the flats knowingly. He has also enclosed the sequence of events vide Annexure-14 attached to his above submissions. 35. The above Applicant vide his submissions dated 30.04.2019 has stated that the DGAP in his Report, vide para 19, has relied on clause (b) of Paragraph 5 of Schedule II of the above Act to arrive at the value of exempt ITC for the tax period from 01.07.2017 to 30.09.2018 and also on Section 17 (3) for calculating exempted value of ITC. He has further stated that Rule 42 and Rule 43 and the Notification No. 16/2019-Central Tax (Rate) dated 29th Mar 20....
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....e date of issuance of completion certificate or first occupation of the project, whichever is earlier; Explanation 2: Carpet area of apartments, tax on construction of which is paid or payable at the rates specified for items (i), (ia), (ib), (ic) or (id), against serial number 3 of the Table in the notification No. 11/2017-Central Tax (Rate), published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated 28th June, 2017 vide GSR number 690(E) dated 28th June, 2017, as amended, shall be taken into account for calculation of value of E in view of Explanation (iv) in paragraph 4 of the notification No. 11/2017-Central Tax (Rate), published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated 28th June, 2017 vide GSR number 690(E) dated 28th June, 2017, as amended." 38. The Applicant No. 1 has accordingly calculated the available ITC as per Rule 42 and Notification No 16/2019-Central Tax (Rate) dated 29.03.2019 as under:-. Table Showing Calculation of Available Input Tax Credit Table A Details Explanation Available (Rs.) Turnover Total Turnover during Tax Period (1 Jul 17 to 30 Sep 18) 187,645,3....
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....Report dated 03.05.2019 furnished by the DGAP has stated that the above Report has been prepared on the basis of the documents and evidence submitted by the Respondent which was not correct and was misleading. He has also stated that he had rebutted each and every point mentioned in the DGAP's first Report dated 03.04.2019 along with evidence on the basis of which further investigation was required to be carried out. He has further stated that the method used for the calculation of profiteering was inconsistent with provisions of Section 17 (2) and (3) and Rule 42 & 43. The above Applicant has also claimed that the contents of para 12 (b) of the above Report which stated that the increase in the agreement value from Rs. 89,39,548/- to Rs. 92,27,211/- was due to the provisions of RERA were completely incorrect as there has been no increase in dimension or measurement of flat in the pre GST or the post GST period or the pre RERA or post RERA period. He has also contended that the Respondent has increased the price of the flats by 3% and then given discount of 2-3%. Since there was no change in the area of the flats there should not have been any increase in the prices which amounted ....
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....espondent has given discount of Rs. 2,21,7301- only as against the increase in cost of the flat by Rs. 2,87,663/-(Rs. 92,27,211/-- Rs. 89,39,5481-). He has further alleged that even after the discount the increase in cost was to the tune of Rs. 65,933/- in addition to the GST of Rs. 8,60,312/- on which no ITC benefit was offered by the Respondent although he was claiming ITC benefits since July, 2017. He has therefore contended that the total increase in the price of the flat was Rs. 9,26,245/-(Rs. 65,9331-+Rs. 8,60,3120 and even if an amount of Rs. 3,19,650/- being the Service Tax @ 4.5% was reduced, the net increase in the cost of the flat was Rs. 6,06,595/- (Rs. 9,26,245 - Rs. 3,19,650/-). The above Applicant has also claimed that the Respondent had initially increased the price citing RERA by about 4% and later reduced the price by claiming to have provided discount of 2-3% arbitrarily which was not uniform. He has further claimed that the base value had increased post GST as no ITC Benefit was allowed to any buyer and the discount offered was only to adjust the increase in the prices of flats to attract timely payments which could not be treated as ITC benefit. 42. The abov....
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....y of goods or services as in the case of construction supply the transactions of sale were spread over a long period of time which covered multiple assessment tax periods and the cost and the revenue were misaligned which led to anomaly in the calculation of exempt ITC at a particular point of time. He has further claimed that for each tax period, the Respondent was not required to reverse the ITC pertaining to the unsold inventory and he had right to completely avail the available input tax credit and hence in order to calculate the correct amount of profiteering, the above amendments should be taken into consideration. 44. The Respondent in his submissions dated 09.05.2019 has stated that in order to execute the projects, he was incurring various costs on inputs which on the advent of GST were presumed to go down due to reduction in cascading effect of taxes which were a cost in the pre-GST regime. He has also stated that as the law was at the developing stage and no basis to determine any such benefit had been prescribed in the provisions of the GST, he, based on the taxes and duties incurred on the total construction cost in the projects completed in the past had assumed tha....
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.... to difference in the mechanism of distribution shall be set off internally and the proceedings against him should be dropped. 46. The Respondent has also stated that the above Applicant has already cancelled the flat booked with him and hence he did not have any locus standi in the matter which was also clear from Para 12 (f) of the DGAP's Report. He has further stated that the Applicant was also not the "recipient" of the service and hence he was not entitled to maintain the present proceedings. He has also claimed that this Authority has prescribed "Procedure & Methodology" in exercise of Rule 126 of CGST Rules, 2017 and vide its para 9, it has been provided that the Authority may inquire into an alleged contravention on receipt of information from an 'interested party'. He has also stated that the term `interested party' has been defined in Explanation (c) of Chapter XV as follows:- "(c) "interested party" includes- a. suppliers of goods or services under the proceedings; and b. recipients of goods or services under the proceedings; c. any other person alleging, under sub-rule (1) of rule 128, that a registered person has not passed on the....
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....post GST period which has resulted in profiteering of Rs. 1.27 Crores as per Table F. Raising objections against the above computation of the profiteered amount the Respondent has argued that in the construction industry, the credit might accumulate in a particular period but the tax liability with respect to the same might arise in a different period. He has further argued that the construction activity might go on gradually which results into accrual of CENVAT credit, however, demand notices were raised as per the milestones mentioned in the agreement and unless the milestone was achieved, the Respondent could not raise demand on the customers. He has also submitted that as per the agreement with the buyers, the milestones specified after applicability of the RERA were as per the Table C given in the Report of the DGAP. He has further submitted that the milestones specified prior to applicability of the RERA were as follows:- Stage Description Percentage 1 Token Plus Booking Amount 19.90 2 On Initiation of Basement 10 3 On Initiation of Plinth 10 4 On initiation of Podium Slab 4 5 On initiation of 1st Slab 3 6 On initiat....
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....nder:- Sr. No. Particulars July 2017 to March 2018 April 2018 to September 2018 Total (Post GST) 1 Input tax credit of GST availed (A) 3,41,65,547 1,51,21,014 4,92,86,561 2 Total Taxable Turnover (B) 4,19,35,865 14,00,25,471 18,19,61,336 3 Total saleable area (C) 2,82,936 2,82,936 2,82,936 4 Area sold relevant to turnover (D) 84,643 84,643 84,643 5 Relevant Credit - (E) = A*D/C 1,02,20,949 45,23,595 1,47,44,544 6 Ratio of Input Tax Credit Post GST (F=E/B) 24.37% 3.23% 8.10% On the basis of the above the Respondent has contended that the ratio of availment of the ITC to the taxable turnover for the period from July-2017 to March-2018 was 24.37% and for the period from April-2018 to September-2018 was 3.23% and the average percentage of availment which has been shown in Table- E was 8.10%. Thus, he has further contended that the variation in the utilization of credit between the two periods both falling under the GST regime itself substantiated that there was no synchronization between the accrual of credit and raising of demand. He has also stated that in the present case, onl....
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....e of service received and value of service provided pre and post GST had remained the same, there was an increase of 2.5% of ITC, however, in reality, there was no additional benefit arising to him as he had paid additional 3% tax to the service providers and taken ITC of the same. Thus, he has further stated that in order to arrive at the correct profiteered amount the credit figures must be revised for the services availed by him during the period from July 2017 till September 2018 as per the following Table:- Sr. No. Particular Amount 1. Taxable Value of Input Services (pure service contracts) A 15,10,53,932 2. ITC availed on these services (18%) B 2,68,83,251 3. Service Tax if leviable - 15% C = A * 15% 2,24,02,709 4. Additional input tax credit D = (B - C) 44,80,542 He has also submitted that this amount of Rs. 44,80,542/- was not an additional benefit thus the same must be reduced from the post GST period for calculation as given in Table E of the DGAP report. 51. The Respondent has also pleaded that in the pre GST era, he has availed CENVAT credit of Rs. 1,20,28,877/- for total saleable area of 2,82,936 sq. ft. a....
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.... submitted the following Table to substantiate his claim:- Particular Pre-GST Post-GST CENVAT/ITC 31,39,142 58,87,921 Turnover 27,83,31,886 18,19,61,336 Ratio 1.13% 3.21% The break-up of the above calculation has been given by the Respondent in Annexure-8. 52. The Respondent has also claimed that the DGAP has also included 12% GST charged by him from the customers in the profiteered amount which was evident from para 25 of the DGAP's Report as the basic profiteered amount has been shown as 1,08,99,4841-. He has further claimed that the DGAP has wrongly mentioned that the base profiteered amount was Rs. 1,14,14,905/- as the balance amount of 18,85,2101- was towards the GST and hence, the excess collection made by him was only 1.08 Crore as the excess GST collected has duly been deposited with the Government, therefore, the same could not be considered as the profiteered amount to be passed on to the customers. He has also relied on the following definitions of profiteering to support his case:- • Black's Law Dictionary - The taking advantage of unusual or exceptional circumstances to make excessive profits • Law Lex....
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....eriod, the rate of tax on construction service was 18%, but for determining the value, abatement of 1/3rd of the value of agreement towards land was allowed and thus, if the agreement value was Rs. 100/- the tax was payable on Rs. 67/- only. He has further stated that as per the judgment passed in the case of Larsen & Toubro Ltd., reported as 2014 (34) STR 481 (SC) = 2013 (9) TMI 853 - SUPREME COURT service provided by the builder/developer was classified as works contract and therefore, value of land included in the price was required to be excluded to arrive at the taxable value under section 15 of the CGST Act, 2017. He has also claimed that the rate of tax was always applied on the taxable value which was also required to be declared in the ST-3 returns under the Service Tax regime and GSTR-3B returns under the GST regime and hence, the rate of tax must be determined based on the rate applicable on the taxable value. Therefore, in order to make the rates in the pre and post GST comparable, rate of tax in the pre GST period needed to be determined on the same basis i.e. after permitting abatement of 33% from total value. He has also submitted that abatement of 70% from the total....
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....the intending allottee(s). The intending allottee(s) shall pay as and when demanded by the Company, VAT, Stamp Duty and Registration Charges/Mutation Charges and all other incidental and legal expenses for execution and registration of Agreement for Sale/mutation of the Flat in favour of the intending allottee(s). The intending allottee(s) agrees to pay the total sale price and other charges of flat as per the payment plan to be mentioned in the Allotment letter/Agreement sale." He has also claimed that it was evident from the above that the other charges were payable in addition as had been mentioned in the application form. He has further claimed that the above Applicant has paid Rs. 4,62,622/- within a month of booking which roughly amounted to 5% of the basic flat cost of Rs. 92,27,211/-. Thus, the Applicant had also considered the basic flat cost without other charges as Rs. 92,27,211/- otherwise the applicant would have only paid 5% of Rs. 89,39,548/-. Therefore, he has claimed that the agreed amount without other charges was Rs. 92,27,211/- on which 2% GST discount was offered by him to the above Applicant as per his email dated 10.10.2017. He has further claimed that the....
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....as never signed by the customer and the demand letter submitted by him to the DGAP for verification did not contain the signature of the Applicant. It is also submitted by him that the increase in the price on account of RERA has no relevance with the provisions of Section 171 of the CGST Act, 2017. He has also claimed that the booking value of the flat in the booking form/ application form was Rs. 92,27,211/- and increase in the price pointed out by the above Applicant actually had not taken place at all which could be ascertained from the email dated 10.10.2017 sent by him to the Applicant intimating that on account of RERA the price would increase only by Rs. 1,26,593/- and in the same mail itself it has been mentioned that the Respondent was not charging for the increased area which could be substantiated by the revised cost sheet in the same mail wherein 2% discount has been given. The Respondent has also claimed that the above Applicant has stated that he had held discussions with many other home buyers who had objected to the increase in the price and only then the Respondent had given discount of 2-3% which was also not acceptable to them. The Respondent has pleaded that si....
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....e-6 attached to his submissions dated 09.05.2019. He has also claimed that the total discount passed on to all the 65 flat buyers was Rs. 1,11,61,090/- on the total value as per the agreements less the value of the demands raised in pre GST regime. Thus, the discount has been provided on all the demands which would be raised/would be raised in the post GST regime. He has also claimed that the GST discount passed on to the 61 flat buyers on which the demands have been raised was Rs. 92,54,051/- which was attached as Annexure-2. 60. The Respondent has also alleged that the DGAP has calculated the profiteered amount in respect of the five buyers on whom no demand has been raised in the post GST period, the details of which have been attached as Annexure-3 and therefore, the profiteered amount should be reduced by Rs. 3,32,326/- as the Respondent was required to pass on ITC benefit of 2.09% which amounted to Rs. 38,02,991/- (18,19,61,336 * 2.09%) only. 61. He has also submitted details of the project as follows:- a) Total number of flats in the project was 429 having total area of 2,82,936 sq. ft. b) Total number of flats sold in the pre GST period was 153 which....
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....,694/-. Similarly the taxable value as per the GSTR-3B returns was Rs. 18,76,45,356/- as against the DGAP's figure of Rs. 18,19,61,336/- and the GST amount as per the GSTR-3B returns was Rs. 2,25,17,438/- as against Rs. 2,24,14,930/-. He has claimed that this difference was on account of the mechanism applied by the DGAP as he has considered the demand figures pertaining to the construction service only and has not considered the other taxable transactions not related to the profiteered amount and hence the figures considered by the DGAP were correct. He has also claimed that Section 17 (2) and 17 (3) of the CGST Act, 2017 applied on the reversal of ITC only in the case of, completion of the projects and could not be applied during the construction phase of the project. 67. The submissions of the Applicant No. 1 were forwarded to the DGAP on 25.04.2019 for his Report. The DGAP vide his Report dated 03.05.2019 has stated that the issues raised by the Applicant No. 1 have already been addressed in his detailed Investigation Report dated 03.04.2019. 68. We have carefully considered all the submissions filed by the Applicant No. 1, the Respondent and the other material placed on ....
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.... from the additional ITC to the tune of 5.99% (8.10% - 2.11%) of the total turnover which he was required to pass on to the flat buyers of this project. The DGAP has also found that the Respondent has not reduced the basic prices of his flats by 5.99% due to additional benefit of ITC and by charging GST at the increased rate of 12% on the pre GST basic price, he has contravened the provisions of Section 171 of the CGST Act, 2017. The DGAP has further submitted that the amount of benefit of ITC which has not been passed on by the Respondent or the profiteered amount came to Rs. 1,27,84,694/- which included 12% GST on the basic profiteered amount of Rs. 1,14,14,905/-. The DGAP has also intimated that there was no demand raised on the Applicant No. 1 in the post GST era therefore, the amount of profiteering in case of the Applicant No. 1 was nil. He has also supplied the details of all the buyers who have purchased flats from the Respondent along with their unit numbers and the profiteered amount vide Annexure-18 attached with the Report. 70. The Applicant No. 1 has stated in his submissions that the Respondent has paid only Rs. 16,072/- in cash and utilised Rs. 2,25,17,438/- from ....
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....e of the flat after coming in to force of the RERA. Although, this Authority has no mandate to look in to the increase in the area as per the above Act but it has certainly mandate to look in to the price rise affected by the Respondent post implementation of GST w.e.f. 01.07.2017 and it is revealed that he has increased the basic price of the flat by Rs. 2,87,683/- i.e. by 3.22% in respect of the above Applicant from Rs. 89,39,548!- to Rs. 92,27,211/-as is clear from Table B of the Report as well as the cost sheet submitted by the Respondent which has been mentioned in para 41 supra, on the ground that there was increase in the carpet area as well as due to implementation of the GST. Perusal of Annexure-4 submitted by the Respondent on 09.05.2019 shows that he has also increased the price in respect of other buyers also on the above grounds in the months of November/December 2017, which he could not have done as he was required to reduce the price commensurately as per the benefit of ITC which he had started receiving after coming in to force of the GST w.e.f. 01.07.2017 and hence the allegation made by the above Applicant in this regard is correct. 73. The above Applicant has ....
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....iteered amount and hence the argument made by the Applicant in this regard cannot be accepted. 78. The Applicant has also claimed that the provisions of Section 17 (2) of the above Act were not applicable while computing profiteering which is wholly untenable as ITC was required to be calculated after taking in to account the provisions of the above Section. 79. The above Applicant has also submitted that it was wrong to consider ITC based on the area for calculation of profiteering and it should be computed on the basis of the amount charged for the flat. However, this contention of the Applicant is seriously flawed as the ITC benefit has to be calculated on the basis of the area purchased by each buyer and the amount paid by him post GST. 80. The above Applicant has also claimed that the Respondent has paid less GST of Rs. 1,02,508/- during the month of November, 2017 and the description of ITC mentioned in column No. 4 of Table E as ITC availed was required to be shown as the ITC available. He has further claimed that the figure of turnover given in column No. 6 of Table E should be Rs. 18,76,45,356/- and not Rs. 18,19,61,3361-. The Applicant has further claimed that th....
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....7,64,080/- as per Table B is also not correct as it has not been calculated on the basis of the relevant ITC in proportion to the area sold and is based on the ITC computed vide Table A. Therefore, the contentions of the above Applicant made in this behalf are frivolous and hence they do not merit consideration. 83. The above Applicant has also contended that the Respondent has increased the basic price of the flat from Rs. 89,39,548/- to Rs. 90,05,481/- by 3.2% and had offered him discount of Rs. 2,21,730/- @ 3% which clearly showed that the above discount had been given to cover the enhanced price and no benefit of ITC was given to him. The above contention of the Applicant has merit as the Respondent has increased the base price of the flat due to the provisions of RERA and coming in to force of the GST and hence the same is correct. It is abundantly clear from the perusal of letter dated 24.11.2018 (Annexure-8 submitted by the Applicant), written by the Respondent to the above Applicant in which he had claimed that there has been revision in the cost of his flat due to implementation of the GST (Bullet Point No. 4) and he had offered him discount of 2% due to this increase w....
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....such application. In this regard it is submitted that as has been discussed in para supra above the provisions of Rule 42 (1) (f) and 43 (1) (b) are not applicable in the present case as has been proposed by the Applicant as the Respondent has not obtained OC as yet. There is also no provision of applying them retrospectively in the CGST Act, 2017 or the notification issued under it as the law requires that in case a notification is to be implemented retrospectively the intention has to be mentioned in the notification itself. Therefore, the above judgements cited by the Applicant do not further his cause. The Order No. 7/2018 passed on 18.09.2018 by this Authority in the case of Sukhbir Rohilla & others v. M/s Pyramid Infratech Pvt. Ltd.= 2018 (12) TMI 707 - NATIONAL ANTI-PROFITEERING AUTHORITY is also of no help to him as the relevant ITC has been calculated after taking in to account the unsold area in that case also. 85. The above Applicant has also claimed that the Respondent was not required to reverse the ITC on the unsold houses. The above claim is contrary to the provisions of Section 17 and clause (b) of para 5 of Schedule II of the CGST Act, 2017 and hence the same ca....
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....t the above Applicant was not an "interested party" and hence he had no locus standi to file complaint against him. However, as has been discussed above the Applicant had filed the complaint on 18.07.2018 whereas the Respondent had cancelled his booking on 24.11.2018 and hence the above Applicant fell within the definition of interested party as per the explanation given under Rule 137 (c) b of the CGST Rules, 2017 as he was recipient of the service supplied by the Respondent at the time of filing of the complaint. Otherwise also "any other person" can file complaint for violation of the provisions of Section 171 of the above Act as per Rule 128 (1) of the above Rules and therefore, the above Applicant is fully entitled to file the present complaint. Accordingly, the above contention of the Respondent cannot be accepted. 89. The Respondent has also contended that there was no correlation between the accrual of the ITC and the demand raised and hence the methodology adopted by the DGAP to calculate the profiteered amount was incorrect. However, perusal of the methodology applied by the DGAP shows that the ratio of additional benefit which was required to be passed on by the Respo....
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....er statements given before the DGAP and therefore, the relevant ITC calculated as per the area sold relevant to turnover in Table E of the Report is correct. Hence the above contention of the Respondent is not tenable. 92. The Respondent has also contended that he was not in agreement with the computation of the profiteered amount made by the DGAP as it included the GST which had been deposited by him in the Govt. account. The plea taken by the Respondent on this ground is fallacious as by forcing the flat buyers to pay more price by not releasing the benefit of additional ITC and by collecting tax @12% on this additional realisation he has denied the benefit of additional ITC to them by not reducing the prices of the flats commensurately. Had he not collected additional GST the buyers would have paid less price and by doing so he has denied them the benefit of additional ITC which amounts to violation of Section 171 of the above Act. Both the Central as well as the State Government had no intention of collecting the additional GST as they had forfeited their revenue in favour of the flat buyers to provide them accommodation at affordable prices and by compelling the buyers to p....
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....basis of reduction in the rate of tax. The case of M/s KRBL does not help the Respondent as in that case there was no benefit of additional ITC to the above party and hence the above case is of no help to him. The claim made by the Respondent on this ground is farfetched and hence the same is untenable. 95. The Respondent has also stated that it was specifically mentioned in the application form that the maintenance charges, stamp duty, reimbursements and taxes etc. shall be charged extra from the allotees and the above Applicant has also deposited Rs. 4,62,622/- being 5% of the price of Rs. 92,27,211/- of the flat and hence he had accepted that other charges would be levied extra. The claim made by the Respondent is based on the contents of paras 9 and 10 of the application form which the above Applicant has himself filled and accepted and hence the contention of the above Applicant that the above price included the extra charges is not correct. However, the contention of the Respondent that he had offered GST discount to the above Applicant is not correct as the same was offered due to increase in the price of the flat which amounted to normal business discount and by no stret....
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....for the construction industry provided for reversal of the ITC credit on the saleable area, whereas for other industries the reversal has been provided based on the amount, accordingly, the objection of the Applicant could not be accepted. The above argument of the Respondent has merit and hence the same is logical. The Respondent has also argued that the above Applicant has wrongly tried to point out that the entire ITC availed by the Respondent was available on the date of investigation and nothing needed to be reversed. However, the above claim of the Applicant is not correct as the ITC is required to be reversed when flats would be sold after receipt of the OC and hence the above argument of the Applicant cannot be accepted. 98. The Respondent has also claimed that he was not required to pass on the benefit of ITC to the buyers who had purchased the flats after coming in to force of the GST. However, it is made clear that the Respondent is required to recalibrate the prices of the flats which he would sell post GST keeping in view the availability of ITC. 99. The Respondent has also submitted the details of the discount amounting to Rs. 1,11,61,090/- which he has claimed ....
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....ction on the computation of the profiteered amount. Therefore, the objection raised by the Respondent and the Applicant on this ground is frivolous and without legal force. 102. It is established from the perusal of the above facts 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. 1,27,84,694/- inclusive of GST @ 12% on the base profiteered amount of Rs. 1,14,14,905/-. Further, the Respondent has realized an additional amount of Rs. 1,27,84,694/- which includes both the profiteered amount (c)5.99% of the taxable amount (base price) and GST on the said profiteered amount from the flat buyers who were not Applicants in the present proceedings as per Annexure-18 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. 1,27,84,694/- along with interest (c)18% per annum to these flat buyers from the dates from which the above amount was collected by him from these buyers till the payment is made, within a period of 3 months from the date of passing of this order. The above amount shall be paid as has be....