TaxTMI 
TaxTMI 
2019 (11) TMI 466
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....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 in the complaint according to Rule 129 (1) o....
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....t 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 appeared before the Superintendent of the DGAP on 26.11.2018 and submitted the documents. 7. The DGAP has further stated that the Respondent had submitted replies vide his letters/emails dated 06.11.....
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....p; 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 communicated to the above Applicant, but he had failed to execute the same. The Applicant No. 1 had also failed to pay instalments as per the buyer's agreement during the pre-GST period and had also requested the Respondent to cancel his booking, vide his email dated 23.11.2017. The Respondent had also submitted that in view of the Applicant's cancellation request, further discount on account o....
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....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 examined by him and he had found that the main issues for determination were whether there was reduction in the rate of tax or benefit of ITC on the supply of construction service by the Respondent after implementation of the GST w.e.f. 01.07.2017 and in case it was so, whether the Respondent had passed on the above benefits to the home buyers as per the provisions of Section 171 of the CGST Act, 2017 or not. 10. The DGAP has further stated that the Respondent, vide his letters dated 16.11.2018 and 29.11.2018 ha....
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....y 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 of the GST, was required to be taken into account to determine the benefit of ITC which was required to be passed on. 13. The DGAP has further contended that para 5 of Schedule-III of the CGST Act, 2017 (Activities or Transactions which should be treated neither as a supply of goods nor a supply of services) reads as "Sale of land and, subject to clause (b) of paragraph 5 of Schedule 11, sale of building". Further, clause (b) of Paragraph 5 of Schedule II of the above Act reads as "(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration had been received after issuance of ....
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....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 customer of the Respondent and hence his allegation was incorrect and the same could not be considered towards compliance of provisions of Section 171 of the above Act. 15. The DGAP has also informed that before coming in to force of the GST w.e.f. 01.07.2017, the Respondent was eligible to avail CENVAT credit of Service Tax paid on the input services, however, CENVAT credit of the Central Excise Duty paid on inputs was not admissible to him as per the CENVAT Credit Rules, 2004. He has further informed that post GST, the Respondent was eligible to avail the ITC of GST paid on all the inputs and input services including the sub-contracts. He has also submitted that as per the information supplied by the Respondent for the period fr....
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....e 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 was 12% on the gross value. On the basis of the figures contained in Table-'E' above, the comparative figures of the ITC availed/available as a percentage of the turnover in the pre and post GST periods, the recalibrated base price and the excess collection i.e. the profiteering during the post GST period, has been tabulated by the DGAP as per the Table- 'F' below:- Table- 'F' (Amount in Rs.) S.No. Particulars Pre-GST Post-GST 1. Period A April, 2016 to June, 2017 July,2017 to Sep 2018 2. Output tax rate (%) B 5.50% 12.00% 3. Ratio of CENVAT/ Input Tax Credit to Total Turnover asper Table - E above (%) C 2.11% 8.10% 4. Increase in input tax credit availed post-GST (%) D - 5.99% 5. Analysis of Increase in input tax credit: 6. Total Basic Demand raised during July, 2017 to September, 2018 E 1,81,961,366 7. GST charged F= E*12% 22,412,632 ....
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....assed on, however, the eligibility of such benefit, claimed to have been passed on by the Respondent to the home buyers, was subject to the satisfaction of this Authority. 20. The DGAP has further stated that the present investigation covered the period from 01.07.2017 to 30.09.2018 and profiteering, if any, for the period post September, 2018, had not been examined by him as the exact quantum of ITC which would be available to the Respondent in future could not be determined at this stage, when the construction of the project was yet to be completed. In view of the aforementioned findings, the DGAP has contended that the provisions of Section 171 (1) of the CGST Act, 2017, requiring that "any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit should be passed on to the recipient by way of commensurate reduction in prices", had been contravened by the Respondent in the present case. 21. The above Report was considered by the Authority in its meeting held on 09.04.2019 and it was decided that the Applicants and the Respondent be asked to appear before the Authority on 25.04.2019. The Respondent was issued notice on 09.04.2019 to explain....
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....nications by him and hence the same appeared to be forged in the back date. He has further submitted that he had booked the flat against nominal amount to be paid every year and rest of the amount was to be funded by the Bank and accordingly, he had paid the booking amount of Rs. 1,00,000/- on 25.02.2017 and second instalment of Rs. 3,62,622/- on 16.03.2017. However, the Respondent had increased the total price of the flat arbitrarily which was beyond the reach of the Applicant. He has also claimed that the Respondent had registered himself under the RERA on 14.09.2017 only and hence his liability to pay instalments had not arisen on 04.03.2017. He has also drawn attention to the demand letters dated 21.09.2017 (Annexure-3) and 30.06. 2017 (Annexure-4) wherein the Respondent had only demanded the amount payable as arrears of Value Added Tax (VAT) which did not include the amount mentioned in the letter dated 04.03.2017 and there was also no mention of the above letter in these two letters. 24. With regard to para 12 (b) of the DGAP's Report the above Applicant has contended that the Respondent had increased the carpet area of the flat from 656 sq. ft. to 665 sq. ft. resulting in i....
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.... 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 Rs. 1,09,75,630/-. He has further stated that effectively, the overall base price was increased by 0.7% and no benefit had been passed on to him towards the ITC by commensurate reduction in the base price, which was fixed prior to 01.07.2017. 26. In respect of para 12 (e) of the DGAP's Report the above Applicant has stated that there was significant change in the price compared to what was agreed on the basis of which the booking was made and the booking amount was paid. He has also claimed that the price had arbitrary been increased by citing the GST legislation however, no mention was made of the ITC benefit. He has further claimed that since there was no agreement on the price, the Respondent was either supposed to refund the booking amount as per common trade practice or to agree on commensurate reduction in the price and since no intention of passing on of the full benefit of ITC availed by the Respondent was shown by him he had no other option but to complain to the Anti-profiteering Committee. He has also contended that there was no requirement in the RERA to reg....
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....(h) of the Report the above Applicant has stated that the Respondent has claimed that total discount of Rs. 1,11,61,090/-, had been accepted by all the home buyers, however, on his inquiry the home buyers had stated that the Respondent had arbitrarily increased the carpet area and the price and later reduced the price by offering discount therefore, effectively no benefit of ITC was passed and the discount of 2-3% was in the base price only. He has further stated that no supporting evidence was produced by the Respondent from the home buyers to prove his claim. 30. The Applicant No. 1 has also contended that as per Table E of the Report, the figures mentioned in column nos. 7 & 8 with regard to saleable area and the sold area relevant to turnover had no relevance as the total output liability was based on the turnover achieved on monthly basis and the GST was collected on that turnover only. As and when un-sold saleable area would be sold, proportionate GST would be determined during that particular month and output liability would again be either set-off against the ITC or paid in cash during that month only and hence, giving any discount for the same during the investigation per....
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.... shown as Rs. 4,92,86,561/- which was the ITC available as per the monthly GSTR-3B returns filed by the Respondent and not the ITC availed which was required to be corrected. Further, as per Row No. 6, total turnover had been mentioned as Rs. 18,19,61,336/-, however, as per the GSTR-3B returns filed by the Respondent the total turnover was Rs. 18,76,45,356/- as per Annexure-1 prepared by him. He has further claimed that in Row No. 9 of the above Table, the relevant ITC has been shown as Rs. 1,47,44,544/- and as per the GSTR-3B returns filed by the Respondent, the total tax paid out of the ITC was Rs. 2,23,98,858/-. He has also stated that after making necessary correction of Rs. 1,02,508/- as mentioned above, the total tax paid out of ITC was Rs. 2,25,01,366/- as per the details given in Annexure-1 and hence, the ratio of ITC to turnover was 11.99% without considering any saleable area and un-sold area. The above Applicant has also contended that in Row No. 6 of Table F supra the total basic demand raised has been stated as Rs. 18,19,61,336/- but as per the GSTR-3B returns filed by the Respondent the total of same was Rs. 18,76,45,356/-. Similarly, the amount of profiteering was Rs....
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....that Rule 42 and Rule 43 and the Notification No. 16/2019-Central Tax (Rate) dated 29th Mar 2019 provided a detailed mechanism vide which the exempted value of the ITC could be calculated. Therefore, he has argued that as per amended Rule 42 (1) (f) the value of T4 would be zero during the construction phase and entire ITC would be treated as common ITC as "the amount of input tax credit attributable to inputs and input services intended to be used exclusively for effecting supplies other than exempted but including zero rated supplies, be denoted as 'T4'. 36. He has further argued that it was also provided in the explanation attached to Rule 42 that "For the purpose of this clause, it is hereby clarified that in case of supply of services covered by clause (b) of paragraph 5 of Schedule II of the said Act, value of T4 shall be zero during the construction phase because inputs and input services will be commonly used for construction of apartments booked on or before the date of issuance of completion certificate or first occupation of the project, whichever is earlier and those which are not booked by the said date." Therefore, he has claimed that for the purpose of calculation ....
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....iod (1 Jul 17 to 30 Sep 18) 187,645,356 T Total Input Tax Credit 22,517,438 T1 Input Tax pertaining to Personal Exp. Nil T2 Attributable to Exempt Services Nil T3 Exempt Services as provided U/sec 17(5) Nil T4 As per Latest Notification T4 will be Zero till issuance of OC Nil C1 C1= T-(T1+T2+T3) 22 517,438 C2 C2= C1-T4 22,517,438 E During the Tax Period 1-Jul-17 to 1 Sep 18 1) The Carpet area exempt from Tax was Nil 2) No Units identified to be sold after receipt of OC. All the units where offered for Sale hence this will also be Nil E 3) Hence (1) + (2) = 0 Nil F Total Carpet area under sale (Saleable Area provided in DGAP report) 2,82,936 D1 D1= C2* E/F Nil D2 Since no info is shared regarding services used for Personal Use Nil C3 C3 = C2-(D1+D2) Total ITC available post Reversal 22,517,438 Hence the above Applicant has claimed that as per the above calculations, the total ITC available post reversal of exempt ITC in accordance with Section 17 (2) was Rs. 22,517,438/-. 39. On the basis of Input Tax Credit Available as per Table A, the percentage of profiteering has been computed by the Applicant No. 1 as under:- Tabl....
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....s right to take assistance of the State Legal Metrology Controllers to ascertain the claims made by the Respondent. 41. Vide his written submissions dated 30.05.2019 the above Applicant has raised objections against the submissions dated 17.05.2019 filed by the Respondent and the DGAP's Report. He has also alleged that after implementation of the RERA and GST, the Respondent had revised the price of the flat to Rs. 1,09,75,629/- and increased it by Rs. 6,57,289/- and hence he had filed the present complaint against the Respondent on 18.07.2018. He has further stated that the Respondent had furnished the following cost sheets during the hearing:- Shared by Man Realty OPA Cost Sheet on Booking Avenue 6 RERA Carpet 656 Flat No 1605 FLOOR 16 TYPE 2 BHK Flat Cost 8,939,548 Discount - New Flat Cost 8,939,548 Installment Demanded 1,836,215 Service tax @ 4.5% 82,630 Consideration Amount less inst. Demanded 7,103,333 Service tax @ 4.5% 319,650 Final Consideration Amount with taxes 9,341,828 Stamp Duty 536,373 Registration Charges 30,000 Vat 89,395 Other Charges 278,909 Service Tax @15% 41,836 Total Cost 10,318,341 OPA Cost Sheet Discount 3....
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....of ITC and he had tried negotiating with each buyer who so ever had approached him due to increase in the base price and provided marginal reduction to few buyers randomly. The Applicant has also argued that the Respondent being a registered person should have approached the Advance Ruling Authority as has been provided under Chapter XVII of the CGST Act, 2017 to seek clarification on computation of the exempted ITC if he was not sure how to calculate the benefit of ITC. The above Applicant has further argued that as per the RERA remedies under Section 11 (5) and Section 12 were available to him. The above Applicant has also contended that the provisions of Rule 42 (1) (f) and Rule 43 (1) (b) were declaratory in nature which clarified the method of calculation of exempt ITC and hence they should be applied retrospectively. The Applicant has also relied on the "Principles of Statutory Interpretation provided by Justice G. P. Singh" and the cases of Keshav Lal Jetha Lal Shah v. Mohan Lal Bhagwan Das = 1968 (4) TMI 72 - SUPREME COURT, Commissioner of Income Tax v. Gold Coin Health Food Private Limited = 2008 (8) TMI 5 - SUPREME COURT, Reserve Bank of India v. Peerless General Finance ....
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.... had not increased the consideration of the flats and passed on additional 2 to 3% discount which was also communicated to the customers, a sample copy of the email was attached as Annexure-2 by him. He has also submitted a copy of the agreement executed with a customer wherein the revised consideration after discount was mentioned, as Annexure-3. He has also claimed that in line with the above he had already agreed to pass on the benefit to his customers as was evident from his email dated 10.10.2017 sent to a customer wherein it was communicated that an amount of Rs. 1,59,085/- has been given as discount on account of GST benefit. Other customers were also sent similar emails on 10.10.2017, sample copies of which were attached by him as Annexure-4. He has further claimed that he had received the notice for investigation from the DGAP on 15.10.2018 however, he had already passed on the benefit. 45. The Respondent has also submitted that in the case of the Applicant No. 1 he had decided to increase the consideration by Rs. 1,26,593/- on account of increase in the carpet area by 9 sq. ft., however, he had agreed to pass a discount of Rs. 1,47,820/- at the rate of 2% of the balance ....
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....the entire investigation was based on the complaint of a person who was not an 'interested party', the demand raised as per the report of DGAP must be set aside. 47. The Respondent has also submitted that he has already passed on benefit of Rs. 1,11,61,090/- to his customers on the gross amount without considering GST which the DGAP has failed to verify. He has further submitted that the facts to substantiate the same were as follows:- * The list of such home buyers was also provided to the DGAP which was annexed as Annexure 18 to the DGAP's Report. * In para 12 (h) of the DGAP's report, it was mentioned that the Respondent has passed on the benefit of GST to his customers. * In para 18 of the Report, it has been observed that the argument of benefit having been passed on by the Respondent might have merit. * In para 20 of the Report, it has been observed that the Respondent has agreed to pass on 2-3% of the amount as benefit to all the existing customers. The said discount was also offered to the Applicant but he had cancelled the flat and hence no benefit should be given to him. * Despite having all the information, the DGAP has concluded in Para 27 that benefit claime....
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.... initiation of Top Slab 3 20 On initiation of Brickworks 3 21 On initiation of Flooring 3 22 On Possession 5 Total 100 He has therefore, averred that in the pre GST regime, the customer had to pay up to 20% of the total amount at the time of booking which was not construction linked and thus, the tax liability on the said value arose to the Respondent but he had very less CENVAT credit since the work done would be minimal as compared to the demand raised, whereas in the post GST regime the customer has to pay up to 30% of the total amount at the time of agreement and which was not construction linked. Similarly, in vice-versa situation, after 25th floor slab was cast, demand could be raised only on completion of the walls of the apartment, however, credit accrued to him on the construction work carried out between completion of the 25th floor slab and walls of all the apartments. He has further averred that the demand for recovery of the instalments based on milestones could only be raised for the premises which were sold, although the expenses were incurred on the entire project, therefore, if the proportion of the premises sold was less than the total ar....
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....2018 to Setpember-2018 for Tower 6 when the activity of 11th floor slab was going on, however, the demand could not be raised in October 2018 as the milestone was not achieved. He has also submitted that the total credit on account of 11th floor slab was taken in the calculation shown in Table E, but there was no corresponding taxable turnover and thus, the credit had accrued and was availed but corresponding income had not accrued. A summary of the above claim has been given by the Respondent as follows:- Bldg. Demand Notice Prior to 30-09-2018 Milestone for prior demand First Demand Notice after 30-09-2018 Milestone for subsequent demand Credit to be reduced for period Tower - 6 15-08-2018 6th Floor Slab 29-10-2018 11th Floor Slab 15-08-2018 to 30-09-2018 Accordingly, he has claimed that the credit availed figure during the post GST period from 15.08.2018 to 30.09.2018 amounting to Rs. 77,04,291/- must be reduced in Table E. 50. The Respondent has also contended that in the pre GST regime, services were subject to Service Tax at the rate of 15% but under the GST, in most of the cases, they were taxable at 18%, therefore, there was an increase of 3% in the ITC availa....
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....d from April-16 to June-17 was only 73,837 sq. ft. in the pre GST regime. Similarly, area sold relevant to the taxable turnover of Rs. 18,19,61,336/- for the period from July-17 to Sept.-18 was only 44,901 sq. ft. in the post-GST regime. The reason for the demand being raised against only few customers was that the market situation on advent of GST was not good as around 30% the bookings of the pre GST regime had been cancelled in the post GST regime, i.e., area measuring to 43,005 sq. ft. area had been cancelled which has also been noted in Annexure 18 of the Report. He has also claimed that the DGAP has considered the area pertaining to the total sales even if there was no demand notice issued for the same during the period. The customer-wise area sold, and amount charged statement has been attached by the Respondent as Annexure-6. He has further submitted that out of area measuring 43,005 sq. ft., demand pertaining to 7,855 sq. ft. was raised in the pre GST regime which was included in the taxable turnover of Rs. 27,83,31,886/-. He has also contended that since the flats were cancelled therefore, the taxable turnover and its corresponding area should not be included in the pre G....
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....t of Rs. 18,85,210/- collected as GST and paid to the Government should be excluded from the profiteered amount. He has further argued that the excess amount collected by him excluding the GST amount was Rs. 1,08,99,484/- whereas the benefit passed by him was Rs. 1,11,61,0901- and thus, he has passed on excess benefit to the customers. 53. The Respondent has also claimed that the DGAP in para 23 and Table F of his Report has considered rate of tax as 12% in the post GST period and the rate of tax in the pre GST regime of Service Tax and VAT has been taken to be 4.5% and 1% respectively which has been assumed to be applicable on the entire agreement value. He has further claimed that as per Section 9 of the CGST Act, 2017 the tax shall be levied on supply of goods or services on which the value was determined under section 15 of the Act at such rate as may be notified by the Government and thus, the notified rate must be considered as the 'tax rate'. He has also argued that the DGAP has concluded that the increase in the tax rate was only 6.5% [12% GST-(4.5% Service Tax + 1% VAT)] which was incorrect. In this connection he has contended that in the pre GST period Service Tax was pa....
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....5% as has been concluded by the DGAP. The Respondent has also argued that increase in the rate of tax on the outward supply made by him was more than the increase in the credit available to him after coming in to force of the GST by 9.8% and therefore, there was no profiteering in his case. The Respondent has also relied upon the Order No. 3/2018 dated 04.05.2018 passed by this Authority in the case of M/s KRBL Ltd. = 2018 (5) TMI 760 - NATIONAL ANTI-PROFITEERING AUTHORITY wherein it was held that if the increase in tax rate was more than the increase in the credit amount, there was no additional benefit which was required to be passed on. 54. In his submissions dated 17.05.2019 the Respondent has reiterated the submission which were made by him on 09.05.2019 and further added that at the time of booking of the flat a person was required to fill up an enquiry form and then to confirm the booking an application form was required to be filed which indicated the total consideration payable for the flat. He has also stated that as per the terms and conditions specified in the application form it was clearly mentioned in para Nos. 10, 11 & 16 that the "Common Area Maintenance (CAM) Cha....
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....ncorrect. 56. The Respondent has also stated that Section 171 of the CGST Act, 2017 provided for passing on the profiteered amount on account of reduction in the cost and since the opening balance and the procurement to be done in future did not pertain to a particular period therefore utilisation figures could not be used for computing the profiteered amount. It is further stated by him that the above Applicant has objected that the reversal of ITC should not be considered for the computation of profiteered amount which was incorrect. He has also submitted that the DGAP has computed the profiteered amount for various companies under the real-estate sector by using the same principle as has been adopted in Table E of the DGAP Report. He has further submitted that the principle followed by the DGAP was correct and therefore, re-computing of the profiteered amount based on some other principle would be wrong. It is also contended by him that the demand letter issued to the above Applicant was prepared by him on 04.03.2017 and the entry for the same in the books of accounts was also made on the same date. He has further contended that the taxable value of the demand raised on the App....
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....ew of which the objection of the Applicant could not be accepted. 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. He has also claimed that the above Applicant has only pointed out the provisions of Rule 42 (1) of the CGST Rules, 2017 and has not referred to Rule 42 (3) wherein calculation of the reversal needed to be done on receipt of OC by considering the entire ITC availed by the project from 01.07.2017. 58. The Respondent has also submitted that no GST benefit was required to be passed on to the new customers as the flats have been booked after GST has been implemented and there was no additional benefit of GST to the Respondent which needed to be passed on to such customers. He has further submitted that the agreements entered into with these customers have fixed price for the sale of the flats which excluded GST and the Respondent has duly charged 12% GST to them as per the agreed terms, hence, there was no benefit of pre GST regime which would accrue to these customers. However, he has stated that without prejudic....
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....ed on which he has given discount. He has further contended that the application form of the applicant was also submitted along with his submissions filed on 22.05.2019 which showed that the sale price agreed with him was Rs. 92,27,211/- and the GST discount has been offered by reducing the price from the agreed price. 64. In his submissions dated 23,07.2019 the Respondent has stated that the discount given by him was not the commercial discount as the price of the flat was not increased factually which was conveyed to the above Applicant vide letter dated 24.11.2018. 65. The Respondent has also stated that the above Applicant has pointed out that the Respondent should have approached the Advance Ruling Authority in case he was not aware of the methodology and procedure to compute the benefit of ITC to be passed on. The Respondent has claimed that he had not claimed that there was no procedure to determine the exempt ITC and he had only mentioned that there was no prescribed procedure or mechanism to determine the amount of ITC to be passed on to the customers and accordingly, he has passed on the benefit on adhoc basis. 66. The Respondent has also contended that the Applicant N....
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.... Sinking Fund, Property Tax, Club Fee and reimbursements shall also be paid additionally by him. The sale agreement was also to be executed by him within a reasonable time as per para 11 of the application form. The above flat was allotted to him on 25.02.2017 for a total consideration of Rs. 1,03,18,340/- as per the details furnished by the above Applicant vide Annexure-14 of his submissions dated 25.04.2019. He had also paid first instalment of Rs. 3,62,622/- on 16.03.2017. 69. It is also revealed from the record that the above Applicant vide his complaint dated 18.07.2018 (Annexure-1 of the Report) had alleged that the Respondent had increased the price of the flat after introduction of GST and was not passing on the benefit of ITC to him in spite of the fact that he was availing ITC on the purchase of the inputs at higher rates of GST which had resulted in benefit of additional ITC to him and was also charging GST from him @12%. The above complaint was forwarded by the Maharashtra State Screening Committee to the Standing Committee on Anti-Profiteering for further action. The complaint was examined by the Standing Committee in its meeting held on 06.09.2018 and was forwarded t....
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....s dated 25.04.2019) written by the Respondent to him and has claimed that it has been forged. However, perusal of the record shows that the above Applicant has admitted vide Annexure-14 of his submissions that he had booked a flat in the above project of the Respondent on 25.02.2017 and hence he was liable to pay 20% of the consideration as per the schedule of payment mentioned in Table C of the Report, as per para 8 of the terms and conditions mentioned in the application form. However, he has paid only 5% of the demand by depositing Rs. 4,62,622/- against the demand of Rs. 14,36,723/- raised through the above letter. He had also not paid arrears of the VAT of Rs. 18,3621- demanded by the Respondent vide Annexure-3 and 4 attached by the Applicant which he was required to pay as per para 9 of the application form. Even if it is admitted that he has not received the above letter he was himself required to make payment as per para 8 and 9 mentioned above which he has not done. His liability to pay the amount demanded by the Respondent had arisen as per the terms of his allotment and he cannot claim that he was not bound to pay the same till the Respondent had obtained registration un....
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....ve Applicant was fully entitled to file complaint for violation of the provisions of Section 171 of the CGST Act, 2017 on 18.07.2018 (Annexure-1 of the Report) as he was having subsisting relationship of recipient with the Respondent as booking of his flat was cancelled by the Respondent on 24.11.2018 only. 75. The above Applicant has also claimed that his allotment was arbitrarily cancelled by the Respondent due to his filing of the present complaint. However it is clear from the perusal of the emails enclosed as Annexure-5 by the Respondent that the above Applicant himself wanted to cancel the booking as far back as October/ November 2017 and hence his allegation that his booking was cancelled as an act of vendetta is not borne out from the record. Further, the Respondent has cancelled his allotment as per the terms of pars 5 of the application form vide his letter dated 24.11.2018 which were agreed to by the Applicant himself and therefore, he cannot resile from his commitment. 76. There is no evidence to suggest that the other home buyers had not accepted the discount of Rs. 1,11,61,0901- offered by the Respondent and hence the allegation made by the above Applicant could not....
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....is correct and the Respondent is bound to follow the provisions of Section 171 of the CGST Act, 2017. 82. The Applicant has also contended that the DGAP has relied on the provisions of Section 17 (2) and 17 (3) of the CGST Act, 2017 and clause (b) of pars 5 of Schedule II while calculating the value of ITC but he has not taken in to account the provisions of Rule 42 and 43 of the CGST Rules, 2017 which provide detailed mechanism for calculation of the same. Perusal of Rule 42 of the CGST Rules, 2017 shows that it provides "Manner of determination of input tax credit in respect of inputs or input services and reversal thereof' and Rule 42 (1) (i) of the above Rules provides the method of calculation of ITC attributable to exempt supplies. Rule 43 provides "Manner of determination of input tax credit in respect of capital goods and reversal thereof in certain cases''. Thus, it is apparent that whereas the provisions of Section 17 (2) and 17 (3) provide the overall basis for calculation and reversal of the ITC, the provisions of Rule 42 and 43 provide the detailed mechanism for calculating the same. Therefore, the calculation of available ITC of Rs. 2,25,17,438/-post reversal given b....
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....exure-4 as well as Annexure-18 enclosed by the DGAP with his Report. The Respondent was at liberty to approach the Advance Ruling Authority in case he was not able to compute the benefit of ITC to be passed on to the buyers. Therefore, he cannot claim that he was not able to pass on the above benefit as he had no mechanism to do so. 84. The Applicant has also relied on the "Principles of Statutory Interpretation provided by Justice G. P. Singh" and the cases of Keshav Lal Jetha Lal Shah v. Mohan Lal Bhagwan Das = 1968 (4) TMI 72 - SUPREME COURT, Commissioner of Income Tax v. Gold Coin Health Food Private Limited = 2008 (8) TMI 5 - SUPREME COURT, Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. 1987 SCR (2) 1 = 1987 (1) TMI 452 - SUPREME COURT, Commercial Tax Officer, Rajasthan v. M/s. Binani Cement Ltd. & another (Civil Appeal No. 336 of 2003 decided on 19.02.2014) = 2014 (3) TMI 905 - SUPREME COURT, LIC v. D. J. Bahadur (1981) 1 SCC 315 : 1981 (1) SCR 1083 = 1980 (11) TMI 157 - SUPREME COURT and Gobind Sugar Mills Ltd. v. State of Bihar (1999) 7 SCC 76 = 1999 (8) TMI 761 - SUPREME COURT to claim that the intent of the amendments made in Rule 42 (1) (f) an....
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....on account of the ITC benefit. The Respondent has also not produced any evidence to prove that the above discount was computed by him on the basis of the ITC availed by him. There is also no entry in his ledgers to show that this discount was due to ITC benefit. Therefore, there is no ground to believe that the above discount as well as the additional discount was given on account of the 1TC benefit and there is no doubt that this discount was given only due to commercial reasons and hence the contention made by the Respondent in this regard cannot be accepted. 87. The Respondent has also claimed that he had offered to pass on discount of Rs. 2,21,730/- to the above Applicant on account of GST benefit. However, the same is not borne out from the record as the above amount has been offered after the price of the flat was increased as is abundantly clear from the cancellation letter dated 24.11.2018. Similarly an amount of Rs. 1,11,61,090/- claimed to have been given to the other home buyers by the Respondent also does not pertain to the benefit of GST. The DGAP has nowhere stated in para 12 (h) and 20 of his Report that the Respondent had passed on the benefit of ITC to the home bu....
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....t the tax on the input services has been increased from 15% to 18% and hence he had not got additional benefit of ITC which he was required to pass on. In this connection it would be pertinent to mention that the Respondent has got benefit of ITC on goods as well and it is only the additional benefit of ITC, from his own supplies in the value chain, which he has availed post GST which he is required to pass on. It is established from the returns filed by the Respondent that he had earned relevant additional ITC of Rs. 58,64,788/- during the pre GST period and Rs. 1,47,44,544/- during the post GST period @ 2.11% and 8.10% of the turnover respectively during the above periods which has resulted in additional benefit of 5.99% of the turnover to him which he is bound to pass on. Hence, there is no basis for reduction of an amount of Rs. 44,80,5421- from the ITC post GST for calculation of the above ratio. 91. The Respondent has also alleged that the DGAP has considered sold area as 1,37,948/- sq. ft. during the pre GST period and 84,643 sq. ft. during the post GST period which was not correct as the above areas were 73,837 sq. ft. and 44,901 sq. ft. only. He has further alleged that t....
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....antage of exceptional circumstances to make excessive profit and hence he has violated the provisions of Section 171 of the above Act. 94. The Respondent has also contended that the DGAP has taken the pre GST rate of tax as 5.5% and post-GST the rate has been taken as 12% showing increase of 6.5%. However, if the rates were applied after considering the abatement then the increase in the rate of tax would come to 9.79% and therefore, the rate of tax had infact been increased on the construction service and he had not availed any benefit of additional ITC. Accordingly, no benefit was required to be passed on as per the order dated 04.05.2018 passed by this Authority in the case of M/s KRBL Ltd = 2018 (5) TMI 760 - NATIONAL ANTI-PROFITEERING AUTHORITY. In this connection it would be appropriate to mention that the Respondent is required to pass on the benefit of additional ITC and not the benefit of reduction in the rate of tax as per the provisions of Section 171 of the above Act and perusal of his returns which he has himself filed during the pre and post GST period shows that he has availed additional benefit of ITC of 5.59% of the turnover as the relevant ITC for the pre GST per....
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....he Respondent has also argued that the above Applicant had wrongly computed the profiteered amount as Rs. 2,07,64,080/- with ratio of 9.88%. He has further argued that the DGAP has calculated the above amount as Rs. 1,27,84,694/- at the ratio of 5.99% of the turnover as per Table F supra which is correct and logical. The Respondent has also admitted that the methodology applied for computation by the DGAP was based on the same principle which he had applied in all similar cases and hence the same was correct and therefore, the above computation made by the above Applicant was incorrect and could not be relied upon. Since the Respondent has himself admitted the correctness of the profiteered amount it is held that the Respondent has resorted to profiteering in violation of the provisions of Section 171 of the above Act. There is also evidence to suggest that the letter dated 04.03.2017 was written by the Respondent to the above Applicant as there are entries to that effect in his record as per Annexure-1 and the CA certificate submitted by the Respondent as Annexure-2 with his submissions dated 17.05.2019 also supports his plea. 97. The Respondent has also claimed that the profitee....
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....r, the present computation of the profiteered amount is only interim w.e.f. 01.07.2017 to 30.09.2018 as the final calculation would have to be made at the time of issue of the OC and hence all such claims made by the Respondent can be taken cognizance of at the relevant point of time. 100. The Respondent has also given details of the above project stating that the total number of flats was 429 having total area of 2,82,936 sq. ft. out of which 153 flats having area of 1,22,050 sq. ft. had been sold during the pre GST period. Booking of 51 flats has been cancelled which was done during the pre GST period having area of 43,005 sq. ft. He has also submitted that demands were raised in respect of 61 flat buyers having area of 44,901 sq. ft. in the post GST period. 101. The Respondent and the above Applicant have also raised objection on the methodology followed by the DGAP while calculating the profiteered amount however, the same is not maintainable as profiteering in each case has to be determined on the basis of the facts of each case and no straight jacket formula can be fixed for calculating the same as the facts of each case differ. Even the methodology applied in two cases of ....
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....est. Therefore, the relationship of recipient and supplier stands terminated between the above Applicant and the Respondent w.e.f. 24.11.2018 and therefore, he is not entitled to the benefit of additional ITC as per the provisions of Section 171 of the CGST Act, 2017. He has further not paid the amount which he was required to pay in the pre and post GST period as per the terms of his allotment to become eligible for passing on of the benefit of ITC and therefore also he is not entitled to the above benefit. 104. 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. Since the present investigation is only up to 30.09.2018 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondent. 105. It is also evident from the above narration of the facts that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his One Park Avenue project in contravention of the provisions of Section 171 (1) of the CG....