TaxTMI 
TaxTMI 
2019 (11) TMI 467
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....ved from the Applicant No. 5 i.e. the Director General of Anti-Profiteering (DGAP), under Rule 129 (6) of the Central Goods & Services Tax (CGST) Rules, 2017. The brief facts of the present case are that the Haryana State Screening Committee on Anti-profiteering, vide the minutes of its meeting held on 20.06.2018 had referred 03 applications filed by the Applicant No. 1, 2 & 3, to the Standing Committee on Anti-profiteering, under Rule 128 of the CGST Rules, 2017, alleging profiteering by the Respondent in respect of supply of flats in the "Expressway Towers" project of the Respondent in Gurugram, under the Affordable Housing Policy, 2013, (AHP), issued by the Government of Haryana on 19.08.2013. 2. Another application was filed by the Applicant No. 4 before the Standing Committee on Anti-profiteering, alleging profiteering by the Respondent in respect of supply of the flat in the project mentioned above. All the Applicants had alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to them by way of commensurate reduction in the prices post implementation of GST w.e.f. 01.07.2017 and had charged GST on the full amount of instalments. To establish their....
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.... under the current investigation is from 01.07.2017 to 31.08.2018. The time limit to complete the investigation was extended by this Authority upto 29.01.2019 vide its order dated 30.11.2018, in terms of Rule 129 (6) of the CGST Rules, 2017 for a period of two months. Further extension of time of 1 month upto 28.02.2019 was allowed to the DGAP to complete the investigation vide order dated 29.01.2019. The Investigation Report of the DGAP was received on 21.02.2019. 7. Vide his Report the DGAP has stated that in response to his notice dated 10.09.2018 and subsequent reminder dated 27.09.2018, the Respondent had submitted his responses vide letters dated 19.09.2018, 24.09.2018, 04.10.2018, 12.10.2018, 29.10.2018, 01.1 1.2018, 02.1 1.2018, 17.11.2018, 27.1 1.2018, 06.12.2018, 20.12.2018, 28.12.2018, 10.01.2019 and 21.01.2019. The averments made by the Respondent, vide his above letters, were summed up by the DGAP as below:- (a) That "Expressway Towers", Sector-109 was his first construction project which was under the AHP, for which he had received environmental clearance on 30.11.2017 and permission to start construction activity was given on 05.02.2018. Earlier, he was involved i....
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....so stated in the Report that the Respondent had submitted that the financial data/information supplied by him was to be treated as confidential, in terms of Rule 130 of the CGST Rules, 2017. The above Applicants were given an opportunity to inspect the non-confidential documents submitted by the Respondent on 07.02.2019 or 08.02.2019, vide email dated 31.01.2019 by the DGAP. The Applicant No. 2 availed of the said opportunity and inspected the documents on 07.02.2019. 10. The DGAP has further stated that the above applications, the various replies of the Respondent and the documents/evidence on record were carefully examined by him and he had found that the main issue that needed to be examined was whether the Respondent had got any benefit of reduction in the rate of tax or on account of ITC in the course of supply of construction service by him after implementation of GST w.e.f. 01.07.2017 and if so, whether the Respondent had passed on such benefit to the recipients in terms of Section 171 of the CGST Act, 2017. The Respondent, vide letter dated 04.10.2018, had submitted the project report of the project "Expressway Towers" wherein payment schedule for the purchase of flats at ....
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....hs of the date of issuance of offer of Allotment letter 19.11.2017 12.50% 3,28,250 - 26,260 3,54,510 3,54,510 4. Within 12 months of the date of issuance of offer of Allotment letter 19.05.2018 12.50% 3,28,250 - 26,260 3,54,510 13,130 Total 50.00% 13,13,000 - 52,520 13,65,520 10,24,140 Applicant No. 4 (Amount in Rs.) S. No. Payment Stage Due Date Basic % BSP Service Tax GST Total Amount payable Amount paid 1. At the time of booking 12.12.2016 5.00% 63,125 - - 63,125 63,125 2. Within 15 days of the date of issuance of offer of Allotment letter 01.04.2017 20.00% 2,52,500 - - 2,52,500 2,52,500 3. Within 06 months of the date of issuance of offer of Allotment letter 30.09.2017 12.50% 1,57,813 - 12,625 1,70,438 0 4. Within 12 months of the date of issuance of offer of Allotment letter 19.05.2018 12.50% 1,57,813 - 12,625 1,70,438 0 Total 50.00% 13,13,000 - 52,520 13,65,520 3,15,625 12. In his Report, the DGAP has further submitted that the contention of the Respondent that he would pass on the benefit of ITC to the flat buyers when the last instalment would be demanded post completion of cons....
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....clause (b) of paragraph 5 of Schedule II, sale of building". In view of the above, the DGAP has claimed that the ITC pertaining to the unsold units was outside the scope of this investigation and the Respondent was required to recalibrate the selling price of such units to be sold to the prospective buyers by considering the net benefit of additional ITC available to him post-GST. 14. The DGAP has further claimed from the GST returns and other information submitted by the Respondent, it was found that the Respondent's turnover was Rs. 16,90,20,522/- and he had availed ITC to the tune of Rs. 1,43,27,507 during the post-GST period (July, 2017 to August, 2018). 15. It was also reported by the DGAP that the Respondent had got permission to start construction for the project "Expressway Towers" on 05.02.2018, i.e., post implementation of GST w.e.f. 01.07.2017 and hence, no ITC was available to the Respondent in the pre-GST era Further, as the service of construction of affordable housing, provided by the Respondent, was exempt from the Service Tax, vide Notification No. 25/2012-ST dated 20.06.2012, as amended by Notification No. 9/2016-ST dated 01.03.2016 issued by the Central Bo....
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....ate on construction service in respect of affordable and low-cost housing was further reduced from 12% to 8%, vide Notification No. 1/2018-Central Tax (Rate) dated 25.01.2018. He has further stated that in view of the change in the GST rate after 01.07.2017, the issue of profiteering had been examined in two parts, i.e., (1) the post-GST period from July, 2017 to 24.01.2018, when the effective GST rate was 12% and (2) the GST period from 25.01.2018 to 31.08.2018, when the effective GST rate was 8%. Accordingly, on the basis of Table-C above, the increase in the availability of ITC, the Respondent's turnover, the recalibrated basic price and the excess collection by the Respondent during the post-GST period, the DGAP has furnished the following details:- Table-'D' S.No. Particulars Pre-GST Post- GST 1. Period A April, 2016 to June, 2017 July, 2017 to January 24th, 2018 January 25th, 2018 to August, 2018 Total July, 2017 to August, 2018 2. Output tax rate (%) B 0 12 8 3. Ratio of CENVAT/ ITC to Turnover as per Table-D above (%) C 0 3.73% 3.73% 3.73% 4. Increase in ITC availed post-GST (%) D - 3.73% 3.73% 3.73% 5. Analysis of Incre....
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.... at serial no.187 and 484 of Annexure-25, the amount profiteered was Rs. 25,3941- (including GST). 19. On the basis of the details of the outward supplies of the construction service submitted by the Respondent, the DGAP has further reported that the said construction service had been supplied by the Respondent in the State of Haryana only. 20. The DGAP has further reported that whereas the Respondent had booked 1,089 flats in the pre-GST period and had received booking amount from all the home buyers in the pre-GST period, no demand had been raised by him in respect of 596 home buyers during the period 01.07.2017 to 31.08.2018 post-GST (period under investigation). Therefore, the above computation of profiteering was with respect to 493 [1089 (-) 596] flats only, wherein demands had been raised and/or payment had been received in the post-GST period. If the ITC in respect of these 596 flats was taken into account to calculate profiteering in respect of 493 flats, where payments had been received post GST, the ITC as a percentage of turnover would be distorted and erroneous. Therefore, the profiteering in respect of these 596 units was required to be calculated when the considera....
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....was decided to hear the Applicants No. 1 to 4 and the Respondent on 13.03.2019. Sh. Rahul Chaudhary, Sh. Ashok Singal, Sh. Rameshwar Singh, Sh. Ishu Khurana and Sh. Ramesh Singh were also added as applicants on their request as they had also purchased flats from the Respondent. First hearing was held on 13.03.2019 when the Applicant No. 1 to 4 had filed written submissions. During subsequent proceedings the above Applicants had filed further written submissions on 02.04.2019, 16.04.2019, 03.05.2019 and 21.05.2019 which are summarized as below:- i. The above Applicants stated that in addition to 4 Applicants, there were several other buyers who had alleged contravention of the provisions of Section 171 of the CGST Act 2017, against the Respondent hence, their names should be tagged with the existing 4 Applicants. Further, the order to be passed by the Authority should be made applicable to all the, buyers on whom the demand had been raised by the Respondent during the period of investigation. ii. The above Applicants further submitted that the Respondent has without sharing the total benefit of ITC or commensurate reduction in the price, passed on merely 4% on account of I....
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....,197 129,18,300 155,34,497 vi. The Applicants have also submitted that profiteering due to non-passing of the ITC benefit by the Respondent was 12% during the period from 01.07.2017 to 24.01.2018 and 7.998% during the period from 25.01.2018 to 31.08.2018 under Section 171 of CGST Act, 2017. Therefore, the amount of refund allowed by the Respondent @ 4% during May, 2018 should be deducted from the above amount of profiteering. They have further submitted that the total benefit of Rs. 26,16,197/- minus the amount allowed as ITC with interest (c)18% p.a. was payable to the buyers against the amount paid prior to 25.01.2018 and an amount of Rs. 1,29,18,300/- was reimbursable to the buyers with interest @ 18% p.a. against the amount paid after 25.01.2018 irrespective of the GST amount or demand raised. vii. The above Applicants have requested that since the above act of profiteering had been done by the Respondent, deliberately penalty should be imposed on him alongwith the following reliefs:- (i) Price reduction should be ordered and (ii) Due compensation should be awarded to the recipients with 18% interest. viii. The above Applicants further submitted that no deduction on....
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....ondent which have been placed on record and find that following issues are to be settled in the present proceedings:- I. Whether there was reduction in the rate of tax on the service in question w.e.f. 01.07.2017 and w.e.f. 25.01.2019? II. Whether there was any net additional benefit of ITC? III. Whether there was any violation of the provisions of Section 171 of the CGST Act, 2017, by not passing on the benefits of reduction in the tax rate or additional ITC, by the Respondent? 26. In this connection it would be appropriate to refer to Rule 127 of the CGST Rules, 2017 which reads as under:- "It shall be the duty of the Authority- i. to determine whether any reduction in the rate of tax on any supply of goods or services or the benefit of ITC has been passed on to the recipient by way of commensurate reduction in prices; ii. to identify the registered person who has not passed on the benefit of reduction in the rate of tax on supply of goods or services or the benefit of ITC to the recipient by way of commensurate reduction in prices; iii. to order; (a) reduction in prices; (b) return to the recipient, an amount equivalent to the amount not passed on by way ....
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....ondent to pass on the benefit at the time of completion of the project has become infructuous. iv. The above Applicants have also questioned the methodology adopted by the DGAP for calculation of the ITC benefit and suggested another methodology as has been mentioned in Para 19 (v) of this order. In this regard, the explanation of the DGAP, referred to in Para 17 and Para 18 of this order, has been found to be correct and rational as per Section 171 of the CGST Act, 2017. Hence, the objection of the Applicants is not sustainable. v. Further, the above Applicants have contended that the Respondent had issued credit notes to the Applicants but he had not adjusted the credit amount in the demand letters hence, credit notes had no value. In this regard, during the proceedings the Respondent has submitted that he would adjust the ITC benefit amount in the demand letters and issue the new demand letters. During subsequent hearings the Respondent has submitted that he has adjusted the ITC benefit amount in the revised demand letters and this fact was also admitted by the Applicants during the proceedings hence, the objection of the Applicants has been resolved. 29. We obs....
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....of benefit of input tax credit that needs to be passed on by the Respondent to the recipients or in other words, the profiteered amount during the period 25.01.2018 to 31.08.2018, comes to Rs. 60,26,165/- which includes 8% GST on the base profiteered amount of Rs. 55,79,782/-. Therefore, the total profiteered amount during the period 01.07.2017 to 31.08.2018 comes to 68,39,570/- which includes GST (@ 12% or 8%) on the base profiteered amount of Rs. 63,06,036/-. It is observed that the Applicant No. 1 and 4 have not paid any amount post GST and hence, there is no benefit of ITC to be passed on to them. The above amount is inclusive of Rs. 25394/- (including GST) which is the profiteered amount in respect of the Applicant No. 2 & 3. 30. It is observed that the Payment Schedule submitted by the Respondent is as follows: Time of Payment % of the total price payable At the time of submission of the Application for allotment 5% of the total price Within 15 days of the date of issuance of offer of Allotment letter 20% of the total price Within 06 months of the date of issuance of offer of Allotment letter 12.5% of the total price Within 12 months of the date of issuance....