TaxTMI 
TaxTMI 
2019 (11) TMI 467
X X X X Extracts X X X X
X X X X Extracts X X X X
.... This Report dated 21.02.2019, has been received 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... already underway. 6. The period covered by the DGAP 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 construct....
X X X X Extracts X X X X
X X X X Extracts X X X X
....opy of Project Report of RERA. (k) Reconciliation of turnover reported in GSTR-3B with the list of home buyers. (l) Details of unsold flats. 9. The DGAP has also 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 CG....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rs.) S. No. Payment Stage Due Date Basic % BSP Service Tax GST Total Amount payable Amount paid 1. At the time of booking 30.12.2016 5.00% 1,31,300 - - 1,31,300 1,31,300 2. Within 15 days of the date of issuance of offer of Allotment letter 20.05.2017 20.00% 5,25,200 - - 5,25,200 5,25,200 3. Within 06 months 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cluding zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies". Section 17 (3) "The value of exempt supply under sub-section (2) shall be such as may be prescribed, and shall include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to 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 p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orted from the above Table-'C', the ITC as a percentage of the total turnover that was available to the Respondent during the pre-GST period (April, 2016 to June, 2017) was 0% and during the post-GST period (July, 2017 to August, 2018), it was 3.73%. This clearly confirmed that post-GST, the Respondent had benefited from additional ITC to the tune of 3.73% [3.73% H 0%] of the turnover. It was stated by him that the Central Government, on the recommendation of the GST Council, had levied 18% GST (effective rate was 12% in view of 1/3rd abatement for land value included in the service) on construction service, vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (Annex-23). The effective GST rate 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 ef....
X X X X Extracts X X X X
X X X X Extracts X X X X
....teered amount, as Rs. 8,13,4051-, including 12% GST on the base profiteered amount of Rs. 7,26,255/-, for the period from 01.07.2017 to 24.01.2018 and the profiteered amount as Rs. 60,26,165/- including 8% GST on the base profiteered amount of Rs. 55,79,7821- for the period from 25.01.2018 to 31.08.2018. Therefore, the total profiteered amount during the period from 01.07.2017 to 31.08.2018 has been calculated by the DGAP as Rs. 68,39,570/- which included GST (@ 12% or 8%) on the base profiteered amount of 63,06,036/-. The home buyer and un it no. wise break-up of this amount has been annexed by the DGAP with his Report as Annex-25. The DGAP has also reported that as per Annexure-25, the Applicant No. 1 and 4 had not paid any amount in the post GST period and hence, they were not entitled for any benefit of increased ITC availability. However, in the case of Applicant No. 2 & 3, mentioned 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 b....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... nos. allotted to them. Therefore, this additional amount of Rs. 68,14,176/- was required to be returned to such eligible recipients. The DGAP has also mentioned that the present investigation covered the period from 01.07.2017 to 31.08.2018 and profiteering for the period post August, 2018 was not examined as the exact quantum of ITC that would be available to the Respondent in future could not be determined at this stage when the construction of the project was not completed. The DGAP's conclusion was that the provisions of Section 171 (1) of the CGST Act, 2017 required that any reduction in rate of tax on any supply of goods or services or the benefit of ITC was required to be passed on to the recipients by way of commensurate reduction in prices which had been contravened in the present case. 22. The above report was considered by the Authority in its meeting held on 26.02.2019 and it 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 hearin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as below:- Calculation of ITC Benefit for passing over to the buyers Sl.No. Particulars 01.07.2018 to 24.01.2018 - @ 12% 25.01.2018 to 31.08.2018- 8% Total (Post - GST) 1. Total Taxable Value / Turnover 194,65,786 1495,54,736 1690,20,522 2. GST payable (1*rate) 23,35,890 119,64,380 143,00,270 3. Paid through ITC 23,35,890 119,61,124 142,97,014 4. Cash paid (2 minus 3) - 3,256 3,256 5. Ratio of ITC availed/ Turnover (3 divided 1) 12% 7.998% - 6. Re-caliberated rate (100 minus 5) 88% 92.002% - 7. Re-caliberated price (1 * 6) 171,29,892 1375,93,348 1547,23,240 8. GST @ 12% / 8% 20,55,587 110,07,468 130,63,055 9. Commensurate demand price with GST (7 + 8) 191,85,479 1486,00,816 1677,86,295 10. Total Turnover plus GST collected originally collected from buyers (1 + 2) 2,18,01,676 16,15,19,116 18,33,20,792 11. Excess collection of demand or profiteering amount (10 minus 9) 26,16,197 129,18,300 155,34,497 vi. The Applicants have also submitted that profiteering due to non-passing of the ITC benefit b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by the Applicants. The Respondent has also submitted the list of all the buyers including the above Applicants to whom he had passed on the ITC benefit. The Respondent has claimed that, upto 31.08.2018 the total ITC benefit of Rs. 68,39,570/- has been passed on by him along with the applicable interest thereon to the 493 home buyers, as per the Annexure 25 of the DGAP's Investigation Report, which is inclusive of the ITC benefit of Applicant No. 2 of Rs. 12,697/- along with interest of Rs. 1496/- and Applicant No. 3 of Rs. 12,697/- along with interest of Rs. 1521/-. Since the Applicant No. 1 & 4 have not paid any amount post GST (upto 31.08.2018) and hence, there was no benefit of ITC to be passed on in respect to these two Applicants during the period of investigation. The Respondent has also claimed that the total ITC benefit of Rs. 1,90,09,595/- has been passed on by him along with interest of Rs. 26,00,920/- to the 720 home buyers up to 31.03.2019. 25. We have carefully considered the DGAP's Report and the written submissions filed by both the Applicants and the Respondent which have been placed on record and find that following issues are to be settled in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....entioned that in every such case, the Authority allows benefit to all the buyers of the project and not only the Applicants. Therefore, this pleading of the Applicants is accepted. ii. Second pleading of the Applicants is that instead of actual ITC benefit accrued to him, the Respondent had passed on the ITC benefit at a flat rate of 4% to the buyers. In this regard, during the proceedings, the Respondent has admitted that he has passed on the ITC benefit on actual calculations as per the DGAP's investigation report along with the interest @18% p.a. This fact was also admitted by the Applicants during the proceedings. Therefore, the objection of the above Applicants is not sustainable. iii. The above Applicants have also raised objection that the request of the Respondent that he would pass on the benefit at the time of completion of the project was not sustainable. In this regard, the Respondent has admitted that he has passed on the ITC benefit as per the DGAP's investigation report along with the interest @18% p.a. during the proceedings. This fact has also been admitted by the above Applicants during the proceedings hence, the request of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... post-GST (%) D - 3.73% 3.73% 3.73% 5. Analysis of Increase in input tax credit 6. Base Price collected during July, 2017 to August, 2018 (Gross Turnover) E 19,465,786 149,554,736 169,020,522 7. GST Collected over Basic Price F= E*12% or 8% 2,335,894 11,964,379 14,300,273 8. Total Demand collected G=E+F 21,801,680 161,519,115 183,320,795 9. Recalibrated Basic Price H=E*(1-D) or 96.27 % of E 18,739,531 143,974,954 162,714,485 10. GST @12/8% I=H*12/8% 2,248,743 11,517,996 13,766,740 11. Commensurate demand price J=H+I 20,988,275 155,492,950 176,481,225 12. Excess Collection of Demand or Profiteering Amount K=G-J 813,405 6,026,165 6,839,570 On the basis of the aforesaid CENVAT/input tax credit availability pre and post-GST and the details of the amount collected by the Respondent from the Applicants and other home buyers during the period 01.07.2017 to 24.01.2018, the amount of benefit of input tax credit that needs to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the fact that the ITC availed by the Respondent during pre-GST period, i.e. upto 30.06.2017, was zero and the value of Turnover for pre-GST period was positive hence, the ratio of ITC/Turnover comes out as zero. Further, we observe from the DGAP's Report that the ratio of ITC/Turnover for post-GST period (July, '17 to August, '18) comes out as 3.71%. Therefore, in the context of the findings of the DGAP, which have been carefully considered the fact that the Respondent has accepted the findings of the Investigation Report and passed on the ITC benefit to his recipients, the Authority finds no reason to disagree with the investigation conducted and the consequent Report of the DGAP. 31 Therefore, this Authority, under Rule 133(3)(a) of the CGST Rules, 2017, orders that the Respondent shall reduce the price to be realized from the buyers of the flats commensurate with the benefit of ITC received by him as has been detailed above. The Respondent's Annexures dated 15.04.2019 and 03.05.2019, which comprise of the details of payments made through various modes have been taken on record. As per this Annexure the Respondent has paid to the Applicant No. 1 to ....