AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (12) TMI 273
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....omes" situated at Sector-4, Sohna, Gurgaon, Haryana. The above applicant had alleged that the Respondent was collecting wrong GST post implementation of GST and was not refunding GST collected in the wrong manner, even after sending clarification that the GST was not applicable to "Affordable Housing", as the GST amount could be adjusted against the Input Tax Credit (ITC). 2. The above application was examined by the Standing Committee on Anti-profiteering in its meetings held on 07.08.2018 & 08.08.2018 and was forward to the DGAP for detailed investigation under Rule 129 (1) of the CGST Rules, 2017. 3. The DGAP on receipt of the above application had called upon the Respondent to submit reply as to the whether the ITC benefit was passed on to the recipients and also asked him to suo-moto determine the quantum of benefit which was not passed on. The Respondent as well as the above Applicant was afforded opportunity to inspect the evidence submitted by the other party however both of them did not avail the same. The Respondent had also not supplied the complete information sought by the DGAP hence summons were issued against him under Section 70 of the CGST Act, 2017 read with Rul....
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....No. 1 for a flat measuring 467 sq. ft., at the basic sale price of Rs. 3,600/- per sq. ft. as per the Table-'A' below:- S.No. Payment Stage Due Date Basic% BSP GST Total 1. At the time of submission of the Application 07.10.2016 5.00% 86,500 - 83,560 2. Within fifteen days of the date of issuance of Allotment 18.10.2016 20.00% 3,46,240 - 3,46,240 3. Within six months from the date of issuance of Allotment letter 03.04.2017 12.50% 2,16,400 - 2,16,400 4. Within 12 months from the date of issuance of Allotment letter 15.09.2017 12.50% 216,400 25,968 242,368 5. Within 18 months from the date of issuance of Allotment letter 15.03.2018 12.50% 216,400 17,312 233,712 6. Within 24 months from the date of issuance of Allotment letter Not yet due as on 31.08.2018 12.50% 216,400 17,312 233,712 7. Within 30 months 12.50% 216,400 17,312 233,712 8. Within 36 months from the date of issuance of Allotment letter 12.50% 216,400 17,312 233,712 Total 100.00% 17,31,200 1,12,528 18,43,728 7. The DGAP has also observed that the Respondent may have informed the above Applicant regarding passing on the benefit of ITC ....
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....ale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building". Therefore, the DGAP has further 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 them post-GST. 8. The DGAP has also submitted that the Respondent has claimed in his letter dated 03.10.2018 that the Applicant No. 1 had been informed on 30.03.2018 that the benefit of ITC accruing to him if any, on account of introduction of GST, would be passed on to her. He has further submitted that copy of the letter issued to other customers, furnished by Respondent as a part of the letter dated 16.11.2018, showed that the Respondent had passed on an amount of Rs. 27,556/- (including 8% GST on the base amount of Rs. 25,516/-) to the above Applicant which worked out to Rs. 45 per sq. ft. {Rs. 25,516/- [467 (carpet area) +100 (balcony area)]}. However, he has argued that the correctness of the amount of benefit so passed on by the Respondent was required to be determined in terms of Rule....
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....lear that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period from April, 2016 to June, 2017 was 2.42% and during the post-GST period from July, 2017 to August, 2018, it was 10.70% which clearly established that post-GST, the Respondent has benefited from additional ITC to the tune of 8.28% [10.70% (-) 2.42%] of the taxable turnover. 10. The DGAP has also stated that the Central Government, on the recommendation of the GST Council, had levied 18% GST with effective rate of 12% in view of 1/3rd abatement on value, on construction service vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The effective GST rate on construction service in respect of the affordable and low-cost houses upto a carpet area of 60 square metres was further reduced from 12% to 8%, vide Notification No. 1/2018-Central Tax (Rate) dated 25.01.2018. The DGAP has further stated that in view of the change in the GST rate after 01.07.2017, the issue of profiteering has been examined by him in two parts by comparing the applicable tax rate and the ITC available for the pre-GST period from April, 2016 to June, 2017 when only VAT@ 5.25% was payable wi....
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....e to Rs. 1,74,24,547/- which includes 12% GST on the base profiteered amount of Rs. 1,55,57,631/- and the profiteered amount during the period from 25.01.2018 to 31.08.2018, came to Rs. 2,61,29,3801- which includes 8% GST on the base profiteered amount of Rs. 2,41,93,870/-. Therefore, the total profiteered amount during the period from 01.07.2017 to 31.08.2018 came to Rs. 4,35,53,927/- which includes GST @ 12% or 8% on the base profiteered amount of Rs. 3,97,51,502/-. The home buyer and Unit No. wise break-up of this amount has been given in Annex-20 of the Report dated 26.02.2019 furnished by the DGAP. This amount is inclusive of Rs. 39,419/- including GST on the base amount of Rs. 35,836/- which is the profiteered amount in respect of the Applicant No. 1. The DGAP has also intimated that the service was supplied in the State of Haryana only. 12. The DGAP has also contended that the Respondent has passed on the benefit of ITC post implementation of GST to the extent of Rs. 2,52,63,079/- including 8% GST on the base amount of Rs. 2,33,91,740/-) to the 1075 flat buyers. A summary of category-wise profiteering & the benefit passed on has been given in Table- 'D' below by the DGAP:- ....
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.... each recipient. The DGAP has also stated that the Respondent has passed on Rs. 2,52,35,523/- as benefit of ITC to his customers and therefore, the Respondent has profiteered by an amount of Rs. 1,82,78,985/- [4,35,14,508/- (-) 2,52,35,523/-] and this additional amount of Rs. 1,82,78,985/- was required to be returned to these eligible recipients. The DGAP has further stated that the present investigation covered the period from 01.07.2017 to 31.08.2018 and hence, profiteering, if any, for the period post August, 2018, has not been computed as the exact quantum of ITC that will 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. 14. The above Report was considered by the Authority in its meeting held on 05.03.2019 and it was decided to hear the Applicants and the Respondent on 25.03.2019. Notice dated 06.03.2019 was also issued to the Respondent to explain why the Report furnished by the DGAP should not be accepted and his liability for having violated the provisions of Section 171 of the CGST Act, 2017 should not be fixed. He was further asked to show cause why penalty as per the provisions o....
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....als was not allowed to him and was cost to him in the erstwhile regime. VIII. That only this component of Central Excise Duty was the additional ITC available to him in the GST regime which he was ready to pass on to his customers subject to adjustment of any ITC which would be cost to him at the time of completion of the project. IX. That the Respondent has also provided the break-up of total ITC of Rs. 7,79,12,520/- available to him in the post-GST regime for the period from July, 2017 to August, 2018 vide Annexure-1 of his submissions dated 27.05.2019. X. That the Respondent has passed ITC benefit of Rs. 2,52,63,684/- to his 1054 customers through the credit notes details of which have been attached by him as Annexure-2 of his above submissions. He has also supplied updated list of flats sold up to 31.03.12019 vide Annexure-3, details of total ITC availed upto 01.04.2019 vide Annexure-4 and details of the demand raised upto 31.03.2019 vide Annexure-5. XI. That he has passed on the GST Benefit on 14.11.2018 to his customer through credit notes on provisional basis and also informed them that the final GST benefit shall be recalculated / reassessed at the time of handing o....
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.... the basis of the above Ratios vide his submissions dated 06.06.2019. 19. Based on the above facts this Authority determines the profiteered amount as Rs. 4,35,53,927/- (inclusive of applicable GST @ 12% or 8%) for the 1075 residential units for the period from 01.07.2017 to 31.08.2018 as per the details furnished by the DGAP vide Annexure-20 of his above Report. The above amount includes an amount of Rs. 1,74,24,547/- including the GST @ 12% w.e.f. 01.07.2017 to 24.01.2018 and an amount of Rs. 2,61,29,380/- including the GST @ 8% for the period from 25.01.2018 to 31.08.2018. However, the Respondent has passed on Rs. 2,52,63,079/- as benefit of ITC to the above flat buyers as has been duly verified by the DGAP in Table-D supra. Therefore, the balance profiteered amount of Rs. 1,82,90,848/- [4,35,53,927/- (-) 2,52,63,079/-] is required to be returned to the eligible recipients as per the details furnished by the DGAP vide Annexure-21 of the above Report. This amount includes Rs. 11,863/-(39,419/-(-) Rs. 27,556/- (inclusive of applicable GST) of the benefit which is required to be passed on to the Applicant No. 1. 20. It is also established from the perusal of the above facts of th....