TaxTMI 
TaxTMI 
2019 (2) TMI 1757
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....ondent's project "Oyster Grande" situated in Sector-102/102A, Gurugram, Haryana. The Applicant No. 1 had alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in the price. This Complaint was examined by the Haryana State Screening Committee and it was observed that due to availability of ITC on input materials, the Respondent's tax burden had been reduced which needed to be passed on to the customers, in terms of Section 171 of the CGST Act, 2017. The State Screening Committee forwarded the said application with its recommendation to the Standing Committee on Anti-profiteering for further action, in terms of Rule 128 of the CGST Rules, 2017. 2. The above Complaint was examined by the Standing Committee on Anti-profiteering in its meeting held on 13.12.2018 and vide its minutes was forward to the DGAP for detailed investigation under Rule 129 (1) of the CGST Rules, 2017. 3. The DGAP in his report has stated that the Applicant had submitted the following documents along with his application: (a) Copies of demand letters issued to him, both pre-GST and post-GST. (b) Copies of the communicati....
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....car Parking + IFMS + CMRC + Power Backup Charges 86,01,729 All Other Charges & Taxes (As Applicable) Total 1,62,79,414 7. The DGAP has further stated that vide the aforementioned letters/emails, the Respondent submitted the following documents/information (a) Copies of GSTR-1 Returns for the period July, 2017 to December, 2018 (b) Copies of GSTR-3B Returns for the period July, 2017 to December, 2018. (c) Copy of Electronic Credit Ledger for the period 01.07.2017 to 31.12.2018 (d) Copies of Tran-I for the period July, 2017 to December, 2017. (e) Copies of VAT & ST-3 Returns for the period April, 2016 to June, 2017. (f) Copies of all demand letters, sale agreement/contract issued in the name of the Applicant No. 1 (g) CENVAT/ITC register for the period April, 2016 to December, 2018. (h) copy of Balance Sheets for FY 2016-17 & 2017-18. (i) Tax rates, pre-GST and post-GST. (J) Details of turnover, output tax liability/GST payable and ITC availed and its reconciliation with the turnover as per the list of home-buyers. In terms of Rule 130 of the CGST ....
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....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." Therefore, the ITC pertaining to the unsold units was outside the scope of the investigation and the Respondent was required to recalibrate the selling price of such units to be sold to the prospective buyers by considering the proportionate additional ITC available to them post-GST. 10. The DGAP also claimed that prior to 01.07.2017, i.e. before CST implementation, the Respondent was eligible to avail CENVAT credit of Service Tax paid on the input services. However, CENVAT credit of Central Excise Duty paid on the inputs was not admissible as per the CENVAT Credit Rules, 2004, which were in force at the material time. Moreover, since the Respondent was paying VAT @1% under Haryana VAT Composition Scheme, he was not eligible to avail ITC of VAT paid on the inputs. Further, post-GST, the Respondent could avail the ITC of GST paid on all the inputs and input services including the s....
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....ember, 2018) when the effective GST rate was 12% on the gross value. On the basis of the figures contained in Table-'B' above, the comparative figures of ITC availed/available as a percentage of the turnover in the pre-GST and post-GST periods and the recalibrated basic price as well as the excess collection (profiteering) during the post-GST period, have been tabulated in Table-'C' below:- Table-C (Amount in Rs.) S. No. Particulars Pre-GST Post-GST 1. Period A April, 2016 to June, 2017 July, 2017 to Dec, 2018 2. Output tax rate (%) B 5.50% 12.00% 3. Ratio of CENVAT/VAT/GST Input Tax Credit to Total Turnover as per Table - B above (%) C 5.57% 7.08% 4. Increase in input tax credit availed post-GST (%) D - 1.51% 5. Analysis of Increase in input tax credit: 6. Total Basic Demand during July, 2017 to December, 2018 E 741,104,272 7. GST@12% F=E*12% 88,932,513 8. Total demand G=E+F 830,036,785 9. Recalibrated Basic Price H=E*(1-D) or 98.49% of E 729,913,59....
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....ts where payment had been received in the post-GST period, the ITC as a percentage of turnover would be distorted and erroneous. Therefore, the benefit of ITC in respect of these 90 units should be calculated when the consideration was received from such units by taking into account the proportionate ITC in respect of such 90 units. 15. The DGAP has further concluded that the Respondent had been benefited with additional ITC of 1 51% of the turnover and the same was required to be passed on to the Applicant No. 1 and the other recipients. Section 171 of the CGST Act, 2017 appeared to have been contravened by the Respondent, in as much as the benefit of ITC @1.51% of the demand raised by the Respondent during the post-CST period from 01.07.2017 to 31.12.2018, has not been passed on to the Applicant No. 1 and the other recipients. On this account, the Respondent has realized an excess amount to the tune of Rs. 1,46,656/- from the Applicant No. 1 which included both the profiteered amount @1.51% of the basic price and GST on the said profiteered amount. Further, the investigation revealed that the Respondent had realized an excess amount of Rs. 1,23,86,899/which included both the p....
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....Electrification and utility charges apart from Basic Sale Price(BSP) which should had been charged at 12% instead of 18%. GST on all additional charges directly related to construction should be charged at 12% instead of 18% and the same had not been considered a part of the investigation report. iv. Based on simple calculation of tax liability pre and post introduction of GST, his overall tax liability has gone upwards by Rs. 7 Lakh including Rs. 4.47 Lakh on BSP alone. However, as per the DGAP's report the benefit of ITC to be passed on to him was only Rs. 1.46 Lakhs. He also submitted calculation of tax pre and post-GST as under:- Table:- Tax pre and post GST Amount Tax Pre-GST (4.5% Service tax and 1 % HVAT) Tax Post GST (12/18%) Additional Tax BSP 68,85,930 3,78,726 8,26,312 4,47,585 Car parking 7,50,000 41,250 1,35,000 93,750 PLC 2,57,900 14,185 46,422 32,238 Interest free maintenance security 2,57,900 14,185 46,422 32,238 Club membership registration charges 2,50,000 13,750 45,000 31,250 Power backup charges 2,00,000 11,00....
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..... The said sample credit notes pertains to the following home buyers.- S.No. Name of the Home Buyer S. No. as per Annexure-12 of DGAP's Report Unit No. as per the Annexure-12 of the DGAP's Report Amount of ITC benefit claimed to have been passed on through the credit notes (Amount in Rs.) 1. Sh. Amit Tandon (The Applicant) 416 B-501 43,997/- 2. Smt. Prabh Bedi & Sh. Paramdeep Singh 48 B-103 7,470/- 3. Sh. Pranav Malik and Smt. Madhumita Malik 380 D-401 5,673/- 4. Sh. Mukesh Saxena & Smt. Tripti Saxena 356 A-202 5,845 5. M/s. R3M Ventures 245 C-104 5,937/- 22. Vide order dated 01.08.2019, The Authority directed the Respondent to submit the following documents:- a. Statement showing project-wise ITC/CENVAT Credit availed and Turnover as per the statutory Returns (GST, ST, VAT Returns) for the period from 01.04.2016 to 31.12.2018. b. Project-wise list of all payments received from each of the buyers and the ITC benefit passed on, if any, to them. c. Balance Sheets for the years 2016-17, 2017-18 & 2018-19 along with the project wise Trial Balance for the same period. ....
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....f all the sold and unsold flats alongwith the copies of Completion Certificate and Occupancy Certificate. b. Details of all the payments received from the 10 flat buyers who had booked flats when the project had started and got occupancy certificate in the post GST period. c. In respect of the Joint Development Agreement, the Respondent further submitted that the Joint Development Agreement was with the bank for loan and enclosed the copy of the letter from the bank. 26. Vide order dated 03.09.2019, the Authority again directed the Respondent to submit the following documents/details:- a. Details of total number of flats constructed tower-wise b. Total number of flats sold up to 31.12.2018 c. Total number of flats sold from 01.01.2019 to 12.02.2019 d. Details of Credit/lTC available as on 12.02.2019. e. Details of Reversal of credit as on 12.02.2019 f. Total profiteered amount for the flats sold up to 31.12.2018 Details thereof. g. Copy of sample receipt from the Applicant alongwith other recipients/flat owners in respect of the profiteered amount made to them. 27. The Respondent, vide his submis....
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....as available to the Respondent during the pre-GST period (April-2016 to June-2017) was 5.57%, whereas, during the post-GST period (July-2017 to December-2018), it was 7.08%. This confirms that in the post-GST period, the Respondent has been benefited from additional ITC to the tune of 1.51% (7.08%-5.57%) of his turnover and the same is required to be passed on by him to the eligible flat buyers, including the Applicant No. 1. We observe that the computation of the amount of ITC benefit to be passed on by the Respondent to the eligible flat buyers works out to Rs. 1,25,33,555/-. We also observe that the said computation of the amount of profiteering worked out by the DGAP is based on the data and information supplied by the Respondent himself. We also take note of the fact that the Respondent has not challenged the said mathematical computation and has agreed to pass on the ITC benefit to the recipients. Hence we observe that the amount of profiteering computed by the DGAP is correct and therefore, we take the view that the provisions of Section 171 (1) of the CGST Act, 2017 have been contravened in the present case as the Respondent had been benefited from additional ITC in the ....
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....y the concerned Commissioner CGST/SGST as per the provisions of Rule 136 of the CGST Rules, 2017, under the supervision of the DGAP. A detailed Report confirming the action taken on the directions passed vide this order shall be submitted by the concerned Commissioner CGST/SGST within a period of 4 months from the date of this order. 33. The Respondent vide his submissions dated 01 08.2019 has claimed that he has issued credit notes to his concerned customers including the Applicant No. 1 to the tune of 30% of the profiteered amount computed by the DGAP in his report. However, the Respondent has only submitted sample copies of credit notes dated 30.07.2019 issued by him to the Applicant No. 1 and four other flat buyers as detailed at Para 21 of the order. We observe that the Respondent has failed to submit any proof of having passed on the ITC benefit to the other eligible buyers. Further, passing on of the ITC benefit by the Respondent to the Applicant No. 1 and the four recipients in respect of whom he has furnished credit notes since the said credit notes were not furnished by the Respondent before the DGAP. For the same reason, the claim of the Respondent regarding his havin....