TaxTMI 
TaxTMI 
2019 (12) TMI 1159
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....fore the Standing Committee on Anti-profiteering, under Rule 128 (1) of the CGST Rules, 2017 and submitted that he had purchase a flat in the Respondent's project "Godrej City Panvel Phase-I" situated at Khanvale, Panvel, Raigarh-410206 and alleged that the Respondent had not passed on the benefit of input tax credit to him by way of commensurate reduction in price of the flat, in terms of Section 171 of the CGST Act, 2017. 2. The above reference was examined by the Standing Committee on Anti-profiteering and vide minutes of its meeting dated 13.12.2018 it had forwarded the same to the DGAP for detailed investigation under Rule 129 (1) of the above Rules. 3. The DGAP on receipt of the application had issued notice dated 15.01.2019 to the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the Applicant No. 1 by way of commensurate reduction in the price and if so to suo moto determine the quantum there of and indicate the same in his reply to the notice as well as furnish all the supporting documents. The Respondent was also given an opportunity to inspect the non-confidential evidences/information submitted by the above Applicant. ....
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....mercial Project 3,66,103 60-CommerciaI Total 24,85,128 --- 7. The Respondent has also stated that he was undertaking two projects, namely, "Godrej City Panvel Phase-I" and "Golf Meadows Godrej City, Panvel (Phase-II)" which were separately registered under the Real Estate Regulatory Authority (RERA). Though the present project was launched in September, 2014, the Respondent has received commencement certificate for the project in March, 2017, and the project "Golf Meadows Godrej City Panvel (Phase-II)", was launched in October, 2018. He has further stated that the number of units booked in the present project as on 30.062017, was 380 and was 493, as on 31.12.2018. Further, the Respondent was also undertaking construction of EWS units which was currently not registered under the RERA. The Respondent was also incurring some expenses in respect of Phase-III of the project which was yet to be launched. 8. He has also submitted that he has only received advances during the pre-GST period and has not raised any tax invoice on his customers and the he has paid Service Tax on the advances so received during the pre-GST period. The Respondent has also availed ....
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....sed on additional benefit to the tune of extra GST levied vis-a-vis Service Tax on advances received in earlier regime but billed in GST regime (around 3% to 4%). Respondent would pass on the benefit on 19 units as and when tax invoice would be raised. Customers who booked units during 01.07.2017 to 31.03.2018 145 Respondent has passed on GST benefit of 6% to the customers Customers who booked units after 31.03.2018 58 GST benefit was factored in the price at which units were booked. 11. The Respondent has also mentioned that the supplies which were fully provided in the GST regime, would not attract the Anti-Profiteering provisions. He has also cited the Order of this Authority dated 24.05.2019 passed in the case of Hermeet Kaur Bakshi v. Conscient Infrastructure Pvt. Ltd. = 2019 (5) TMI 1395 - NATIONAL ANTI-PROFITEERING AUTHORITY, wherein it was held that in case, there was no comparative pre-GST ITC which was availed or utilized, the question of profiteering would not arise. The service rendered in the said case (construction of the project) was not in existence during the pre-GST regime and the project was launched only after the implementation of the GS....
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....s earlier blocked in the hands of the Respondent. Hence, the approach adopted for comparison of the ratio of ITC and turnover in the pre-GST and post-GST periods, was not the correct approach. Further, the Respondent has himself computed the benefit of ITC based on the methodology adopted by this Authority while determining profiteering in recent orders. The calculation has been furnished in Table- 'C' below:- Table- 'C' (Rs. In Cr.) S.No. Particulars Pre-GST Post-GST (Apr, 14 to Jun, 17) (Jul, 17 to Dec,18) A Cenvat Credit of Service Tax Paid on Input Services 2.48 B ITC of GST Availed (Net of reversal as per GSTR-3B) 14.59 C Total Turnover as per Home Buyer List 40.36 189.89 D Total Saleable Area (In Sq. ft.) 0.07 0.07 E Total Area Sold relevant to turnover as above 0.05. 0.06 F ITC Relevant to Turnover[A*(E/D)] OR [B*E/D)] 1.68 12.79 G Ratio of ITC to Turnover[F/C] 4.16% 6.73% PROFITEERING 2.58% 14. In the light of the above calculations, it was submitted by the Respondent that in case the above methodology of calculation was adopted for th....
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.... by the Respondent to his recipients, in terms of Section 171 of the CGST Act, 2017. 18. The Respondent has also submitted a copy of the agreement for sale dated 07.03.2018, and the demand letters and payment receipts for the sale of Flat No. D0403 to the Applicant No. 1. He has also furnished the details of amounts and taxes paid by the Applicant No. 1 to the Respondent in as per Table-ID' given below:- Table-'D' (Amount in Rs.) S.No. Payment Stage Due Date Basic % BSP Other Charges GST Total BSP Other Charges 1. Before registration of the agreement 19.02.2018 10% 6,34,211 36,718 76,105 6,610 7,53,644 2. Immediately after execution and registration of the agreement 10.04.2018 20% 12,68,421 73,438 1,52,210 13,219 15,07,288 3. On completion of plinth of the apartment/flat's building/wing 10.04.2018 15% 9,51,316 55,078 1,14,158 9,914 11,30,466 4. On completion of 2^nd floor slab 04.05.2018 5% 3,17,105 18,360 38,052 3,305 3,76,822 5. On completion of 5^th floor slab 13.08.2018 5% 3,17,105 18,360 38,052 3,305 3,76,....
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....to be taken into account to find out the benefit of additional ITC. 20. The DGAP has also intimated that Respondent has contended that the project "Golf Meadows Godrej City, Panvel" which was launched in September, 2018, i.e. in the GST regime should have been kept outside the ambit of anti-profiteering provisions, in terms of the Order of this Authority dated 24.05.2019, passed in the case of Hermeet Kaur Bakshi v. Conscient Infrastructure Pvt. Ltd. = 2019 (5) TMI 1395 - NATIONAL ANTI-PROFITEERING AUTHORITY. In this regard, the DGAP has submitted that the present proceedings were initiated with reference to the present project which was launched in September, 2014, i.e. in the pre-GST regime and no reference has been received from the Standing Committee on Anti-profiteering with regard to the project "Golf Meadows Godrej City, Panvel" and hence the said project has been kept outside the ambit of this investigation by the DGAP. 21. The Respondent's another contention was that the Applicant No. 1 has filed the complaint under Section 171 of the CGST Act, 2017 on the ground that the Respondent has not passed on the benefit on account of reduction in the GST rate on "Paints and ....
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.... and liable to be dropped and that the investigation could not travel beyond the application filed by the Applicant No. 1. In this regard, the DGAP has stated that the Authority, being statutorily empowered to determine the methodology and procedure for determining whether the reduction in rate or benefit of ITC had been passed on by the supplier to the recipient by reducing the prices, might take a view on the issue raised by the Respondent. 25. The DGAP has also submitted that para 5 of Schedule-III of the CGST Act, 2017 (Activities or Transactions which shall 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 Il, sale of building". Further, clause (b) of Paragraph 5 of Schedule II of the Central Goods and Services Tax Act, 2017 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 has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier". Thu....
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.... 2016 Total (Pre-GST) July, 2017 to March, 2018 April, 2018 to December, 2018 Total (Post-GST) (1) (2) (3) (4) (5) = (3)+(4) (6) (7) (8) = (6)+(7) 1 Credit of Service Tax Paid on Input Services (A) 51,18,288 43,71,851 94,90,139 - - - 2 ITC of GST Availed (B) - - - 4,94,26,835 8,19,78,649 13,14,05,484 3 Turnover from List of Home buyers (net of cancellation) (C) 28,07,35,805 2,98,00,244 31,05,36,049 1,89,79,84,692 4 Total Saleable Carpet Area (Excluding Balcony Area) (in SQF) (D) 6,96,969 6,96,969 5 Total Sold Carpet Area (Excluding Balcony Area) (in SQF) relevant to turnover (E) 3,52,105 5,83,022 6 ITC relevant to Area Sold [(F)=(A)*(E)/(D)] or [(F)=(B)*(E)/(D)] 47,94,367 10,99,22,088 Ratio of ITC to Turnover [(G)=(F)/(C)*100] 1.54% 5.79% 28. The DGAP has also stated that in the Table given above, the period considered in the pre-GST regime was from April, 2014 to March, 2016 as the Respondent had received consideration as well as availed CENVAT ....
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....98,784 12. Excess Collection of Demand or Profiteered Amount K=G-J 9,03,44,071 30. From the Table given above, the DGAP has claimed that the additional ITC of 4.25% of the turnover should have resulted in commensurate reduction in the base prices as well as cum-tax prices. Therefore, in terms of Section 171 of the CGST Act, 2017, the benefit of such additional ITC was required to be passed on by the Respondent to the recipients. 31. The DGAP has also contended that on the basis of the aforesaid CENVAT/ITC availability in the pre and post-GST periods and the details of the amount collected by the Respondent from the Applicant No. 1 and the other home buyers during the period from 01.07.2017 to 31.12.2018, the amount of benefit of ITC that needed to be passed on by the Respondent to the recipients, came to Rs. 9,03,44,071/-which included 12% GST on the base profiteered amount of Rs. 8,06,64,349/-. The DGAP has also furnished the home buyer and unit no. wise break-up of the said amount. This amount included Rs. 2,23,696/- (including GST on the base profiteered amount of Rs. 1,99,729/-) which was the benefit of ITC required to be passed on to the Applicant No. 1. The ....
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....e the present investigation covered the period from 01.07.2017 to 31.12.2018, thus, profiteering, if any, for the period post December, 2018, has not been examined as the exact quantum of input tax credit that would be available to the Respondent in future could not be determined at the present stage, when the construction of the project was yet to be completed. 35. The above Report was considered by this Authority in its meeting held on 02.07.2019 and it was decided to hear the Applicants and the Respondent on 17.07.2019. A show cause notice dated 02.07.2019 was issued to the Respondent asking him to reply why the Report dated 25.06,2019 furnished by the DGAP should not be accepted and his liability for profiteering under Section 171 of the CGST Act, 2017 should not be fixed. He was also asked to explain why penal provisions should not be invoked against him under Section 29, 122- 127 of the CGST Act, 2017 read with Rule 21 and 133 of the CGST Rules, 2017 36. Seven personal hearings were accorded to the parties on 17.07.2019, 06.08.2019, 02.09.2019, 06.09.2019, 20.09.2019, 29.10.2019 and 07.11.2019. During the course of the hearing, Sh. Potnoor Naveen, the Applicant No. 1 ap....
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....were 139 and the units booked w.e.f. 01.04.2018 to 31.12.2018 were 59. 40. The Respondent has also furnished the details of the turnover of the project which is given in the below table:- Table (Amount In crores) Project Pre-GST Regime (upto 30.06.2017) Advance Received but not billed till 30.06.2017 Amount Billed Total Godrej City Panvel Phase-I 31.01 - 31.01 Other Projects - - - Refer Para 24 - - 28.26 Total 59.27 - 59.27 As per ST-1 59.27 Difference 0 Table (Amount In crores) Project Pre-GST Regime (01.07.2017 to 31.12.2018)^(1) Advance Received but not billed till 31.12.2018 Amount Billed Total Godrej City Panvel Phase-I 3.80 185.98 189.79 Golf Meadows Godrej City, Panvel (Phase-II) 11.66 11.96 23.63 Refer Note 2^(2) - - 1.53 Total 15.47 197.94 214.94 As per GSTR-3B 214.94 Unreconciled Difference (0.09) 41.He has also submitted that there were some minor differences in comparison to the figures shared with the DGAP in his Report dated 25.06.2019 which were as follows:- Miscellaneous Income 1.02 Amount re....
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....mount of CENVAT credit included the specific credit for the project and the common credit. The Respondent has also maintained project wise profit and loss account and accordingly allocated expenses to the projects as per the methodology provided by Accounting Standards/ IND AS and generally accepted accounting policies. He has further submitted that the common credit has been categorised in three broard categories on the basis of expenses allocated as per his accounting policy. Thereafter, the common credit of each category has been allocated to the present project and other projects in the ratio of saleable area. 46.He has also stated that the amount mentioned in "Other projects" included credit pertaining to the Golf Meadows Godrej City, Panvel, EWS Units, Commercial units and future projects as per the Table given below:- GST Regime - ITC Details Projects (In Crores) 01.04.2017 to 31.12.2018 Godrej City Panvel Phase-I^1 13.07 Other Projects^2 6.71 Total 19.78 As per GSTR-3B 19.78 Difference - He has also provided the summary of CENVAT credit for the period from October, 2014 to June, 2017 and ITC for the period from July, 2017 to Dece....
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....ng the matter to the DGAP for further investigation as per Rule 128 (1) of the CGST Rules, 2017 which states as under:- "On receipt of an application, the Standing Committee shall examine the accuracy and adequacy of the evidence provided in the application to determine whether there was prima facie evidence to support the claim of the Applicant that the benefit of reduction in the rate of tax on any supply of goods or services or the benefit of Input Tax Credit had not been passed on to the recipient by way of commensurate reduction in prices." 50. On the basis of the above Rule the Respondent has argued that the application filed by the Applicant No. 1 was only on the basis of one ground that the Respondent had not passed on the benefit on account of reduction in the GST rate on 'Paints and Varnishes' from 28% to 18% as being an input, ITC was available on the same and thus, it did not form part of the cost of construction of the Respondent. He has also submitted that the above fact could not be considered as a prima facie evidence to say that the Respondent had profiteered post-GST regime. As per Section 171 of the CGST Act, the benefit was required to be passed on i....
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....as only on the product for which complaint was filed in the respective cases:- (i) Dinesh Mohan Bhardwaj v. M/s. Vrandavaneshwree Automotive Private Limited 2018-VIL-OI-NAA = 2018 (4) TMI 1377 - THE NATIONAL ANTI-PROFITEERING AUTHORITY: In this case, the Applicant had filed an application alleging that the supplier did not pass on the benefit of reduced rate of tax on Honda Car having Model No. WR-V 1.2 VX MT (i-VTEC) purchased by the Applicant No. 1. The Authority in this case while holding that the supplier had not contravened the provisions of Section 171 of the CGST Act, 2017 limited its enquiry and order, only to the particular model of car. (ii) Rishi Gupta v. M/s Flipkart Internet Pvt Ltd. 2018 WL-04-NAA = 2018 (7) TMI 1490 - NATIONAL ANTI-PROFITEERING AUTHORITY: In this case, the Applicant had filed an application stating that he had paid extra amount for Godrej Interio Slimline Metal Almirah to the supplier and by not refunding the same, the supplier was resorting to profiteering in contravention of Section 171. This Authority while holding that the supplier had not contravened the provisions of Section 171 limited its order only to the particular model o....
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.... the submissions which were not allowed to be raised by the Tribunal before us, as well. We agree with the Tribunal that the revenue could not be allowed to raise these submissions for the first time in the second appeal before the Tribunal. Neither adjudicating authority nor the appellate authority had denied the facility of the project import to the respondent on any of these grounds. These grounds did not find mention in the show cause notice as well. The Department cannot be travel beyond the show cause notice. Even in the wounds of appeals these points had not been taken.' 55.He has further pleaded that similarly in the case of Reckitt & Colman of India Ltd. v. CCE, reported at 1996 (88) E.L.T. 641 (S.C.) = 1996 (10) TMI 100 - SUPREME COURT it was held by the Hon'ble Supreme Court that the Revenue authorities could not make an order against an assessee that was based on allegations and grounds that were not raised in the notice of show-cause. The relevant paragraph had been extracted for reference as under:- "3. It would be remembered that the case of the Revenue, which the appellant had been required to meet at every stage from the show cause notice onwards, was t....
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....ng anything contained in sub-rule (4), where upon receipt of the report of the Director General of Anti-profiteering referred to in sub-me (6) of rule 129, the Authority has reasons to believe that there had been contravention of the provisions of section 171 in respect of goods or services or both other than those coveted in the said report, it may, for reasons to be recorded in writing, within the time limit specified in sub-rule (1), direct the Director General of Anti-profiteering to cause investigation or inquiry with regard to such other goods or services or both, in accordance with the provisions of the Act and these CGST Rules, 2017.' In the instant case, no such reference had been made by this Authority to cause any investigation in respect of profiteering vis- a-vis customers, other than the Applicant No. 1. 58. The Respondent has also contended that in the absence of prescribed method of calculation of profiteering the proceedings were arbitrary and liable to be set aside as the CGST Act, 2017 read with the CGST Rules, 2017 did not provide the procedure and mechanism of determination and calculation of profiteering. In the absence of the same, the calculation and m....
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....nce of ITC were being passed on to the recipients, identification of registered persons who had not passed on the benefits to the recipients and passing of orders effecting reduction in prices. However, under the CGST Act, 2017 or CGST Rules, 2017 made thereunder, there was no indication, let alone description as to how to conclude that there was profiteering due to change in the rate of tax. Whether such computation had to be done invoice-wise, product-wise, business vertical-wise or entity-wise, etc. Thus, in absence of the same, there was lack of transparency and the results could vary from case to case resulting in arbitrariness and violation of Article 14 of the Constitution of India and it would be impossible for the Respondent to defend its case and explain how the observations and findings of the Applicant No. 2 were incorrect which violated the principles of natural justice. He has also submitted that the absence of mechanism or framework within which the Authority/ DGAP must discharge their duties, would also lead to arbitrariness. 60. In this regard, reference was made by the Respondent to other countries where GST is/was in place. In order to control rise in inflatio....
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....f the Finance Act, 1994 vide the Finance Act, 2010 expanding scope of taxability of construction of complexes intended for sale by builders, was ultra vires as there was no statutory mechanism to ascertain value of service component of the subject levy. 62. It was also submitted that this Authority was itself using different methodologies to ascertain 'profiteering' in the cases filed before it. In some cases, the Authority had restricted itself to the goods mentioned in the application, while in some other it had considered business as a whole which showed that there was no defined procedure being adopted by the Authority leading to the arbitrariness. 63. The Respondent has also contended that the DGAP has arrived at the figures of alleged profiteering on the basis of the difference between the ratio of ITC to turnover under the pre-GST and the post-GST periods however, by using this formula correct quantum of profiteering could not be computed. He has also claimed that the comparison of the above ratios was not appropriate for the reason that under the real estate sector, there was no correlation of turnover with the cost of construction or development of a project. The tur....
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....the credit had been attributed towards the same. No regard was given to the fact that ITC would also get accumulated on account of construction of unsold units. 65. Based on the above contentions it was submitted by the Respondent that the additional ITC in his hands in terms of Section 171 of the CGST Act would reflect such ITC on goods or services which was not available earlier to the Respondent. However, the approach adopted by DGAP for calculating the additional benefit which has accrued to the Respondent was based on the change in the rate of tax on input goods and services in the GST regime itself. The credit with respect to such inputs/input services was available to the Respondent earlier as well before the change in the rate. Further, the DGAP has not considered the tax cost which was earlier blocked in the hands of the Respondent. Hence, the above approach of comparison of ITC to turnover for the pre-GST and post-GST periods for a limited period instead of project duration was not a correct approach and profiteering computed on the basis of the same was liable to be set aside on this count itself. 66. The Respondent has also submitted that the essence of Anti-Profi....
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....e that there was no consideration received during the period from April 2016 to June 2017. The DGAP has observed that pre-GST period should be considered from September 2014 to March 2016 as only during this period, both the indicators (ITC as well as the turnover) existed. But this observation of the DGAP was incorrect to the extent that there was no turnover during the period from April 2016 to June 2017. Also mere absence of turnover, could not be a reason for disregarding the period from April 2016 to Jun 2017 in the computation of profiteering in terms of the applied methodology. The comparison of ratio of ITC to turnover for the pre-GST period and the post-GST period was not the correct methodology for computing profiteering under Section 171 of CGST Act as it suffered from various inconsistencies and assumptions discussed above. Further, this methodology assumed that uniform expenses would be incurred throughout the project lifecycle and that turnover would also be uniform, which practically varied a lot given the market conditions and was objectively, an incorrect assumption to make. Presuming the same to be true and applying the same to the present case, the assumption of ....
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.... 13,06,94,423 C Turnover from List of Home buyers (net of cancellation) 31,01,45,170 1,89,78,50,586 D Total Saleable Area (in SQF) 6,96,969 6,96,969 E Saleable Area (in SQF) relevant to turnover 3,53,181 5,83,022 F ITC relevant to Area Sold [(F) = (A)*(E)/(D) or (B)*(E)/(D)] 1,75,58,907 10,93,27,278 Ratio of ITC to Turnover [(G) = (F)/(C)*100] 3.79% 5.76% Profiteering % 2.17% 72. On the basis of the aforementioned calculations made on the methodology adopted by DGAP including the period from April 2016 to June 2017, the Respondent has claimed that he was only liable to pass on benefit of 2.17% to his customers whereas he has passed on benefit of at least 3.35% to the eligible customers of the present project which was more than the profiteering computed on the basis of the methodology adopted by the DGAP. 73. The Respondent has also submitted that without prejudice to the above, if it was assumed that the observation given by DGAP was correct insofar as the period in which there was no turnover the same should be excluded for computing the profiteering. 74. He has also stated that he had a turnover of ....
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....018 67 1,13,947 G. Total Residential Units (D+F) 560 6,96,969 H. Commercial Units (Unsold) 8 I. Total Units (G+H) 568 The project was under profit sharing model 77. The Respondent has also given his next written submissions on 27.09.2019 vide which he has submitted details of comparison of prices of the flats in the present project as on September 2014, when the project was launched and as on 19.11.2017, when the Applicant No. 1 had made booking of the Flat. He has also submitted that the Applicant No. 1 had booked unit no. GCPTI D0403 with saleable area of 1086 sq. ft. on 19.11.2017. It was also submitted by the Respondent that he had not booked any unit in the pre-GST regime of the category (1086 sq. ft.) booked by the Applicant No. 1. Further, the Respondent has submitted home-buyer's list showing the prices at which units were booked in different time periods. He has also furnished a copy of Respondent's letter/e-mail to the Applicant No. 1 regarding giving benefit of GST. 78. The Respondent has also added that the customers who had booked units from 01.07.2017 to 01.02.2018, were passed on GST benefit ....
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....ny consideration during the period from April 2016 to June 2017. Therefore, for the purpose of computation of ratio of input tax credit to turnover, if he divided the input tax credit availed during April 2016 to June 2017 with Nil turnover, the result would be distorted and not comparable. Therefore, he in his Report had considered the period in the pre-GST regime from April 2014 to March 2016 as the Respondent had received consideration as well as availed CENVAT credit of the Service Tax. 81. The Respondent has filed his last written submissions on 07.11.2019 vide which he has submitted the following in response to the DGAP's Report dated 07.10.2019 which are as follows:- A. There were certain differences observed by the DGAP in respect of ITC and turnover in respect of the amount submitted to the DGAP vis a vis the amount submitted to this Authority which were very minor. B. The DGAP had observed that the amount of ITC submitted to the Authority was inconsistent with the details submitted to him during the investigation. In this regard, it was to be noted that the difference was majorly on account of proportionate credit reversal adjusted while computing ITC....
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....he correct ones. F. Further, it was submitted that there were some differences in the unadjusted advances as on 31.12.2018 when comparison was made with the details submitted to the DGAP. The difference was on account of technical glitch in the system to extract unadjusted advances as on 31.12.2018. This was mainly due to following two reasons:- i. Advances received in pre-GST regime on which Service Tax had already been paid were also accounted in the unadjusted advances as on 31.12.2018. This had led to increase in unadjusted advances as on 31.12.2019 when details were submitted to the DGAP. ii. Advances received in GST regime when billed to customers were knocked off in the system. However, for certain customers, advances were knocked off in the system after 31.12.2018 even though billing was done prior to 31.12.2018. However, while extracting data, the system computed unadjusted advances which were knocked even after 31.12.2018. This had led to decrease in unadjusted advances as on 31.12.2018 when details were submitted to the DGAP. 82. We have carefully considered all the Reports filed by the DGAP, submissions of the Respondent, the Applicant No. ....
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.... Section 171 of the CGST Act, 2017, that any reduction in the rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices. But my builder is not passing me any discount or benefit. 8. The builder cannot appropriate this benefit (Rs. 1.50 Cr) as this is a concession given by the Government from its own tax revenue to reduce the prices being charged by builders. The builder is not being asked to extend this benefit out of his own account and he is liable to pass on the benefit. 9. The government in the public interest reduced the rate on tax on the various products being sold by sacrificing its own revenue and therefore, the builder is bound to pass on this benefit to customers and by no stretch of imagination he can pocket this reduction to the detriment of the ordinary customer. 10. The builder cannot be allowed to top up his margins from the amount of tax reduction which he is legally required to pass on this to his customers. The Builder is not willing to pass on any benefit to me: The above-said benefit amount may be passed on to all flat owners. XXX....
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....ommittee and correctly investigated by the DGAP. Further, under Rule 129 (2) of the above Rules the DGAP is required to investigate whether a registered person has passed on the benefit of tax reduction or ITC to the recipients or not and hence during the course of investigation if it comes to his notice that the above two benefits have not been passed on to those recipients who had not filed complaint against the registered person, he is legally bound to investigate the same and bring the facts before this Authority for determination of those benefits to the eligible recipients. It is also clear that the above benefit has accrued to the Respondent due to the concession given by the Central as well as the State Government out of the public exchequer, therefore, the DGAP is bound to investigate to ascertain whether the Respondent has misappropriated the amount of ITC which he was required to pass on to the buyers. The DGAP cannot overlook commission of an offence which has occurred under Section 171 (1) of the above Act once it has come to his notice during the course of the investigation and hence the above contentions of the Respondent are not correct. 87. The Respondent has al....
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....ot a supplier. However, during the course of the proceedings it was found that M/s. Flipkart had not refunded the extra GST to the buyers which was ordered to be refunded and it was accordingly refunded. Therefore, the above case does not help the cause of the Respondent. 90. The Respondent has also placed reliance on the decision given by this Authority in the case of Kerala State Screening Committee on Anti-Profiteering and another v. M/s. Pulimoottill Silks 2019 (2) TMI 296 in which no reduction had occurred in the rate of tax. In the case of Kerala State Screening Committee on Anti-Profiteering and another v. M/s. Velbon Vitrified Tiles Pvt. Ltd. 2019 (3) TMI 370 the benefit of tax reduction had already been passed on. In both these cases violation of the provisions of Section 171 (1) had not been committed hence the facts of these cases were not similar to the facts of the present case where violation of the above provisions has been made and hence the decisions passed in these cases are not being relied upon. 91. The Respondent has further submitted that the DGAP could not suo moto assume jurisdiction with regard to other customers. As has been discussed supra the ....
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....ent which prima facie disclosed that the Respondent has not passed on the benefit of ITC which was found to be correct on investigation and a show cause notice was duly served on the Respondent and hence the above case does not come to the rescue of the Respondent. 94. The Respondent has also quoted the case of Fx-Enterprise Solutions India Pvt. Ltd. and ors. v. Hyundai Motor India Limited 2017 Comp 586 (CCI) however, in this case the Director General had investigated those issues which were not ordered to be investigated by the Competition Commission whereas the DGAP has only investigated whether the Respondent has passed on the benefit of ITC or not which he is legally entitled to investigate as per the provisions of Rule 129 and hence the above case is of no help to the Respondent. 95. The Respondent has also submitted that under Rule 133 (5) (a) of the CGST Rules, 2017 this Authority can order investigation if there had been contravention of the provisions of section 171 in respect of goods or services or both other than those covered in the Report furnished by the DGAP under Rule 129 (6), however, in the present case no such reference was made by this Authority to the Re....
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....ical. Every buyer is entitled to the benefit which cannot be denied to him on the ground that it has been passed on to the other buyer or on the other product or at the entity or vertical level or at the invoice level. Denial of the above benefits on any such ground will amount to violation of the provisions of Section 171 (1) of the CGST Act, 2017 as well as Article 14 of the Constitution. Hence, there is no scope of arbitrariness on this ground as has been alleged by the Respondent. 97. In this connection it also would be relevant to state that under Rule 126 of the CGST Rules, 2017 this Authority has been granted power to determine 'Methodology & Procedure' for determination whether the benefit of rate reduction or of ITC has been passed on by the registered person to the recipient or not, by the Central Government as per the provisions of Section 164 of the above Act which has approval of the Parliament. Rule 126 has further been framed on the recommendation of the GST Council which is a constitutional body created under the Constitution (One Hundred and First Amendment) Act, 2016. Therefore, the above power has both legislative sanction es well as incorporation in the CGST ....
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....se provision were also regulating and controlling the prices in Malaysia. As far as the 'Net Dollar Margin Rule' framed by the Government of Australia is concerned the same amounts of fixing of prices which is not the intention of the provisions of Section 171 (1) of the above Act as it proposes to only pass on the above two benefits and does not propose to control the prices. It is strange that the Respondent is not willing to pass on the above benefits which he is not to pay from his own pocket as both of them are being given out of the tax revenue of the Central as well as the State Governments but is advocating fixing of prices of his flats by the Government. Therefore, the above contentions of the Respondent are frivolous and cannot be taken in to consideration. 99. In this regard reliance was placed by the Respondent on the case of Eternit Everest Ltd. v. Union of India 1997 (89) E.LT. 28 (Mad.) = 1996 (6) TMI 90 - MADRAS HIGH COURT. In this connection it is mentioned that no tax has been levied under Section 171 (1) of the above Act and hence no machinery is required to compute it. However, adequate machinery has been provided to implement the Anti-profiteering measures a....
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.... of alleged profiteering on the basis of the difference between the ratio of ITC to turnover under the pre-GST and the post-GST periods and by using this formula correct quantum of profiteering could not be computed. In this connection it would be relevant to state that Section 171 (1) of the above Act requires that the benefit of additional ITC which a registered person has received in the post- GST period is required to be passed on. This benefit is also required to be passed on, on the basis of the payment made by a recipient i.e. the turnover. Therefore, computation of the ratios of ITC to turnovers for the pre-GST and post-GST period is required to be made so that the benefit can be passed on to every flat buyer proportionate to the payment made by him. Therefore, computation of the above ratios as has been made by the DGAP vide Table E supra is correct. 103. He has also claimed that the comparison of the above ratios was not appropriate for the reason that under the real estate sector, there was no correlation of turnover with the cost of construction or development of a project. The above plea of the Respondent is incorrect as there is correlation between the turnover and....
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....nefit which would accrue to him in the present project based on the transitional stock and the reduction in prices on the purchases made by him and accordingly, he has passed on benefit of 3.35% however, the DGAP has ignored the same and has considered the ratio of ITC to the turnover of pre-GST and post-GST periods for calculating the benefit of additional ITC which would not yield the correct quantum of profiteering. As discussed supra the DGAP has correctly computed the ratios of ITC to turnovers for the pre and post GST period and hence the above contention of the Respondent is not correct. 108. The Respondent has also claimed that he has passed on benefit of 3.35% to the eligible customers by way of commensurate reduction in prices due to additional benefit of ITC. He has also furnished sample copies of the tax invoices and credit notes to substantiate his claim made vide his submissions dated 06.09.2019. However, perusal of the above documents shows that he has only made entry of 'Discount or GST credit passed back or GST benefit' in them and nowhere it has been mentioned that the above amount has been transferred on account of benefit of ITC. Therefore, this discount/GST ....
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....ted 20.09.2019 seemed to be inconsistent with the details of buyers submitted during the investigations e.g. for customer Mr. Ahmed Junaid Shareef (Customer Code- 10013771) total billing till 31st December, 2018 as per the Respondent's submissions was Rs. 24,66,747/- whereas, the Respondent vide his e-mail dated 19.06.2019 had submitted total billing as Rs. 23,72,434/-. He has also contended that the same was the case in respect of most of the other customers. It is apparent from the above that the Respondent had no evidence of passing on the benefit of ITC till the investigation Report was filed by the DGAP on 25.06.2019 whereas the credit note issued to Mrs. Joshi shows that the benefit was passed on 13.10.2017. Therefore, there is no doubt that these tax invoices and the credit notes have been prepared by the Respondent after 25.06.2019 and hence all his claims of having passed on the benefit of ITC are frivolous and hence they cannot be relied upon. 110. The Respondent has also contended that the period considered by the DGAP for the pre-GST period should have been from September 2014 to June 2017 instead of the period from September 2014 to March 2016. However, the DGAP vid....
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....o June 2017 cannot be taken in to account for calculation of the above ratio as no turnover was received during the above period, therefore, the ratio of 1.54% calculated by the DGAP for the pre-GST period from April 2014 March 2016 is correct and consequently the ratio of profiteering of 4.25% is also correct. Accordingly, his claim that he has passed on benefit of 3.35% as compared to the ratio of 2.17% is incorrect and hence the same cannot be relied upon 113. The Respondent has further claimed that he had turnover of Rs. 4,81,176/- during the period from April 2016 to March 2017. However, no reliable evidence supported by the entry of the above amount in his returns has been produced by the Respondent and hence, the same cannot be accepted. 114. The Respondent has also contended that the DGAP has wrongly computed the profiteered amount as he should have taken the relevant period vis-å-vis the recalibrated base price, excluding the GST amount. However, the above claim of the Respondent is not tenable since he has not only charged extra amount from his buyers which he should not have charged due to commensurate reduction in the prices as he had availed benefit of addi....
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....ulted in the commensurate reduction in the base prices as well as cum-tax prices charged by the Respondent from his buyers. Therefore, as per the provisions of Section 171 (1) of the CGST Act, 2017, the Respondent is required to pass on the benefit of such additional input tax credit to the recipients. Since, both the above Tables have been prepared by the DGAP on the basis of the Returns filed by the Respondent and the information submitted by the Respondent himself the computations made in the above Tables are taken to be correct and can be relied upon. 118. Accordingly, the excess amount collected by the Respondent from the above Applicant and other home buyers during the period from 01.07.2017 to 31.12.2018 or the amount of benefit of input tax credit which is required to be passed on by the Respondent to the recipients or the profiteered amount is determined as Rs. 9,03,44,071/- which includes 12% GST on the base profiteered amount of Rs. 8,06,64,349/-, in terms of Rule 133 (1) of the CGST Rules, 2017. The home buyer and the unit no. wise break-up of this amount has been given in Annexure-18 of the Report furnished by the DGAP on 25.06.2019. This amount also includes profit....
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....the buyers of the flats and the shops being constructed by him in his Project 'Godrej City Panvel Phase-I' in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has apparently committed an offence under Section 171 (3A) of the above Act and therefore, he is apparently liable for imposition of penalty under the provisions of the above Section. Accordingly, a Show Cause Notice be issued to him directing him to explain as to why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him. Accordingly, the notice dated 02.07.2019 vide which it was proposed to impose penalty under Section 29, 122-127 of the above Act read with Rule 21 and 133 of the CGST Rules, 2017 is withdrawn to that extent. 123. It is also revealed from the perusal of Table-'A' mentioned in para 8 (a) of the Report dated 25.06.2019 furnished by the DGAP that the Respondent has admitted that he is executing two more projects viz. 'Golf Meadows Godrej City, Panvet Phase II project' and the 'EWS project'. It is also apparent from para 8 (c) of the above Report that the Respondent has also admitted that he....