TaxTMI 
TaxTMI 
2019 (12) TMI 1159
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....eering, 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. The Respondent availed this opportunity and in....
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....ondent 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 credit of Service Tax and VAT paid on the advances received under Section 142 (11) (c) of the CGST A....
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....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 GST. Applying the same ratio, the Respondent has argued that the project "Golf Meadows Godrej City, Panvel" which was launched in September, 2018 in the G....
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....riods, 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 the present project, the additional ITC that has accrued to the Respondent would come to 2.58%. It was also submitted that the Respondent has already computed 3.35% ITC benefit for the above project. The Respondent has also stated....
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....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 2nd floor slab 04.05.2018 5% 3,17,105 18,360 38,052 3,305 3,76,822 5. On completion of 5th floor slab 13.08.2018 5% 3,17,105 18,360 38,052 3,305 3,76,822 6. On completion of 8th floor slab 28.09.2018 5% 3,17,105 18,360 38,052 3,305 3,76,822 7. On completion of 11th floor slab 09.12.2018 5% 3,17,105 18,360 38,052 3,305 3,76,822 8. On completion of terrace floor slab 23.12.2018 5% 3,17,105 18,360 38,052 3,305 3,76,822 9. Completion of watts of said apartment Not demanded as on 31.12.2018 4% 2,53,684 14,688 10. Completion of ....
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....iated 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 Varnishes" from 28% to 18%. In this regard, the DGAP has intimated that the Applicant No. 1 might not possess all the technical and legal knowledge required to examine the applicability of various legal provisions and the Standing Committee on Anti-profiteering was of the opinion that the benefit of additional ITC was not passed on by the Respondent to his recipients. 22. The DGAP has also stated that the Respondent has also contended that the comparison of ratio of ITC to turnover for the pre-GST and the post-GST periods was not the correct mechanism for calculation of profiteered amount.....
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....y 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". Thus, the ITC pertaining to the residential units which were under construction but not sold was provisional ITC which may be required to be reversed by the Respondent, if such units remained unsold at the time of issue of the completion certificate, in terms of Section 17(2) & Section 17(3) of the CGST Act, 2017, which read as under:- Section 17 (2) "Where the goods or services or both are used by the registered person partly for effecting taxable supplies including 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 ....
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....er (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 Credit of Service Tax during this period whereas during the period from April, 2016 to June, 2017, though the Respondent has availed credit, he has not received any consideration. Therefore, the ratio of ITC to turnover during the period from April, 2016 to June, 2017 would be distorted and not comparable. 29. The DGAP has further stated that from the above Table, it transpired that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period from April, 2014 to March, 2016 was 1.54% and during the post-CST period from July, 2017 to December, 2018, it was 5.79% and therefore, post-GST the Respondent has benefited from additional ITC to the tune of 4.25% [5.79% (-) 1.54%] of the turnover. Accordingly, the DGAP has exa....
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....h 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 DGAP has also informed that the Respondent has supplied the construction service in the State of Maharashtra only. 32. The DGAP has also mentioned that the above computation of profiteering was with respect to 473 home buyers, whereas the Respondent has booked 493 units till 31.12.2018, 20 customers who had booked the flats and also paid the booking amounts in the pre-GST period, had not paid any consideration during the post-GST period from 01.07.2017 to 31.12.2018 (period under investigation). Therefore, if the ITC in respect of these 20 units was considered to calculate profiteering in respect of 473 units where payments have been received after implementation of GST, the ITC as a percentage of turnover might be erroneous. Therefore, the benefit of ITC in respect of these 20 units might be calculated when the consideration was received fro....
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....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 appeared in person; None appeared for the Applicant No. 2 and the Respondent was represented by Sh. Girish Goenka, Company Representative, Sh. Sharavanan lyer, Company Representative, Sh. Narendra Singhvi, Advocate, Ms. Disha Jain Bhandari, Advocate, Sh. Tarun Rehan, CA, Sh. Kapil Sharma, Advocate and Sh. Gagan Gugnani, CA. 37. The Applicant No. 1 has filed his written submissions on 17.07.2019 vide which he has submitted that the Respondent's submissions dated 12.02.2019 to the DGAP vide which he has submitted that "he had duly passed on the amount of benefit arising on account of ITC in each demand note raised to the customers and that he was already passing on the benefit of 3.35% to his customers" was not in consonance with all the demand notes raised on him for payment from time to time where he was actually charged 12% GST on the base value. 38. T....
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....fferences 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 received from unidentified customer 0.33 Amount pertaining to cancellation of units 0.19 Total 1.53 42. The Respondent has also contended that there were some cancellations of units in the pre-GST period and the total amount refunded to the customers on account of cancellation of units in the pre-GST period itself was Rs. 2.24 Crore, the adjustment of which has been taken in the Service Tax returns. He has also submitted that he has availed credit under section 142 (11) (c) of CGST Act to the tune of Rs, 1.66 Crore on the amount of Rs. 40.04 Crore. He has also added that he has also applied for refund of tax on account of units cancelled in terms of Section 142 (5) of CGST Act. The gross figure of advances for units cancelled in the GST regime for which refund was applied was Rs. 16.95 Crore He has also summarized the above submissions in the Table given below:- Table (Amount in crores) S.No. Particulars Amount (excluding tax) A. Gross Advance received in earlier regime 59.27 B. Amount refunded to customers on ca....
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...., 2017 to December, 2018, attributable to the present project. 47. The Respondent has also claimed that he has passed on benefit of at least 3.35% to the eligible customers of the present project, by way of commensurate reduction in the prices due to expected additional ITC which has accrued to him under the GST regime. The details of actual benefit passed on to different category of customers were given by him as follows:- Table Category No. of Units Benefit Passed on till 31.12.2018 Mechanism of ITC benefit passed on to customers A. Customers who booked units in earlier regime and advances were received 275(1) Rs. 3,82,25,015/- 3.35% had been passed to the customers of 275 units on the amount of billing done in GST regime. Further, the Respondent had passed on additional benefit to the extent of extra GST levied vis a vis service tax on advances received in earlier regime but billed in GST regime (around 4% to 5%). Respondent would pass on the benefit on 20 units as and when tax invoices would be raised. B. Customers who booked units from 01.07.2017 to 01.02.2018 112 Rs. 5,41,32,769/- Respondent had passed on GST benefit of 6% to the customers. This was factored....
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....or on the benefit of additional ITC. However, under the GST regime, all the inputs and input services were creditable to the Respondent and accordingly, the GST component on procurement did not in any way, formed part of cost of construction. As a result, the change in the rate of tax on inputs did not have any impact on the cost. Thus, there was neither any additional ITC which had been made available to the Respondent on account of change in the rate of GST on Paints and varnishes from 28% to 18% nor there was reduction of GST rate on outward supply of Respondent. Thus, reduction in rate of inputs (Paints and varnishes) could not be considered to be prima facie evidence for alleging profiteering on the part of the Respondent. 51. The Respondent has also argued that the Applicant No. 1 had booked his unit after the enactment of the GST Acts and therefore, the price charged by the Respondent already comprised of adjustment with respect to GST benefit and other market factors. He has also passed 6% benefit to the Applicant No. 1 and other similar customers. He has further argued that the Standing Committee has erred in referring the matter to the DGAP in the absence of any accurate....
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....Committee on Anti-Profiteering and Director General Anti-Profiteering v. M/s. Pulimoottill Silks 2019 (2) TMI 296. * Kerala State Screening Committee on Anti-Profiteering and Director General of Anti-Profiteering, Central Board of Indirect Taxes & Customs v. M/s. Velbon Vitrified Tiles Pvt. Ltd. 2019 (3) TMI 370 = 2019 (3) TMI 370 - THE NATIONAL ANTI-PROFITEERING AUTHORITY. 53. It was also submitted by the Respondent that the application in an anti-profiteering case acted as foundation and base of an investigation. In the present case, the application was received merely from Applicant No. 1 for the flat constructed on CTS/Survey/Final Plot No. 70/1 pt, 70/2 pt, 76 pt, 69 pt, 78 pt, 68 pt, 81/2 pt, 40 pt, and 72 pt at Khanavate, Panvel, Raigarh - 410206. Hence, the investigation could not go beyond the application and cover other customers also who had not questioned the benefit passed on to them. 54. The Respondent has further submitted that the DGAP could not suo moto assume jurisdiction with regard to other customers of the Respondent, on receipt of reference from the Standing Committee to conduct a detailed investigation in the matter of Applicant No. 1. The DGAP could als....
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....ibunal should had allowed the appeal. It was beyond the competence of the Tribunal to make out in favour of the Revenue a case which the Revenue had never canvassed and which the appellants had never been required to meet. It was upon this ground alone that the appeal must succeed." 56. He has thus said that on the basis of the aforementioned submissions, an order could not travel beyond a show cause notice, and the investigation and the Report of the DGAP could not go beyond the application which acted as a basis of the investigation. In this regard, reliance was also placed by the Respondent on the case of Fx Enterprise Solutions India Pvt. Ltd. and ors. v. Hyundai Motor India Limited 2017 Comp 586 (CCI), wherein the Commission had asked the officer to conduct investigation regarding the contravention of Section 3 (4) read with Section 3 (1) of the Competition Act. However, the officer had also investigated whether the party had abused its dominant position in contravention of Section 4 of the Act. In this case, the Commission had held that the officer's investigation of contravention of Section 4 of the Act by the part was dehors the directions given and was ultra vires the sco....
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....-Central Tax dated 28.06.2017 (amending Notification No. 3/2017-Central Tax) has notified Anti-profiteering CGST Rules, 2017 which provide for constitution of the Authority, Standing Committee and Screening Committee, power to determine the methodology and procedure, duties of the Authority, examination of application, order of the Authority and compliance by the registered persons etc. He has also stated that Rule 126 of the CGST Rules, 2017 contained provisions regarding the power to determine the methodology and procedure. The extract of the relevant portion of the rule has been quoted below by the Respondent:- "Rule 126- power to determine the methodology and procedure.- The Authority might determine the methodology and procedure for determination as to whether the reduction in the rate of tax on the supply of goods or services or the benefit of ITC had been passed on by the registered person to the recipient by way of commensurate reduction in prices." On the basis of the above Rule the Respondent has claimed that the Authority had the power to determine the methodology and procedure for determination as to whether the reduction in rate of tax on the supply of goods or....
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....lations 2014, which provided for the mechanism to calculate whether any Respondent had profiteered on account of GST or not. The Anti-Profiteering measures in Australia revolved around the 'Net Dollar Margin Rule' serving as the fundamental principle for their guidelines. If the new tax scheme - GST in this case - caused taxes and costs to fall by $ 1, then prices should fall by at least $ 1. At the same time if the cost of the business rose by $ 1 under the new tax scheme, then prices might rise by not more than $ 1. These regulations had been set as barometers for calculating profiteering, the Respondent has claimed. 61. In this regard, reliance was placed by the Respondent on the case of Eternit Everest Ltd. v. UOI 1997 (89) E.L.T. 28 (Mad.) = 1996 (6) TMI 90 - MADRAS HIGH COURT, where the Hon'ble Madras High Court had held that in the absence of machinery provisions pertaining to determination and adjudication upon a claim or objection, the statutory provision would not be applicable. In the case of Commissioner of Income Tax Bangalore v. B. C. Srinivasa Setty, (1981) 2 SCC 460 = 1981 (2) TMI 1 - SUPREME COURT, the Hon'ble Supreme Court has held that charging section was not a....
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....is of actual cost incurred by him while undertaking the development of a project. Thus, accrual of ITC was not dependent on the amount collected from the buyers. In this sector, advance was received by the suppliers/dealers even before the commencement of the projects. Likewise, units were sold after the completion of the project as well. Thus, receiving of inputs/input services and taking credit of the same did not have any immediate and direct relation with the turnover. Accordingly, calculating profiteering on the basis of turnover could not reflect the correct outcome for the Respondent. 64. The Respondent has also contended that the following points were totally ignored by the DGAP in his Report dated 25.06.2019, while calculating the alleged profiteering based on the comparison of ratios of ITC to turnover for the pre-GST period and the post-GST period:- * Construction project Life cycle effect had been totally ignored and it had been assumed that uniform expenses were incurred throughout the lifecycle of the project based on the formula adopted by the DGAP; * The turnover would vary as per the market conditions and it was difficult to maintain the ratio of the same in ....
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....g with Anti-Profiteering provided that any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices. He has also argued that provision of Anti-Profiteering required the registered person to pass on the benefit available on following grounds:- Reduction in rate of tax on supply of services: There was no benefit arising on account of reduction in rate of tax on supply of services. Benefit of ITC With respect to benefit of ITC available, the same was dependent upon various factors such as stage of construction and negotiation with vendors etc. The following two factors must be taken into account for calculating the quantum of benefit:- * Benefit on transitional stock carried forward in Trans 1 Form. * Saving of taxes on goods/services to be purchased in GST regime for completion of the project 67. It was further submitted by the Respondent that he had estimated the additional benefit which would accrue to him in the present project based on the above factors. Accordingly, he has passed on the benefit of 3.35% to the eligible-customers, by way of commensurate reduction in....
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....riod of the project (be it pre-GST or post-GST period) was that, the ITC and its co-relation with turnover should be assessed at the broader periodic level rather than linking it with a particular period of the project. No period of a project should be excluded for the purpose of computing the profiteering as doing the same would lead to incorrect results. In this regard, reference was made by the Respondent to Rule 5 of CENVAT Credit Rules, 2004 wherein refund was allowed of CENVAT credit in the ratio of export turnover to the total turnover for that particular relevant period. He has also mentioned that it was held in a catena of case laws that 'CENVAT credit' meant credit which was lying unutilized at the end of relevant period and not just pertaining to the relevant period. Thus, even if the turnover considered was for a particular month, the CENVAT credit considered for computing refund was the balance lying at the end of said particular relevant period. Applying the said ratio to present facts, it was immaterial whether during a specific period, the turnover was nil, in the said period. 71. It was also submitted that the impugned methodology was based on assumption of unifor....
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....h 2017. Further, there was a receipt of Rs. from one customer during the period from April 2016 to March 2017. However, Service Tax was not paid on the said receipt due to clerical errors. 75. The Respondent has also contended that the profiteering computed on the methodology adopted by the DGAP has certain Quantum Computation Errors as have been given below:- a. Without prejudice to the above, if it was assumed that the percentage calculation of profiteering of 4.25% by DGAP was correct, in such a scenario, the computation of quantum of benefit to be passed was incorrect. b. For computing the profiteered amount, the difference should be calculated between the base price during the relevant period vis- a-vis the recalibrated base price, excluding the GST amount. Further, the recalibrated base price should be computed as inclusive of profiteered amount instead of the computation made above. The correct computation of quantum of profiteering is given by him as below:- Analysis of Increase in ITC: Base Price raised during July, 2017 to December, 2018 (Rs.) A 1,89,79,84,692 Recalibrated Base Price B=A/104.25% 1,82,06,08,817 Excess Collection of Demand or Profiteered Amo....
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....he amount of ITC of GST availed mentioned in Table- 'B' of his Report dated 20.05.2019 had been considered from the Respondent's submissions dated 21.06.2019. However the Respondent has now submitted different figures of ITC availed during the post-GST period before the Authority which were inconsistent with the earlier figures as follows:- Table:- (Amount in Rs.) S.No. Period Submitted during investigation Submitted vide letter dated 20.09.2019 Difference 1. July 2017 to March 2018 4,94,26,855 4,92,01,366 2,25,489 2. April 2018 to December 2018 8,19,78,649 8,14,64,629 5,14,020 80. Regarding the Respondent's contention that the CENVAT Credit for the period from April 2016 to June 2017 was not taken into consideration by the DGAP, the DGAP has stated that this issue had already been addressed vide para- 17 and 20 of his Report dated 25.06.2019. Regarding Respondent's another contention that the details of benefit passed on to customers were not considered by the DGAP, the DGAP has submitted that the Respondent had not submitted details of the benefit passed on during the course of investigation even after repeated requests made vide letters dated 01.05.2019 and 04.....
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....submitted figures to the Authority [C-D] 0.02 0.05 C. The DGAP had observed that the home-buyers details submitted to the Authority seemed to be inconsistent with the details of home-buyers submitted during the investigations to the DGAP. In this regard, it was submitted that all the details submitted to the Authority were the correct figures which had been submitted after re-examination. Further, in totality, the difference on account of advances and instalments billed was very nominal as has been mentioned below:- S. No. Particulars Unadjusted Advances as on 31.12.2018 Instlaments Billed from 01.07.2017 to 31.12.2018 A. Submitted during investigation 3.79 186.01 B. Submitted to Authority 3.80 185.98 C. Difference [A-B] (0.02) 0.03 D. Further, in respect of Mr. Ahmed Junaid Shareef, it was to be noted that the Respondent had submitted total billing of Rs. 23,71,345/- to the Authority. The amount mentioned by the DGAP in his observations was inclusive of the benefit of Rs. 95,402/-. The above difference has been explained as follows:- S.No. Particulars Amount A. Submitted during investigation 23,72,434 B. Submitted to Authority [Rs. 23,71,34....
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....on as per the provisions of Rule 129 (1) of the CGST Rules, 2017. The DGAP has conducted investigation in the above allegations levelled by the Applicant No. 1 and vide his Report dated 25.06.2019 has stated that the Respondent has violated the provisions of Section 171 of the above Act by resorting to profiteering of an amount of Rs. 9,03,44,071/-. 83. The Respondent has stated that the Standing Committee has erred in referring the matter to the DGAP for further investigation as per Rule 128 (1) of the CGST Rules, 2017 as the application filed by the Applicant No. 1 was only on 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%. In this respect it would be relevant to quote the relevant paras of the application dated 12.10.2018 filed by the above Applicant before the Standing Committee which was investigated by the DGAP, as under:- "4. The Government has reduced the GST rates on a large number of goods and services on the recommendations of the GST council w.e.f. 27.07.2018. Among the list of items, GST tax rates on Paints and varnishes have been reduced from 28% to 18%. Paints ....
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....tion 171 (1) of the above Act he was bound to pass on the additional benefit of ITC. Therefore, the above application was correctly forwarded by the Standing Committee for investigation to the DGAP under Rule 129 (1) of the above Rules. 85. The Respondent has further stated that the Applicant No. 1 had booked his unit after the enactment of the GST Acts and therefore, the price charged by the Respondent had taken in to account the GST benefit and other market factors and he had also passed on 6% benefit to him. However, the investigation carried out by the DGAP shows that the above Applicant was entitled to the benefit of ITC of Rs. 2,23,696/- and hence the claim of the Respondent that the Applicant was not entitled to be above benefit is not correct. The Respondent has also admitted that he has paid benefit of 6% to the above Applicant which also proves that the above contention of the Respondent is incorrect and hence the same cannot be accepted. 86. The Respondent has also submitted that the DGAP's Report could not go beyond the application submitted by the Applicant No. 1 on 12.10.2018 and no investigation could be conducted by the DGAP in respect of the flats purchased by th....
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.... made by the Standing Committee on Anti-Profiteering. Since the above Applicant had specifically alleged that the Respondent was not passing on the benefit of ITC and it should be passed to him as well as to all the other flat buyers hence no order was required to be passed by this Authority under the above Rule. Accordingly, the interpretation given to the above provision by the Respondent is farfetched and hence the same is not tenable. 88. In this regard the Respondent has quoted the case of Dinesh Mohan Bhardwaj v. M/s Vrandavaneshwree Automotive Private Limited 2018-VIL-01-NAA = 2018 (4) TMI 1377 - THE NATIONAL ANTI-PROFITEERING AUTHORITY however, the above case is of no help to the Respondent as it was found in the above case that the Applicant was entitled to the benefit of ITC on the Honda Car having Model No. WR-V 1.2 VX MT (i-VTEC) which had already been passed on by the above Respondent. Hence, there was no ground to investigate the other models of the Cars. However, in the present case it was found that the Respondent has not passed on the benefit to the above Applicant and hence there was sufficient ground for the DGAP to investigate the passing on of the benefit to o....
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....nnot get away by pocketing the benefit which he is legally required to pass on, on the pretext that he could not be investigated as no complaint was made in respect of the other flats. Therefore, the DGAP has not exceeded his jurisdiction and the objection raised by the Respondent in this regard cannot be accepted. 92. He has also argued that the application filed by the Applicant No. 1 could be compared to a show cause notice and it was settled principle of law that an order adjudicating a show cause notice could not travel beyond its scope. On this issue it would be relevant to mention that the application filed by the above Applicant cannot be compared to the show cause notice. The DGAP was required to issue notice to the Respondent under Rule 129 (3) of the above Rules which he has done vide notice dated 15.01.2019, however, there is no provisions to treat the application filed by a complainant as show cause notice in the above Rules. Hence, the above claim of the Respondent is not tenable. The Respondent has also placed reliance on the case of Toyo Engineering India Limited v. CC Mumbai 2006 (201) E.L.T. 513 (S.C.) = 2006 (8) TMI 184 - SUPREME COURT in this regard. However, i....
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....tion in respect of the buyers who had not filed complaint against the Respondent and who were legally entitled to the benefit of ITC. 96. The Respondent has also contended that in the absence of prescribed method of calculation of profiteering the methodology used in the Report was arbitrary and was in violation of principles of natural justice. The Respondent has also contended that the Methodology and Procedures, 2018 issued on 19.07.2018 by this Authority only provided the procedure pertaining to investigation and hearing and no methodology has been prescribed for computation of profiteering. It would be appropriate to mention here that Section 171 (1) of the above Act provides that "Any reduction in 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." Therefore, it is apparent that the above provisions clearly provide the methodology of computing the benefit of tax reduction or ITC and also the methodology of passing on the above benefits by commensurate reduction in the prices of every supply made by a registered person to every recipient and hence no further methodol....
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....id while computing profiteering. In this regard, it would also be relevant to mention that the profiteering has to be determined on cases to case basis, by adopting the most appropriate and accurate mathematical method based on the facts and circumstances of each case as well as the nature of the goods and services supplied. There cannot be any fixed mathematical formulation/methodology for determination of the quantum of benefit to be passed on which could cover different sectors of the economy and each case has to be decided based on its specific facts. The mathematical methodology adopted in the case of real estate sector cannot be applied in the case of consumer goods sector. Even the mathematical methodology applied in two cases of real estate cannot be the same as it would depend on the amount of ITC availed as well as the turnover realised. This Authority certainly cannot prescribe how to do mathematical calculations of the profiteered amount as it can be easily done by any person who knows elementary mathematics. The Respondent has also been granted full opportunity to raise objections against the methodology applied by the DGAP and hence there has been no violation of the ....
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....the profiteered amount deposited. Under Section 171 (3A) of the CGST Act, 2017 read with Rule 133 (3) (d) of the above Rules, this Authority has been given power to impose penalty on the registered persons who do not pass on the above benefits. Under Rule 136 this Authority has been assigned power to get its orders monitored through the tax authorities of the Central or the State Governments. Hence, there is more than the adequate machinery required to implement the Anti-Profiteering measures and hence all the claims made by the Respondent on this ground are incorrect and hence they cannot be accepted. 100. In view of the reasons given in para supra the law settled in the cases of Commissioner of Income Tax Bangalore v. B. C. Srinivasa Setty (1981) 2 SCC 460 = 1981 (2) TMI 1 - SUPREME COURT, Samsung (India) Electronics Pvt. Ltd v. Commissioner of Commercial Taxes U.P. Lucknow 2018 [11] G.S.T.L 367 = 2018 (1) TMI 911 - ALLAHABAD HIGH COURT, and Union of India v. Suresh Kumar Bansal 2017 (4) G.S. T.L. J128 (S.C.) = 2016 (11) TMI 1640 - SC ORDER is not being followed. 101. It was also submitted that this Authority was itself using different methodologies to ascertain 'profiteering' ....
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....t are not correct as the benefit of ITC would be computed over the entire life cycle of the project keeping in view the entire ITC availed by the Respondent and the turnover raised by him during the life cycle of the project. The present investigation has covered the period from 01.07.2107 to 31.12.2018 only and hence, the benefit has also been computed for the above period only. 105. The Respondent has also stated that reversal of ITC in future due to receipt of Completion Certificate might also had a bearing on the ITC availed by him which was required to be considered. It is apparent from the Report of the DGAP that he has computed the benefit of ITC on the area sold and the turnover received on such area. He has not computed the benefit on the unsold area nor the Respondent is being asked to pass on the benefit on the unsold area and hence, the ITC relevant to this area would remain intact with him which he can reverse at the time of issue of the Completion Certificate. Hence the above contention of the Respondent is incorrect. 106. The Respondent has also submitted that there was no benefit arising on account of reduction in the rate of tax on supply of services and hence, n....
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.... GST Benefit". Such entries have been made in respect of other buyers also. By no stretch of imagination these entries can be construed to have been made on account of passing on of the benefit of ITC. In case the Respondent wanted to pass on the benefit of ITC to his customers he should have re-calibrated the prices of his flats after coming in to force of the GST and informed his buyers that he proposed to pass a particular amount as benefit to them through the demand notes/ tax invoices to be issued to them in future. He should also have supplied them the details of the computations made to determine the benefit of ITC. It may also be pointed out that the Respondent could not have passed benefit of 3.35% to all the buyers as it was to be determined on the basis of the area and the amount paid by each customer. Therefore, the above amount cannot be taken to have been passed on account of the ITC benefit. 109. The DGAP vide para 13 of his Report dated 25.06.2019 has also mentioned that the Respondent has claimed that he has passed on benefit of 3.35% to the eligible customers. However he has observed in the above para that the Respondent inspite of repeated requests had not submi....
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.... its co-relation with turnover should be assessed at the broader periodic level rather than linking it with a particular period of the project. In this regard, reference was made by the Respondent to Rule 5 of the CENVAT Credit Rules, 2004 wherein refund of CENVAT credit was allowed in the ratio of export turnover to the total turnover for that particular relevant period. In this connection it would be appropriate to mention that the Respondent is required to pass on the benefit of ITC as per the provisions of Section 171 (1) as soon as he avails it himself. As the Respondent is discharging his GST output liability every month through the Returns filed by him from the ITC available to him he is also legally bound to pass on the benefit of ITC to his customers every month. He cannot employ two yardsticks while using the benefit of ITC himself and while extending the benefit to his buyers. In case he proposes to pass on the benefit of ITC after the completion of the project he should also avail the same after the completion of the project. Therefore, the above benefit has to be passed on periodically as per the provisions of Section 171 (1) of the above Act and provisions of Rule 5 o....
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....ect since the above Applicant in his application dated 12.10.2018 has clearly stated that he as well as all the other flat buyers were not passed on the benefit of ITC by the Respondent. He has reiterated his above claim vide his submissions filed before this Authority on 17.07.019. The present investigation also shows that the Respondent has not passed on the benefit of ITC to the above Applicant as well as his other customers. Hence, the above claims of the Respondent cannot be accepted as there is no credible and irrebutable evidence to prove them. 116. The Respondent vide his submissions dated 27.09.2019 and 07.11.019 has pointed out that there were some minor difference in the figures submitted by him during the investigation and during the course of the present proceedings. However, all these differences show that the Respondent has not produced correct figures during the investigation and the present proceedings and has tried to mislead. 117. Therefore, It is evident from the facts narrated above that the ratio of input tax credit as a percentage of the turnover that was available to the Respondent during the pre-GST period from April, 2014 to March, 2016 was 1.54% and dur....
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....tion). Therefore, the benefit of input tax credit in respect of these 20 units is required to be calculated when the consideration is received from such buyers taking into account the proportionate input tax credit in respect of such units. 120. Accordingly, the Respondent is directed to commensurately reduce the prices of his units as per the provisions of Rule 133 (3) (a) of the above Rules. He is further directed to pass on the benefit of ITC of Rs. 9,03,44,071/- to the above 473 recipients including the Applicant No. 1 as per the details submitted by the DGAP vide Annexure-18 of his Report alongwith the interest @ 18% PA to be paid from the date when the above amount was collected by the Respondent from them till the amount is paid as per the provisions of Rule 133 (3) (b) of the CGST Rules, 2017 as all the buyers are identifiable. The above amount shall be paid by the Respondent within a period of 3 months from date of passing of this order failing which it shall be recovered by the concerned Commissioner CGST/SGST as per the provisions of the CGST/SGST Acts. 121. Since, the present investigation pertains to the period of 01.07.2018 to 31.12.018 any additional benefit which ....