TaxTMI 
TaxTMI 
2019 (12) TMI 1264
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....-71, Gurgaon and alleged that the Respondent had not passed on the benefit of input tax credit to him by way of commensurate reduction in price, in terms of Section 171 of the Central Goods and Services Tax Act, 2017. While filing his application, he had sought anonymity. The Haryana State Screening Committee on Anti-profiteering conducted prima facie verification of the application and after having satisfied itself that the Respondent did not appear to have passed on the benefit of ITC, forwarded the said application with its recommendation to the Standing Committee on Anti-profiteering for further action, in terms of Rule 128 of the above Rules. 2. The Standing Committee on Anti-profiteering examined the aforesaid reference, in its meeting held on 13.12.2018 and it forwarded the same to the DGAP for detailed investigation. 3. The DGAP, on receipt of the application and the supporting documents from the Standing Committee on Anti-profiteering, issued a Notice under Rule 129 of the CGST Rules, 2017 on 15.01.2019 calling upon the Respondent to reply as to whether he admitted that the benefit of input tax credit had not been passed on to the Applicant No. 1 by way of commensura....
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....Tax regime with applicable taxes. After implementation of GST, the Respondent raised demand of the balance amount (37.50% of the total cost of the flat) with applicable GST. 9. The Respondent further submitted that he was not directly engaged in the construction activity and all the work related to the project was assigned to various sub-contractors, who procured all the required materials on their own except Steel, Cement and RMC which were supplied by the Respondent on free of charge basis. However, the project was executed under the supervision of the staff employed by the Respondent. 10. The Respondent also informed the DGAP that in the pre-GST regime, under the provisions of Haryana Value Added Tax Act, 2003, "Under-Construction Properties" were covered under the definition of 'Works Contract' and subjected to Haryana VAT @ 4.5% (approximately) with full ITC of VAT paid on the goods involved in the execution of works contracts. He also clarified that under the Service Tax regime, "Construction Services" were subjected to Service Tax @ 4.5% but the Affordable Housing was exempted from Service Tax, vide Notification No. 9/2016-ST dated 01.03.2016 with effect from 01.03.201....
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....r GST. In order to comply with the provisions of Section 171 of the CGST Act, 2017, he (Respondent) had himself calculated the additional benefit of ITC (provisionally) available under the GST regime and the same had been credited to his homebuyers. 14. The Respondent requested for disposal of the application filed by the Applicant No. 1 by way of a speaking order, before proceeding further under Section 171 of the CGST Act, 2017, citing the decision of the Hon'ble Supreme Court in the case of M/s. GKN Driveshafts (India) Ltd. [2002] 1 SCC 72 = 2002 (11) TMI 7 - SUPREME COURT. He also contended that the issues relevant to be addressed vide a speaking order before proceeding further in the matter were as follows: - (i) Whether on the facts & circumstances of the case, there was any reduction in the rate of tax on the supply of goods & services involved in the execution of works contract in the current GST regime. (ii) Whether on the facts & circumstances of the case, the benefit already credited/forwarded to the buyers before initiation of proceedings, should not be treated as compliance with the provisions of Section 171 of the Central Goods and Services Tax Ac....
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.... % of total cost 1. At the time of Application 5% of total cost 2. At the time of Allotment 20% of total cost 3. Within 6 months of Allotment 12.5% of total cost 4. Within 12 months of Allotment 12.5% of total cost 5. Within 18 months of Allotment 12.5% of total cost 6. Within 24 months of Allotment 12.5% of total cost 7. Within 30 months of Allotment 12.5% of total cost 8. Within 36 months of Allotment 12.5% of total cost 19. The Respondent submitted before the DGAP that the benefit already credited/passed onto the buyers by him should be treated as compliance with provisions of Section 171 of the CGST Act, 2017. Also, in support of this claim, the Respondent, on 12.04.2019, submitted:- 1. Sample copies of some individual homebuyer ledgers maintained by him; 2. Sample copies of covering letters dated 18.07.2018 issued to the homebuyers informing them regarding his intent to pass on the ITC benefit @ Rs. 75.75/- per sq. ft. 3. Copies of credit notes issued to his buyers. 20. The DGAP further reported that while the Respondent has claimed that he has already passed on the benefit....
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....tion 17(2) & Section 17(3) of the CGST Act, 2017, which read as under:- Section 17 (2) "Where the goods or services or both was 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 amount of credit shall be restricted to so much of the input tax as was attributable to the said taxable supplies including zero-rated supplies". Section 17 (3) "The value of exempt supply under sub-section (2) shall be such as may be prescribed and shall include supplies on which the recipient was 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". 23. Hence, the ITC pertaining to the unsold units did not fall within the ambit of this investigation and as such the Respondent was required to recalibrate the selling price of such units to be sold to the prospective buyers by considering the net benefit of additional input tax credit available to them in the post-GST period. 24. The DGAP further report....
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....7,689 6. Turnover from commercial shops as per ST-3 return (F) 9,48,86,747 25,52,251 9,74,38,998 - - - 7. Turnover from residential flats as per VAT Returns (G) 69,90,47,326 9,75,96,550 74,66,43,875 - - - 8. Total Turnover (H) 74,39,34,073 10,01,48,801 84,40,82,873 24,22,72,227 61,29,66,741 85,52,38,968 9. Total Saleable Carpet Area (Excluding Balcony Area) (in SQF)(I) 477068.59 (Residential) 23769.54 (Commercial) 5,00,838 477068.59 (Residential) 23769.54 (Commercial) 5,00,838 10. Total Sold Carpet Area (Excluding Balcony Area) (in SQF) relevant to turnover (J) 452796.67 (Residential) 15023.42 (Commercial) 4,67,820 477068.59 (Residential) 17535.67 (Commercial) 4,94,604 11. Relevant ITC [(K)=(D)*(J)/(I)] or [(K)=(E)*(J)/(I)] 4,01,32,046 13,17,17,518 Ratio of Input Tax Credit to Turnover [(L)=(K)/(H)*100] 4.75% 15.40% 25. From the above Table, it was clear that the input tax credit as a percentage of the turnover that was available to the Respondent during the pre-GST p....
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....2,38,968 7. GST raised over Base Price @ 12% or 8% (Rs.) F=E*B 2,90,72,667 61,11,869 4,49,62,760 8,01,47,296 8. Total Demand raised G=E+F 27,13,44,895 5,70,44,107 60,69,97,263 93,53,86,264 9. Recalibrated Base Price H=E*(1-D) or 89.35% of E 21,64,70,235 4,55,07,955 50,21,77,828 76,41,56,018 10. GST @ 12% or 8% I=H*B 2,59,76,428 54,60,955 4,01,74,226 7,16,11,609 11. Commensurate demand price J=H+I 24,24,46,663 5,09,68,909 54,23,52,054 83,57,67,627 12. Excess Collection of Demand or Profiteered Amount K=G-J 2,88,98,321 60,75,197 6,46,45,208 9,96,18,637 27. From the Table given above, it was clear that the additional input tax credit of 10.65% of the turnover, which was the benefit to the Respondent, should have resulted in the commensurate reduction in the base prices as well as cum-tax prices of the units. 28. On the basis of the aforesaid CENVAT/input tax credit availability pre and post-GST and the details of the amount collected by the Respondent from the Applicant No. 1 and other buyers during the period 01.07.2017 to 24.01.2018, the DGAP computed t....
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....B) 75 23,770 6,19,87,319 73,97,847 17,91,608 Grand Total (C)=(A)+(B) 1,055 5,00,839 85,52,38,966 9,96,18,637 4,08,20,676 31. On the basis of the above tabulation, the DGAP observed that the total amount profiteered by the Respondent worked out to be Rs. 9,96,18,637/-. Out of the above amount, the benefit claimed to have been passed on by the Respondent was Rs. 4,08,20,676/- which was lesser than what he should have passed on in all 980 cases of residential flats (Sr. 1 of above table) by an aggregate amount of Rs. 5,31,95,722/- and by an aggregate amount of Rs. 59,06,111/- in case of 59 commercial shops (Sr. 2 of above table). Further, benefit claimed to have been passed on by the Respondent was more than what he was required to pass on, in respect of 11 commercial shops, (Sr. 3 of above table) by an amount of Rs. 3,03,872/-. However, in terms of the relevant provisions this excess benefit claimed to have been passed on to some recipients, could not be permitted to be set off against the additional benefit required to be passed on to the other homebuyers/ shop buyers/ recipients and any such amoun....
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....ndent towards contracts awarded to the former relating to procurement of raw materials/labour etc. giving details of T.D.S. and all other relevant documents submitted by the Respondent during the DGAP's investigation. 38. Since the above-listed records and documents furnished by the Respondent before the DGAP during the course of investigation had been marked as confidential by the Respondent in terms of Rule 130 of the CGST Rules, 2017, the Authority sought Respondent's objections, if any, regarding supply of the documents as per the request of the Applicant No. 1. 39. Meanwhile, the Respondent, vide his letters dated 01.08.2019 and dated 09.08.2019, requested that he be supplied a copy of the application filed by the Applicant No. 1, as the same had not been enclosed with the DGAP's Report dated 14.06.2019 as the Applicant No. 1's identity was kept anonymous at that stage. The Authority supplied the same to the Respondent after procuring a copy of the application filed by the Applicant No. 1 from the DGAP. 40. Further, the Respondent, vide his submissions made on 19.08.2019 and on 26.08.2019, averred that the information sought by the Applicant No. 1 vide submissions dat....
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.... 4. 20.02.2017 - 14,768 5. 21.08.2017 - - 19,691 19,691 6. 15.03.2018 - - 13,128 13,128 7. 15.09.2018 - - 13,128 13,128 8. 15.03.2019 - - 13,127 13,127 9. 15.03.2019 (Additional Area) - - 203 203 Total 22,974 59,073 59,277 59,277 Citing the above Table, he stated that he had paid tax component of Rs. 2,00,601/- (Rs. 22,974 + Rs. 59,073 + Re. 59,277 + Rs. 59,277) to the Respondent. He also submitted that the Respondent should have passed on to him more than Rs. 2,00,601/- by way of reduction in the price per sq. ft. on account of the benefit of ITC. The Applicant No. 1 further furnished the payment details as is given below:- S.No. Description Percentage (%) Total amount paid (Rs.) VAT Service Tax GST Due date of payment Actual due of payment 1. Application money 5 1,31,275 - - - 13.03.2015 28.02.2015 2. Application money 20 5,48,073 - 22,973 - 04.09.2015 31.08.2015 3. Within 6 months of Allotment 12.5 3,28,188 - - ....
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....application as void. 44. The Respondent also submitted that the initial complaint of the Applicant No. 1 dated 13.11.2018, was followed by another complaint filed before this Authority on 20.08.2019, which was titled "Input Tax Credit not yet passed". The Respondent submitted that the contents of the application/ submission filed by the Applicant No. 1 dated 20.08.2019 were false since it had been claimed therein that a total tax component of Rs. 2,00,601/- had been paid by him to the Respondent on various dates, whereas the Applicant No. 1 had not paid tax amounting to Rs. 52,916/- as claimed and the details of the said amount claimed to have been paid but not paid were as under:- • 15.03.2018 Rs. 26,256/- • 15.03.2019 Rs. 26,256/- • 15.03.2019 Rs. 406/- (GST on additional area) In support of his above contention, the Respondent enclosed the ledger account maintained in respect of Applicant No. 1. 45. The Respondent reiterated that Applicant No. 1, vide his submissions dated 20.08.2019, had declared that "l....
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....nd his suit. The Applicant No. 1 also claimed that in a similar case of Shruti Garg & Ors v/s Signature Builders Pvt. Ltd. = 2019 (12) TMI 834 - NATIONAL ANTI-PROFITEERING AUTHORITY (Solera-l), this Authority vide order dated 08.08.2019 had made available the necessary documents to the applicant and thus, he should also get the documents/information of the Respondent. 49. This apart, Applicant No. 1 contended that the ledger account pertaining to him, maintained by the Respondent, clearly showed that full and final payment of Rs. 28,31,181/- (including all taxes) had been received from him (the Applicant No. 1) but the Respondent's submissions before the Authority were different from this truth and were hence untrue. 50. The Applicant No. 1 further averred that the Respondent had misreported before this Authority that the benefit of ITC to the Applicant No. 1 was @ Rs. 75.75. per sq. ft. Contradicting the Respondent's submissions on this issue, the Applicant No. 1 stated that the Respondent had never passed on the benefit but had only offered to do so and that Rs. 75.75 per sq. ft. was only an "offered Rate" which was never passed on by the Respondent. 51. The Respondent f....
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....ipt of credit notes issued by him had been acknowledged by the complainant as also other customers and that the Applicant No. 1 had also admitted to have received the credit note. 53. The Respondent further submitted that the benefit on account of additional input tax credit to the tune of 10.65% of the turnover has been miscomputed by the DGAP by arbitrarily applying the average method without any proper mechanism. 54. The Respondent also submitted that vide his submissions dated 10.04.2019 made. before the DGAP, he had furnished an undertaking to reverse an amount of Rs. (Rupee seven crore and ninety one only) representing input tax credit unavailed by him as per the provisions of Section 18 (4) read with Rule 42 of the CGST Act' Rules. The Respondent further mentioned that the said reversal of ITC was effected in his GST returns (Form GSTR-3B) filed for the month of March 2019. The filing of the said Return was delayed due to his Electronic Credit Ledger account being blocked, thereby holding back ITC of Rs. 1,76,15,353/- due to certain mismatch between his GSTR 3B & GSTR 2A Returns. He added that the GST Return for March 2019 was subsequently filed by him in June 2019 whe....
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....or passing on the benefit of ITC in the post GST period and that Applicant No. 1's letter dated 07.08.2018 was an admission of receipt of ITC credit at the rate of 75.75 per sq. ft. 57. The Respondent further mentioned that the DGAP, in his Report had alleged profiteering by him of 10.65%. Hence, while accepting that benefit of ITC to the extent of 4.96%, amounting to Rs. 4,08,20,676/- had been passed on, the DGAP had found that the total amount of benefit that needed to be passed on to the fiat owners aggregated to Rs. 9,96,18,637/-. On this issue, he drew reference to the study conducted by the State Level Screening Committee of Haryana on tax liability of builders/developers in the pre & post GST periods which mentioned that on an average, the variance in the input tax credit in the post GST period as compared to the pre GST period worked out to approx. 4 to 5%. Further, he contended that a comparative study of certain previous orders passed by this Authority also supported the above claim. The Respondent further averred that on the basis of the ITC stated to have been utilized by him, the comparative utilisation of ITC was in excess of 2.15% in the post GST period as against....
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....rovisions would be construed to have never included the transactions within its fold and no tax can be levied on such transactions. He further cited the judgements passed in the cases of B.C. Srinivasa setty (1981) 128 ITR 294 (SC) = 1981 (2) TMI 1 - SUPREME COURT, Palai Central Bank Ltd. (1984) 150 ITR 539 (SC) = 1984 (10) TMI 41 - SUPREME COURT and National Mineral Development Corporation (2004) 65 SCC 281 = 2004 (5) TMI 575 - SUPREME COURT. He also contended that the Hon'ble Patna High Court has held in the case Larsen & Toubro v State of Bihar 2004 (134) STC 354 (Pat.) = 2003 (11) TMI 565 - PATNA HIGH COURT which was affirmed by Supreme Court in the case of Voltas Ltd., (2007) 7 VST 317 (SC) = 2007 (5) TMI 18 - SUPREME COURT, that in absence of all exclusions which were to be prescribed for computation of tax, no tax was payable. He further submitted that the recent judgement passed in the case of Larsen & Toubro, 2015 SCC Online SC 738 = 2015 (8) TMI 749 - SUPREME COURT, supra, had also quoted with approval the decisions of the Patna, Madras and Orissa High Courts relating to machinery provisions in following terms:- "We find that the Patna, Madras and Orissa High Cou....
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....od of January 2019 to March 2019. 63. Clarification was sought from the DGAP on the Respondent's submissions. The DGAP vide his Report dated 01.11.2019, reported that most of the issues raised by the Respondent in his submissions had been duly considered and incorporated in the DGAP's Report dated 14.06.2019: The DGAP has also reported that his mandate was to conduct investigation based on the recommendation of the Standing Committee on Anti-profiteering, The DGAP further stated that the investigation under Rule 129 of the CGST Rules, 2017 was a time bound matter. In the instant case, since the last date for submission of the Report was approaching, the Draft Report was prepared and put up for approval on 13.06.2019 which was approved and signed by the Director General of Anti-profiteering on 14.06.2019. Moreover, the Respondent had intimated to the DGAP only on 13.06.2019 about the reversal of the ITC of Rs. 7,00,00,091/- vide an e-mail and hence the same could not be incorporated in the DGAP's Report dated 14.06.2019. The DGAP also stated that if the details of reversal of ITC of Rs. 7,00,00,091/- would have been submitted earlier, the same could have been considered appropria....
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....in inputs were exempted from VAT in pre-GST period, there was no credit/ ITC of the same in pre-GST period. However, these inputs suffered GST @ 5% in post-GST period and the ITC of the same was available in post-GST period. Therefore, the additional benefit of the said ITC was required to be passed on by him to his homebuyers in terms of Section 171 of the CGST Act, 2017. 68. The DGAP further clarified that the extent of profiteering would vary from case to case depending upon the facts and circumstances of each case and the nature of goods or services supplied. Therefore, the average profiteering arrived at by the Respondent from this Authority's orders and the average profiteering arrived at by the Haryana State Screening Committee on the basis of a comprehensive study could not be compared with an individual case. Further, the calculations made by the Respondent himself were made after taking into account the voluntary reversal of the ITC of Rs. 7,00,00,091/- and hence the amount of profiteering calculated by the Respondent was vastly different from the computation in the report of the DGAP 69. The Respondent filed further written submissions on 06.11.2019 vide which he r....
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....o Rs. 7,00,00,091/-(SGST - Rs. 3,04,61,609/- CGST - Rs. 3,04,61,609/- & IGST- Rs. 90,76,873/- for the period 01.04.2018 to 31.12.2018 within the time limit prescribed under sub-section 9 of Section 39 of the CGST Act, 2017 in the GST return for the month of March 2019. He also drew reference to CBIC Circular No. 26/26/2017 dated 29/12/2017. The Respondent also submitted a copy of Electronic Credit Ledger showing unutilized Input Tax Credit of Rs. 7,19,46,200/- after discharge of liability upto the period till 31.12.2018 and a copy of his GST return for the month of March 2019, in which unutilized Input Tax Credit of Rs. 7,00,00,091/-for the period 01.04.2018 to 31.12.2018 (SGST - Rs. 3,04,61,609/-, CGST Rs. 3,04,61,609/- & IGST of Rs. 90,76,873) has been shown as reversed. He also referred the case of Abhishek v. M/s. Signature Global Developers Pvt. Ltd (Order No. 60/2019 dated 21.11.2019) = 2019 (11) TMI 1085 - NATIONAL ANTI-PROFITEERING AUTHORITY passed by this Authority in which the Authority had allowed the reversal of unutilized input tax credit of Rs. 1,25,00,000/- on similar basis. 71. The Respondent, vide his email dated 03.12.2019, has also enclosed some of the coverin....
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....units therein. Records also reveal that the Applicant No. 1 had filed an application before the Haryana State Screening Committee on Anti-profiteering and alleged that the Respondent had not passed on the benefit of input tax credit to him by way of commensurate reduction in price, in terms of Section 171 of the Central Goods and Services Tax Act, 2017. The Haryana State Screening Committee on Anti-profiteering conducted a prima facie verification of the application and after having satisfied itself that it was a case of profiteering in as much as the Respondent did not appear to have passed on the benefit of ITC, forwarded the said application with its recommendation to the Standing Committee on Anti-profiteering for further action, in terms of Rule 128 (2) of the above Rules. At the time of filing his application, the Applicant No. 1 had sought anonymity. In the application filed by him, he had complained that the Respondent was not passing on the benefit of ITC to him in respect of the flat purchased from the Respondent. The above application was examined by the Standing Committee in its meeting held on 13.12.2018 and the same was forwarded to the DGAP for detailed investigation....
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....strictly in line with the provisions of Section 171 of the CGST Act, 2017. It is also worthwhile to note that this Authority has already determined the Methodology and Procedure under Rule 126 vide its Notification dated 28.03.2018 which is available on its website. However, the basis and the reasons for computing profiteering have been mentioned in Section 171 (1) of the above Act itself which require 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 quite clear that both the above benefits are required to be passed on by commensurate reduction in the price on every product to each buyer and in case they are not passed on profiteered amount has to be computed as per the provisions of Section 171 (3A) of the above Act. In view of the above facts no methodology is required to be prescribed by this Authority as the same has been clearly and unambiguously prescribed in the above Section. Therefore, this contention of the Respondent is not correct. 77. Further, another contention of the Respondent is that the State level Screening C....
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....at letters had been issued by the Respondent conveying his intent of passing on the benefit of ITC to his customers including the Applicant No. 1. In any case, the above claim of the Respondent does not have any bearing on the proceedings under Section 171 of the Act, ibid, since commensurate benefit of profiteering had, in any case, not been passed on to the buyers at the time of filing of the application or even during the period under investigation. Accordingly, the other contentions of the Respondent questioning the date of the application or inadequacies therein, also become irrelevant. We find it pertinent to mention that as a buyer/consumer, it is not expected of the Applicant No. 1 to have an immaculate knowledge of the documentation related to the application and to have knowledge regarding the exact benefit of ITC that ought to be passed on, which is a matter of investigation by the DGAP. Hence, notwithstanding any clerical anomaly in the Application, the fact that the application has led to the finding of the DGAP after a detailed investigation that the instant case was indeed a case of profiteering is relevant here and hence this contention of the Respondent does not co....
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.... marked as confidential in the two cases were also different from each other. Hence it was decided to not share the records marked "confidential" with the Applicant No. 1. Thus, in terms of Rule 130 of the CGST Rules, 2017, the records that the Respondent had marked "confidential" were not provided to the Applicant No. 1. 80. We also observe that the Respondent, in his written submissions filed on 14.10.2019, has claimed that the DGAP's Report dated 14.06.2019, has recorded an incorrect finding whilst stating that the Respondent had benefited from additional ITC of 10.65% of the turnover, as this finding was based on the average method applied by the DGAP's on his own accord. In this regard, however, a perusal of the Table B of the DGAP Report makes it clear to us that while computing the ratio of CENVAT/VAT to Turnover, the DGAP has, for the period between April, 2016 to June, 2017 calculated the above ratio on the basis of the figures furnished by the Respondent himself in his Service Tax and the VAT Returns filed during the above period. Similarly, the computation of ratio of ITC to turnover for the period from July 2017 to December 2019 is also based on the Returns and the i....
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....enefits have been passed on not. Under Rule 133 this Authority has been empowered to determine the above benefits, grant them to the eligible recipients and get 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. 83. We also observe that the Respondent has also placed reliance on the case of Commissioner of Income Tax v. B. C. Srinivasa Setty (1981) 128 ITR 294 (SC) = 1981 (2) TMI 1 - SUPREME COURT while making the above contention. 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. 84. In view of the reasons given in para supra ....
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.... taken for execution of the project, the area sold and the turnover realised. It would also be appropriate to mention here that this Authority has power to 'determine' the methodology and not to 'prescribe' it as per the provisions of the above Rule and therefore, no set prescription can be laid while computing profiteering. However, there can be no doubt that the above benefit has to be passed on as soon as the Respondent avails the benefit for discharging his output tax liability by utilising the ITC. Since, the Respondent is utilising the benefit of ITC every month through his GSTR-3B Returns he should also pass on the benefit by commensurate reduction in the price every month. The Respondent cannot use two yardsticks while passing the above benefit by using the ITC every month himself and by claiming that his buyers would be entitled to get the same when the project would be near completion/completed. The Respondent cannot enrich himself at the expense of vulnerable house buyers by denying them the benefit for more than 4 years and use the additional ITC in his business. In case he wants to do so he should also claim the ITC at the time of completion of the project. There is al....
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....the price of the goods or services or both. The implication thereof, in respect of the instant case, is that the benefit of ITC which becomes available to the supplier, has to be passed on to the recipients, irrespective of whether the supplier utilizes the benefit or not. In other words, what is relevant to the computation of profiteering is the amount of ITC that became available to the supplier (i e. the Respondent) and the actual utilization/ reversal thereof is irrelevant for this purpose of the said computation. In other words, what is relevant for the purpose of computation of profiteering is the comparative availability of ITC in the pre-GST and post GST periods (and not what is done therefrom, which could either be payment of tax or reversal as has been done in this case). With this background, we find that in the instant case, it cannot be denied that benefit of ITC became available to the Respondent. It also cannot be denied that the said benefit accrued to him on account of rollout of GST. The fact that the Respondent did benefit on account of ITC is sufficient for the purpose of inclusion of the entire ITC for the computation of the amount of profiteering in terms of S....
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....ase had ended on 31.12.2018 whereas the reversal was effected in March 2019 and reported in the GST return of March 2019, which was filed only in June 2019 by the Respondent. It is also a fact that at the time of reversal, a number of units were yet to be sold and occupancy certificate had not yet been received, which implies that the act of reversal was not only premature on the part of the Respondent but apparently also an afterthought aimed at hoodwinking the investigation with the sole mens-rea of avoiding the passing on of benefit of ITC to his customers/ homebuyers. The said reversal, having been done without the authority of law, effected much after the period of investigation had ended and it having been effected with mala-fide intent of denying the passing on of the benefit of ITC to the customers/ homebuyers (as envisaged under provisions of Section 171 of the CGST Act, 2017) also leads us to opine that the said reversal does not merit to be considered as material to the instant proceedings and has no bearing on the amount of profiteering computed by the DGAP. The contents of the Circular No. 26/26/2017-GST thus have no bearing on our above finding. 90. We also observe....
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....rther, mathematical computation of profiteering in respect of supplies of other sectors, such as FMCG, services or cinema, are even more divergent as the facts in those cases are different from those of the real estate sector. Thus there cannot be any fixed mathematical formulation/methodology for determination of the quantum of benefit to be passed on and that each case has to be decided based on its specific facts. In this case profiteering has been computed by the DGAP on the basis of comparison of the ratios of Input Tax Credit to the total taxable turnover for the pre and post GST periods and we find no infirmity in the computation made by the DGAP. 92. We further observe that the DGAP has reported that the Respondent has claimed to pass on benefit of ITC amounting to Rs. 4,08,20,676/- to his customers/ homebuyers. However, we observe that this claim of the Respondent has not been duly verified at any stage. In this context, we find that a careful perusal of 40 of the ledger accounts of the buyers which have been submitted by the Respondent shows that there is no evidence to suggest that he had passed on the benefit of Rs. 4,08,20,676/- to his 980 home buyers and 75 commerc....
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....he Respondent is under legal obligation to pass on the benefit of ITC to his buyers and he cannot be allowed to appropriate the same. 94. Based on the above facts it is clear that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period from April, 2016 to June, 2017 was 4.75% and during the post-GST period from July, 2017 to December, 2018, it was 15.40% as per Table B supra and hence it is established that the Respondent has benefited from the additional ITC to the extent of 10.65% [15.40% (-) 4.75%] of the turnover. Since, the above computations made in Table B have been done on the basis of the records, information and returns furnished by the Respondent himself, the same can be relied upon. 95. It is also clear from the records that the Central Government, on the recommendation of the GST Council, had levied 18% GST with effective rate of 12% in view of 1/3rd abatement on value on the construction service, vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 which was reduced in the case of affordable housing from 12% to 8%, vide Notification No. 1/2018-Central Tax (Rate) dated 25.01.2018. Accordingly, the DGAP h....
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....as claimed to have passed on. The above amount shall be passed on by the Respondent along with interest @18% payable from the date from which the excess amount was collected by the Respondent from the buyers till the date of its payment within a period of 3 months from the date of this order failing which the same shall be recovered by the concerned Commissioner CGST/SGST and paid to the eligible house buyers as per their entitlement as per the provisions of CGST/SGST Acts. 97. Since, the DGAP has carried out the present investigation till 31.12.2018 only any further benefit of additional ITC which might accrue to the Respondent shall also be passed on by him to the eligible buyers. The Commissioner CGST/SGST shall ensure that the above benefit is passed on by the Respondent to his recipients as per the provisions of Section 171 of the CGST Act, 2017. In case if the above benefit is not passed in future the Applicant No. 1 or any other buyer shall be at liberty to approach the Haryana State Screening, Committee to launch fresh proceedings against the Respondent as per Section 171 of the CGST Act, 2017. 98. It is also evident from the above narration of facts that the Responde....