TaxTMI 
TaxTMI 
2020 (1) TMI 306
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....nstruction services related to the purchase of the apartments in his project "Supertech Basera" and had also alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) by way of commensurate reduction in the prices of the apartments purchased by them, on implementation of the GST w.e.f. 01.07.2017. The said applications were examined by the Haryana State Screening Committee in its meeting and upon being prima facie satisfied that the Respondent had contravened the provision of Section 171 (1) of the CGST Act, 2017, had forwarded the same with its recommendation to the Standing Committee on Anti-Profiteering for further action in terms of Rule 128 (2) of the CGST Rules, 2017. The said applications were examined by the Standing Committee on Anti-Profiteering in its meeting held on 27.12.2018 and it had referred the applications to the DGAP for investigation under Rule 129 (1) of the CGST Rules, 2017 to determine whether the benefits of reduction in the rate of tax or ITC had been passed on by the Respondent to his recipients. 2. The Standing Committee on Anti-Profiteering had examined two other similar references against the Respondent in its meetings ....
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.... not been accepted by the GST authorities due to some technical glitch for which he had been running from pillar to post and had filed a Writ Petition before the Hon'ble Punjab & Haryana High Court. 6. The DGAP in his Report has further stated that vide the aforesaid letters, the Respondent had submitted the following documents/information:- a. As the GSTR-1 & GSTR-3B Returns were not filed due to technical glitch, he had submitted a summary of the sales details for the period of July, 2017 to January, 2019. b. Service Tax and VAT Returns for the period from April, 2016 to June, 2017. c. Allotment letters issued to the Applicants. d. CENVAT Credit Register for the F.Y. 2016-17, 2017-18 and from April, 2018 to January, 2019 e. Applicable tax rates, pre-GST and post-GST. f. Balance Sheets for the F.Y. 2016-17 and 2017-18. g. Copy of RERA Report. h. List of all the home buyers of the project "Supertech Basera". 7. The DGAP in his report has further stated that various replies of the Respondent and the documents/evidences on record have been carefully examined by him and the main issues to be examined were (a) whether there was benefit of reduction in rate of ta....
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....units remained unsold at the time of issue of the completion certificate, in terms of Section 17 (2) & Section 17 (3) of the Central Goods and Services Tax 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 amount of credit shall be restricted to so much of the input tax as is 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 is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building." Therefore, the ITC pertaining to the unsold units may not fall within the ambit of this investigation and the Respondent was required to recalibrate the selling price of such units to be sold to the prospective buyers by considering the proportio....
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....nover (K) = J/G*100 0.00% 2.68% 11. The DGAP has also claimed that as per the Table-B, the ITC as a percentage of the total turnover (as per the home buyer's list) that was available to the Respondent during the pre-GST period (April, 2016 to June, 2017) was 'NIL' and during the post-GST period (July-2017 to December, 2018), it was 2.68%. This clearly confirmed that post-GST, the Respondent had been benefited from additional ITC to the tune of 2.68% (2.68% (-) 0%) of the turnover. The DGAP has further claimed that the Central Government, on the recommendation of the GST Council, has levied 18% GST (effective rate was 12% in view of 1/31d abatement for land value) on construction service, vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The effective GST rate on construction service in respect of affordable and low-cost housing was further reduced from 12% to 8%, vide Notification No. 1/2018-Central Tax (Rate) dated 25.01.2018. In view of the change in the GST rate after 01.07.2017, the issue of profiteering had been examined by the DGAP in two parts, i.e., by comparing the ITC and turnover in the pre-GST period when the tax liability of t....
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....ed by the Respondent from the Applicant No. 1 to 8 and other buyers of the flats and commercial shops during the period from 01.07.2017 to 24.01.2018, the amount of benefit of ITC that needed to be passed on by the Respondent to the recipients or in other words, the profiteered amount came to Rs. 1,17,34,498/- for residential flats and commercial shops, which included 12% GST on the base profiteered amount of Rs. 1,04,77,230/-. Further, the amount of benefit of ITC that needed to be passed on by the Respondent to the recipients or in other words, the profiteered amount during the period from 25.01.2018 to 31.12.2018, came to Rs. 2,12,60,195/- for residential flats which included 8% GST on the base profiteered amount of Rs. 1,96,85,366/-. The profiteered amount during the period from 25.01.2018 to 31.12.2018, came to Rs. 2,67,117/- for commercial shops which included 12% GST on the base profiteered amount of Rs. 2,38,497/-, Therefore, the total profiteered amount during the period from 01.07.2017 to 31.12.2018 came to Rs. 3,32,61,809/- which included GST (@ 12% or 8%) on the base profiteered amount of Rs. 3,04,01,093/-. 14. The DGAP in his report has also argued that the above comp....
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....e Respondent had provided their names and addresses along with Unit Nos. allotted to them. Therefore, this additional amount of Rs. 2,98,30,299/- was required to be returned to such eligible recipients. 17. It has also been intimated by the DGAP that the present investigation covered the period from 01.07.2017 to 31.12.2018. Profiteering, if any, for the period post December, 2018, has not been examined by him as the exact quantum of ITC that would be available to the Respondent in future could not be determined at this stage, when the construction of the project was yet to be completed. The DGAP has further intimated that as the Respondent had failed to submit the copies of the GST returns, this Report had been prepared on the information/details provided by the Respondent. He has also contended that on verification from the GST portal, it was ascertained that the Respondent had filed GSTR-1 Returns for January, 2019 to March, 2019 and GSTR-3B Returns for September, 2018 to March, 2019, in the month of June, 2019 but had not submitted the copies of these returns to the DGAP. Therefore, no data verification or reconciliation could be done during the course of the investigation. 1....
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....e submissions has also stated that:- a. He has reversed balance ITC amounting to Rs. 1,62,78,213/- as on 31.03.2019. b. He has also disbursed an amount of Rs. 3,32,61,809/- to the 1976 customers. c. The DGAP in his report had not considered the reversal of Rs. 1,62,78,213/-. Therefore, he requested to adjust the amount of CENVAT credit reversal and claimed that the actual profiteering amount should be Rs. 1,69,83,596/-. d. He also requested to consider all the details upto 31.03.2019. 22. The Respondent vide his submissions dated 17.09.2019 has also furnished the following documents/information:- a. Details of Turnover and ITC for the period from 01.07.2017 to 31.03.2019 alongwith the copies of the GSTR-3B and GSTR-1 Returns. b. He has also stated that he has reversed the CENVAT Credit of Rs. 1,62,78,2131- on 06.08.2019 and Rs. 15,15,360/- on 31.08.2019, total amounting to Rs. 1,77,93,573/- which had not been considered while calculating profiteering as per the DGAP's Report. He requested to consider the above amount and calculate the profiteering ratio. c. Details of flat booked/sold during the period from 01.01.2019 to 31.03.2019. d. Detai....
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...., post-GST, the Respondent has been benefited from additional ITC to the tune of 2.68% (2.68%-0%) of his turnover and the same was required to be passed on to the Applicant No. 1 to 8 and the other flat buyers. The DGAP has calculated the amount of ITC benefit to be passed on to all the flat buyers as Rs. 3,32,61,809/- which was availed by the Respondent vide Table- C Supra on the basis of the information supplied by the Respondent, which the Respondent has not challenged and hence the amount of profiteering computed by the DGAP is hereby accepted as correct. 26. The Respondent has also contended that he has reversed the CENVAT Credit of Rs. 1,62,78,213/- on 06.08.2019 and Rs. 15,15,360/- on 31.08.2019 (Total Rs. 1,77,93,573/-) and the same has not been considered while calculating the amount of profiteering in DGAP's Report and he has requested to adjust the above amount. In this context, it will be pertinent to mention that the expression "profiteered" as explained under Section 171 (1) of the CGST Act, 2017 means the amount determined on account of not passing on the benefit of reduction in the rate of tax on supply of goods or services or both or the benefit of additiona....
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....ent has to be viewed as an act that was carried out with the mala-fide intent of denying the passage of benefit of ITC to his customers/ homebuyers. It is also a fact that at the time of reversal a number of units were yet to be sold and occupancy certificate has not yet been received which implies that this act of reversal was not only premature on the part of the Respondent but apparently also an afterthought aimed at avoiding the passing on of the benefit of ITC to his customers/ homebuyers. It would also be relevant to add here that the profiteered amount has been calculated by the DGAP only in respect of the sold units on which the GST is being charged by the Respondent from his customers in proportion to the ITC available on such units and therefore, in case the ITC would be required to be reversed in the case of the unsold flats/shops in future the same can be easily done by the Respondent from the balance available ITC. Therefore also the above argument of the Respondent cannot be accepted. 28. The Respondent vide his submissions dated 17.09.2019 has also submitted the details of the profiteered amount claimed to have been passed on by him to all his customers along with s....