TaxTMI 
TaxTMI 
TaxTMI 
2020 (2) TMI 1237
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....ction services related to the purchase of Flat J-66C, in the Respondent's project "Officer Enclave", Sector-2, Sohna Road, Gurugram. The Applicant No. 1 had also alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) by way of commensurate reduction in the price of the apartment purchased by him, on implementation of GST w.e.f. 01.07.2017. 2. The said application was examined by Standing Committee on Anti-Profiteering in its meeting held On 11.03.2019 and forwarded with its recommendation to the DGAP for detailed investigation under Rule 129(1) of the CGST Rules, 2017 to investigate whether the benefit of reduction in the rate of tax or ITC had been passed on by the Respondent to his recipients. The DGAP had received the minutes of the meeting of the Standing Committee on Anti-Profiteering on 27.03.2019. 3. The DGAP has stated that the Applicant No. 1 had submitted a copy of the Application and copies of his written communication with the Respondent. 4. Thereafter, the DGAP had issued a notice to the Respondent on 09.04.2019 (Annex-3) under Rule 129 of the above Rules, calling upon the Respondent to reply as to whether he admitted that the benefit of....
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.... of the Rules. 7. The DGAP has also reported that he has carefully examined the various replies of the Respondent and the documents/evidence placed on record. The main issues for determination were whether the Respondent had benefited from the reduction in the rate of tax or the ITC after implementation of the GST w.e.f. 01.07.2017 and if so, whether such benefit was passed on by the Respondent to the recipients, in terms of Section 171 of the CGST Act, 2017. 8. The DGAP has further reported that the Respondent had submitted a copy of the sale agreement dated 23.06.2016, for the sale of flat no. J-66C to Applicant No. 1 in his project "Officer Enclave", measuring 1375 square feet, at the basic sale price of Rs. 3550/- per square feet. The details of amounts and taxes paid by the Applicant to the Respondent has been furnished by the DGAP in Table-'A' below:- Table-'A' (Amount in Rs.) Sl.No. Payment Stages Due Date Basic Sale Price Service Tax GST Total 1 At the time of Booking 23.05.2016 4,50,000 16,875 - 4,66,875 2 Within 90 days 21.08.2016 5,26,250 19,734 - 5,45,984 3 On completion of foundation 03.02.2017 4,88,125 18,305 - 5,06,430 4 On casting ....
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....he DGAP has contended that the ITC pertaining to unsold units might not fall within the ambit of this investigation and the Respondent would be required to recalibrate the selling price of such units to be sold to prospective buyers by considering the proportionate benefit of additional ITC available to them in the post-GST period. 10. Further, the DGAP in his Report further stated that the issue of profiteering had been examined by comparing the ratio of ITC available relevant to the turnover. The rate of tax during the pre-GST period (April, 2016 to June, 2017) was Service Tax @4.5% and VAT@I% (total tax rate was 5.5%) and the post-GST period (July, 2017 to December, 2018) the effective GST rate on construction service was 12% (GST @18% alongwith 1/3rd abatement on account of land value), vide Notification No.11/2017-Central Tax (Rate) dated 28.06.2017. This showed that upon the introduction of GST w.e.f. 01.07.2017, the applicable tax rate on the construction services supplied by the Respondent had gone up from 5.5% to 12%. 11. The DGAP in his Report has also mentioned that as per the details submitted by the Respondent, it appeared that prior to 01.07.2017, i.e., in the pre-G....
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....019, no ITC had been availed by the Respondent and the percentage of ITC from July, 2017 to December, 2018 was also very low in percentage. 13. The DGAP has further stated that as per the Table-B above, the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April, 2016 to June, 2017) was 0.94% and during the post-GST period (July, 2017 to March, 2019), it was 0.39%. It was also observed from the above narrated facts that the rate of tax in the post-GST period was higher than the rate of tax in the pre-GST period. Therefore, it appeared that the Respondent had neither benefited from additional ITC nor had there been a reduction in the tax rate in the post-GST period. Therefore, the provisions of Section 171 of the Central Goods and Services Tax Act, 2017 did not appear to be attracted to the present case. Based on the submissions made by the Respondent, it was also observed that the Respondent had supplied construction services in the State of Haryana only. 14. The DGAP has intimated that the Respondent has not contravened the provisions of Section 171 15. The above investigation Report was received by this Authority from the DGAP ....
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....n inputs and no credit was available for VAT paid on inputs. However, in the post GST period, the Respondent could avail ITC of GST paid on all inputs and input services, which implied that free flow of credit was allowed. j) That the DGAP had considered the 'net benefit of ITC' to compute the quantum of profiteering as per the Table mentioned in para No. 14 of the Report, but he has not considered the type of sale consideration i.e. Subvention plan or CLP Plan. Further, as was apparent from para No. 14 of the DGAP Report, in the GST regime, the Respondent could avail ITC of GST paid on all the inputs and the input services. However, the DGAP, while calculating profiteering has not considered the same through cost sheet pre GST and Post GST on the base price of Rs. 3550 in his case. k) That as construction has been stalled in the present scenario, so, post GST period, the Respondent had not raised demands on homebuyers, as there were cases of construction linked plan, so,. exact quantum of ITC in present scenario by concept of "net benefit of ITC" based on sales would be wrong and it should be compared based on construction work which has happened in the pre GST and post GST pe....
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....as sought from the DGAP on the issues raised by the Applicant No. 1 through submissions dated 25.09.2019, under Rule 133(2A) of the CGST Rules, 2017. The DGAP vide his Report dated 14.10.2019 has stated:- a) That the Respondent has stated the facts which related to the booking and construction activities and hence they have no impact on profiteering. b) That during the post-GST era (i.e. the period covered under investigation), the construction activities were minimum and it was also corroborated by the fact that the demand raised in the post-GST was much lesser than the pre-GST period. c) That ratio of CENVAT/ITC availed by the Respondent had been compared with the total turnover for the period from April, 2016 to June, 2017 (i.e. pre-GST) and July, 2017 to March-2019 (i.e. post-GST) to work out the additional benefit of ITC available with the Respondent. d) That the Respondent had declared all the data submitted by him as confidential except allotment letter and ledger of the Applicant No. 1. e) That in para 11 of the DGAP Report dated 30.08.2019, the area had been mentioned in square feet. However, due to typing error, the total saleable area in Table-B had been incorr....
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....e of profiteering. We find no reason to differ from the Report of DGAP and we therefore agree with his findings that the the provisions of Section 171 of the CGST Act 2017 have not been contravened in this case. 21. The Applicant No. 1 vide his above submissions has stated that the documents supplied by the Respondent to the DGAP during the investigation period had not been supplied to him. It is evident from the DGAP Report dated 30.08.2019 and supplementary Report dated 14.10.2019 that the Respondent in terms of Rule 130 has requested that all the date submitted by him except allotment letter and Applicant's ledger, were to be treated as confidential. Therefore, the confidential documents submitted by the Respondent had correctly not been supplied by the DGAP to the Applicant No. 1. 22. The Applicant No. 1 has further contended that while calculating profiteering, the DGAP has not considered the type of sale consideration i.e. Subvention Plan or CLP Plan, pre-GST impact of ITC on cost, Cost Sheet Performa for Goods/Services pre-GST and post-GST, Summary of purchased materials/inputs versus Construction Stages and the Project report submitted to RERA. The above claim of the App....