TaxTMI 
TaxTMI 
2020 (2) TMI 1237
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....fiteering in respect of the supply of construction 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 ....
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....the data submitted by him as confidential except the allotment letter and the ledger of Applicant No. 1, in terms of Rule 130 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....
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.... 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 Il, sale of building". Therefore, the 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 t....
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.... units was taken into account to calculate profiteering in respect of 39 units where payments had been demanded in the post-GST period, the ITC as a percentage of the turnover would be distorted and erroneous. Further, on scrutiny of the reconciliation of returns of the project, it was observed that for the month of January to March, 2019, 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 c....
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....s. iv. Project Report Submitted to RERA. h) That he had requested the DGAP for the inspection of the non-confidential documents on 20th or 21^st August, 2019 and for scanned copies of the documents submitted by the Respondent, but the same were not supplied to him. i) That as per the DGAP's investigation report, it had been established that no credit was admissible in respect of Central Excise Duty paid on 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 th....
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....India Pvt. Limited = 2018 (12) TMI 135 - NATIONAL ANTI-PROFITEERING AUTHORITY and M/s. Pyramid Infratech Pvt. Ltd. = 2018 (9) TMI 1107 - NATIONAL ANTI-PROFITEERING AUTHORITY and has requested to initiate the proceedings in the same manner. q) He has requested that in this case the DGAP's Report dated 30th August 2019 be rectified and the correct calculation of profiteering be undertaken based on the demands raised in the post GST period keeping in mind the stage of completion of the project. 16. Supplementary Report was 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 R....
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....period. Hence the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. On this issue, the DGAP in his Report, has stated that ITC as a percentage of the turnover which 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%. On this basis, the DGAP has reported that the Respondent had neither benefited from additional ITC nor had there been a reduction in the tax rate in the post-GST period and therefore it does not qualify to be a case 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 allotmen....