TaxTMI 
TaxTMI 
2020 (6) TMI 621
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....or-16, Greater Noida, U.P. The above Applicant had alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) which had accrued to him, by commensurate reduction in the price of the flat, after implementation of GST w.e.f. 01.07.2017 and charged Goods & Services Tax (GST) on the full amount of instalments. 2. This application was considered by the above Screening Committee in its meeting held on 12.04.2018 and it was found by it that the Respondent had availed ITC from July 2017 to January 2018 as per his GSTR-3B Returns and had not paid his output tax liability by cash due to availability of sufficient ITC and hence the above Applicant had rightly claimed that he was entitled to the benefit of ITC and since the Respondent had failed to pass on this benefit he had contravened the provisions of Section 171 of the CGST Act, 2017. The above complaint was forwarded by the Screening Committee to the Standing Committee on Anti-profiteering on 16.04.2018 with its recommendations for initiating action against the Respondent. 3. The above application was considered by the Standing Committee on Anti-profiteering in its meeting held on 25.05.2018 and was recommended....
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....h was acknowledged by the above Applicant vide his email dated 09.07.2018 and hence the present notice should be withdrawn. 8. The Respondent had also submitted the following documents along with his replies to the DGAP:- a) Copies of GSTR-1 Returns from July, 2017 to August, 2018. b) Copies of GSTR-3B Returns from July, 2017 to August, 2018. c) Copies of Tran-1 Statements. d) Copies of VAT & ST-3 Returns from April, 2016 to June, 2017. e) Electronic Credit Ledger from July, 2017 to August, 2018. f) Copies of all demand letters, receipts and sale agreement/contract and construction agreement dated 02.04.2012 in the name of the Applicant No. 1 Shri Amarjeet Singh Yaday. g) Tax rates- pre-GST and post-GST. h) Copy of Balance Sheet for FY 2016-17. i) Copy of Cost Audit Report for FY 2016-17. j) Copies of documents submitted to RERA. k) Details of taxable turnover and ITC of the project "Vedantam". I) List of home buyers in the project "Vedantam". 9. The DGAP in his Report has submitted that as per the copies of the demand letters and the payment schedule supplied by the Respondent for the purchase of a flat measuring 1495 square feet at the basic sale price o....
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....of the CGST Act, 2017 (Activities or Transactions which shall be treated neither as a supply of goods nor a supply of services) reads as "Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building". He has further intimated that clause (b) of Paragraph 5 of Schedule II of the CGST 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, he had submitted that ITC pertaining to the residential units which were under construction but not sold was provisional which might be required to be reversed by the Respondent as per the provisions 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 ....
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....he Taxable Turnovers during the pre and post GST periods were as has been furnished in Table-B below:- Table-'B' (Amount in Rs.) S.No. Particulars April, 2016 to March, 2017 April, 2017 to June, 2017 Total (Pre-GST) July,2017 to March, 2018 April, 2018 to August, 2018 Total (Post-GST) (1) (2) (3) (4) (5)=(3)+(4) (6) (7) (8)=(6)+(7) 1. CENVAT of Service Tax Paid on Input Services as per ST-3 (A) 93,82,102 14,97,268 1,08,79,370 - - - 2. Input Tax Credit of GST Availed as per GST Return (B) - - - 36,85,977 43,28,153 80,14,130 3. Total Taxable Turnover as per Return (C) 15,70,24,581 8,40,42,025 24,10,66,606 1,73,24,555 5,25,48,719 6,98,73,274 4. Total Saleable Area of apartments in the project (Square Ft.) (D) 10,11,429.00 10,11,429.00 5. Area Sold relevant to Taxable turnover as per returns (E) 7,62,200.00 7,65,070.00 6. Relevant CENVAT/Input Tax Credit (F)= [(A)*(E)/(D)] or [(B)*(E)/(D)] 81,98,555 60,62,087 7. Ratio of CENVAT/ Input Tax Credit to Taxable Turnover [(I)=(H)/(E)] 3.40% 8.68% 13.Therefore, the DGAP has claimed that it was established from the above Table that the ITC as a percent....
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....fit of which as per the provisions of Section 171 of the CGST Act, 2017, was required to be passed on to the recipients/flat buyers by the Respondent. The DGAP has accordingly calculated the amount of benefit of ITC which was required to be passed on by the Respondent to each flat buyer including the above Applicant or the profiteered amount as per Annexure-18 of his Report as Rs. 40,92,054/- including GST @12% on the basic profiteered amount of Rs. 36,53,620/-. This amount includes an amount of Rs. 21,496/- including GST (c)12% on the base amount of Rs. 19,193/- which has been profiteered by the Respondent, from the Applicant No. 1. Thus, the DGAP has claimed that the Respondent has contravened the provisions of Section 171 of the CGST Act, 2017 in as much as the additional benefit of ITC (c)5.28% of the base price received by the Respondent during the period between 01.07.2017 to 31.08.2018, has not been passed on to the above Applicant and other recipients by him. However, he has also stated that the Respondent had suo-moto passed on an amount of Rs. 14,514/-, to the above Applicant therefore, the Respondent had profiteered an amount of Rs. 6,982/-[21,496/-(-) 14,514/-] in respe....
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.... of which had been mentioned by him in Annexure-1 of his submissions. The above discount was due to prompt and timely payments made through the life cycle of the project by the respective buyers. He has also claimed that he wanted to hand over possession at the earliest and therefore it was decided that the possession charges and interest on late payments should be waived off. He has further claimed that he had been asked to refund a sum of Rs. 33,73,095/- to the home buyers however, he had paid a sum of Rs. 1,56,56,749/- against the full and final payments made to him. He has also stated that the benefit due in the case of Phase-2 and Phase-3 of the project wherein the possession was still to be given, shall be passed on as per the computation made vide Annexure-2 and Annexure-3 amounting to Rs. 1,11,292/- and Rs. 6,07,667/- respectively. He has also stated that no other housing or commercial project either in the name of the Respondent or otherwise had been launched by him. He has also claimed that no complaint was pending against him for not passing on the ITC benefit and the Applicant No. 1 had already withdrawn his complaint as was evident from Annexure-5. He has further claim....
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....ient by the way of commensurate reduction in prices" and hence if there was any benefit of ITC or reduction in the rate of tax, there should be a commensurate reduction in the prices of the goods or services and the above Section did not provide any other method of passing on the benefit of ITC or reduction in the rate of tax to the consumers and hence the discount given by the Respondent to his recipients did not fall within the ambit of Section 171 of the above Act. In his final Report dated 01.04.2019 the DGAP has stated that the Respondent had requested to reconsider the issue of input ITC of VAT available to him in the pre-GST period which had already been addressed in para 19 of his Report dated 05.12.2018. The DGAP has further stated that vide his submissions dated 26.02.2019 the Respondent had claimed that he had given an amount of Rs. 1,56,56,749/- as discount to various customers on account of prompt and timely payment, waiver of possession charges and interest on late payments, details of which had been submitted by him customer wise however now he had gone back on his earlier stand and claimed that Rs. 23,76,551/- were given on account of ITC, for which he had not submi....
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.... not was a law point which did not require to be explained, rather it called for decision by the Appropriate Authority or was a matter to be decided by referring to the provisions of the law on this point and hearing the Respondent. He has further submitted that the issue contained at point (V) of the said order that what amount of purchase value was paid in cash by the Respondent seemed to have no bearing on the provisions of the CGST Act, 2017 and the Rules made there under as the relevant provisions hardly distinguished the purchases made by cash or by making payment in any other mode e.g. Cheque, electronic transfer etc. The other findings of the DGAP on the above order are as follows:- a) Notwithstanding the provisions contained in the Uttar Pradesh Value Added Tax Act and the Uttar Pradesh Trade Tax Act, the fact was that the Respondent had discharged his output VAT liability on a notional/deemed taxable value which was 110% of the purchase price of the inputs and the VAT so paid by the Respondent has not been recovered from the home buyers. Since the taxable value for the purpose of output VAT liability of the Respondent was distinct/different from the actual base price ra....
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....the Respondent and the other material placed on record and find that a complaint dated 26.12.2017 was preferred before the Uttar Pradesh State Screening Committee on Anti-Profiteering by the Applicant No. 1, alleging profiteering against the Respondent in respect of purchase of a flat in the Respondent's project "Vedantam", located at Plot No. 1-B, Sector-16, Greater Noida, U.P. The above complaint mentioned that the Respondent had not passed on the benefit of ITC which had become available to him, by reducing the price of the flat commensurately, after coming in to force of the GST w.e.f. 01.07.2017. It was also alleged that the Respondent had charged GST on the full amount of the instalments paid by the Applicant No. 1. After preliminary consideration in its meeting held on 12.04.2018 the complaint was forwarded by the Screening Committee to the Standing Committee on Anti-profiteering on 16.04.2018. The above complaint was considered by the Standing Committee on Anti-profiteering in its meeting held on 25.05.2018 and was referred to the DGAP for detailed investigation under Rule 129 (1) of the CGST Rules, 2017. 24. Accordingly, the DGAP had called for the record and after its ex....
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....ccordingly, the above contention of the Respondent is not tenable. 26. Accordingly, the amount of benefit of ITC which was required to be passed on by the Respondent or the profiteered amount has been computed as Rs. 40,92,054/- including the GST @12% on the basic profiteered amount of Rs. 36,53,620/- as has been mentioned in Annexure-18. This amount includes an amount of Rs. 21,496/- including GST @12% on the base amount of Rs. 19,193/- which has been profiteered by the Respondent from the Applicant No. 1. It has also been established from the record that the Respondent had suo-moto passed on an amount of Rs. 14,514/- to the above Applicant therefore, the Respondent had profiteered an amount of Rs. 6,982/- [21,496/-(-) 14,514/-] from him. It is further established that the Respondent had also realized an additional amount of Rs. 40,70,558/- which included both the profiteered amount @5.28% of the taxable amount (base price) and GST on the said profiteered amount from the other flat buyers who were not party in the present proceedings. These recipients/flat buyers were identifiable as per the documents supplied by the Respondent himself in which their names and addresses along wit....
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....in which the former is lessee of the land on which the Respondent is executing the project. In this connection it would be relevant to mention that the above JDA has no connection with the benefit of ITC. The benefit of ITC is being enjoyed by the Respondent as per the provisions of Section 16 of the CGST Act, 2017 as he is making purchases of the goods and services to execute the above project and is utilising the same to discharge his tax liability. As per Section 171 (1) of the above Act he is required to pass on the benefit of additional ITC to his buyers as he cannot appropriate the same as this benefit has been given by the Central and the State Government out of their tax revenue in favour of the flat buyers. Not even a single penny is required to be paid as ITC benefit by the Respondent from his own pocket. Therefore, the above contention of the Respondent is untenable. 30. The Respondent has further claimed that the Applicant No. 1 has withdrawn his complaint as was evident from Annexure-5 and hence, the present proceedings were not maintainable. Perusal of Annexure-5 shows that it is copy of the e-mail dated 13.07.2018 sent by the above Applicant to the DGAP in which he ....
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....ngs are required to be recorded on them. 33. In his submissions dated 01.03.2019 the Respondent has claimed that the calculations made by the DGAP, vide Table-B and Table-C of his Report dated 05.12.2018 were not correct. He has submitted revised Tables which show that the ratio of ITC to taxable turnover during the pre GST period was 6.35% instead of 3.40%. He has also contended that he should be allowed the benefit of ITC on VAT which he had duly mentioned in his Returns filed during the period from April, 2016 to June, 2017. In this regard perusal of Table-B prepared by the Respondent shows that he has included an amount of Rs. 94,44,084/- as ITC on VAT which he has claimed to have availed during the period from 01.04.2016 to 30.06.2017 pertaining to the pre-GST period. He has not disputed rest of the figures taken by the DGAP for computing the ratios of CENVAT/ITC to the taxable turnover for the pre and the post GST periods. Since he has added the ITC on VAT amounting to Rs. 94,44,084/- in his calculations the ratio of CENVAT to ITC for the pre GST period has been computed by him as 6.35% when it has been computed by the DGAP as 3.40% as he has not included the above amount of....
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....ce with the provisions of the UP VAT Act as well as the CGST Act, 2017. Since, the Respondent has discharged his VAT liability on notional/deemed value and has not recovered VAT from his buyers the DGAP has rightly not taken the amount of VAT on ITC while calculating the above ratio for the pre GST period as per Table-B. He has also rightly not taken the taxable turnover as per the Returns filed by the Respondent and has taken the amount of demands raised by the Respondent for computing the above turnover. Hence, the above amount of Rs. 94,44,084/- on account of ITC on VAT cannot be allowed to be included for computation of the ratio of ITC to taxable turnover for the pre GST period and hence, the ratio of 3.40% computed by the DGAP for the above period is held to be correct. While preparing the Table-C the Respondent has taken ratio of CENVAT to taxable turnover as 6.35% for the pre GST period which has been calculated by him by adding the ITC on VAT which has not been allowed to be added. After taking the ratio of ITC on GST to taxable turnover during the post GST period as 8.68% he has accordingly computed the additional benefit of ITC as 2.32% of the taxable turnover whereas th....