TaxTMI 
TaxTMI 
2020 (6) TMI 621
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....ect "Vedantam", located at Plot No. 1-B, Sector-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 i....
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....ant and he was informed vide letter dated 07.07.2018 which was acknowledged by the above Applicant vide his email dated 09.07.2018 and hence the present notice should be withdrawn. 8.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 d....
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.... Applicant as benefit of ITC which was 4% of the amount paid by him post GST however, he was required to affirm the correctness of the benefit of ITC so passed on by the Respondent by taking in to account the ITC and the amount collect by him from the above Applicant as well as from all other flat buyers post GST. 11. The DGAP had also intimated that para 5 of Schedule-III 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 ....
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....ce of the GST w.e.f. 01.07.2017. He had further submitted that it was clear from the information furnished by the Respondent which had been duly verified from his GSTR-1 and GSTR-3B Returns for the period from July, 2017 to August, 2018, the details of the ITC availed by the Respondent and his taxable turnover for the project "Vedantam" during the above period that the ratios of CENVAT/ITC to the 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 o....
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....@ 12% over Basic Price I= H*12% 83,03,682 11. Total Demand collected J=H+I 7,75,01,031 12. Recalibrated Basic Price K= H*(1-E) or 94.72% of H 6,55,43,729 13. GST @12% L= K*12% 78,65,247 14. Commensurate demand price M=K+L 7,34,08,976 15. Excess Collection of Demand or Profiteering Amount N= J - M 40,92,054 15.The DGAP has also submitted that it was apparent from Table- 'C' given above that the additional ITC of 5.28% of the taxable turnover should have resulted in commensurate reduction in the base price as well as cum-tax price of the flat the benefit 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/- in....
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....ring and had submitted copies of various approvals and the details of benefit passed on by him to the flat buyers. The Respondent during the hearing submitted that the project Vedantam has three phases and consisted of total 853 Flats. It was also submitted that out of the total benefit alleged in the DGAP's Report of 5.28%, benefit of 4% has been passed on to all the homebuyers. 17. Vide his submissions dated 26.02.2019 the Respondent has submitted that under Phase-1 of the project, possession of 109 flats had already been handed over to the buyers majority of whom had already been given huge discount of Rs. 1,56,56,749- at the time of handing over the possession, the details 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....
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....im which would be adjusted in the next instalments. 19. The above submissions of the Respondent were sent to the DGAP for filing reply and vide his supplementary Report dated 27.02.2019 the DGAP has stated that the issue raised by the Respondent pertained to the calculation of interest to be paid on the benefit of ITC or the profiteered amount paid or to be paid on which he had no submissions to make. In his further Report dated 08.03.3019 the DGAP has stated that as per the provisions of Section 171 of CGST Act, 2017 which regulated the anti-profiteering measures "Any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient 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 01.04.201....
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....e provisions of the UP VAT Act, 2008 read with the provisions of the UP Trade Tax Act, 1948 why the correlation between the turnover reported in the VAT Returns filed for the period from April, 2016 to June, 2017 and the amount collected from the home buyers could not be established in accordance with the provisions of the above Acts ? 21. The DGAP has submitted his Report in compliance of the order dated 26.06.2019 passed under Rule 133(4) on 05.11.2019 and submitted that many of the issues contained in para-22 of the said order related to the points of law which needed to be decided by the VAT Authorities viz. whether the Respondent was liable to charge VAT from his customers as per the provisions of the UP VAT Act, 2018 or 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 Rule....
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....f VAT should not be allowed. 22. After due consideration of the above Report by this Authority, it was decided to hear the Applicants and the Respondent on 20.11.2019, which was further postponed to 05.12.2019, 02.12.2019 and 13.01.2020 on the request of the Respondent. Neither the Respondent nor the Applicants appeared in any of the 04 hearing opportunities given to them however, the Respondent vide his submissions dated 13.01.2020 intimated that taking the benefit of VAT into consideration the percentage ratio of ITC was 2.032% however, he had pass on the benefit of ITC to his customers more than that. He has also attached documents in support of his claim 23. We have carefully considered all the Reports filed by the DGAP, submissions of 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 pass....
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....espondent has again claimed that the additional benefit of ITC (c) 2.32% of the turnover was to be passed on which he has passed on. He has also attached list of the beneficiaries and the receipts issued by them in token of having received the benefit of ITC. In this regard it would be relevant to mention that as has been discussed above the benefit of 2.32% has been wrongly computed by the Respondent by adding the amount of ITC of VAT to which he was not entitled. The Respondent has himself admitted that he had given discount to his buyers due to timely and prompt payment during the lifecycle of the project. Therefore, he cannot claim that he has passed on the benefit of ITC. Hence, the list and the receipts submitted by him cannot be relied upon. Accordingly, 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. 19,1....
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....ively. Perusal of Annexure-2 and 3 shows that the Respondent has not explained the methodology on the basis of which he has computed the above amount. Therefore, the computation of the profiteered amount is arbitrary, unreasonable, unjustified and is not in consonance with the provisions of Section 171 (1) of the above Act and hence, the same cannot be accepted. The Respondent is required to pass on the benefit of additional ITC after its computation as per Table-B and C of the Report dated 05.12.2018. 29. He has also attached copy of the JDA vide Annexure-4 of his submissions and claimed that no ITC benefit arose from the above agreement. Perusal of the JDA shows that it has been executed between M/s Jyotirmay Infracon Private Limited and the Respondent 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 disch....
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....e buyers cannot be compelled to wait for the benefit indefinitely when the Respondent is utilising the ITC to pay his tax liability every month. Therefore, the above claim of the Respondent is untenable. 32. Vide Annexure-8 the Respondent has submitted the details of the CENVAT which was available to him w.e.f. 01.04.2016 to 30.06.2017. The DGAP has already considered the eligible amount of CENVAT available during the above period while calculating its ratio to the taxable turnover vide Table-B of his Report dated 05.12.2018. The Respondent has also submitted Annexure-7 and 9 giving details of the sold and in stock units and the RERA Construction Progress Reports. The Respondent has not raised any objections in respect of the above Annexures and hence, no findings 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....
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....t-GST base price, such VAT amount was required to be excluded from the pre-GST base price. The exercise to exclude the VAT amount from the pre-GST base price would involve apportioning of the total VAT amount among the home-buyers, depending on the consideration received from them over a period of 15 months, which was quite complex. Therefore, while on the one hand, the pre-GST base price has not been reduced by the VAT amount, the input tax credit of VAT has not been taken into account, on the other so that the comparison of the pre-GST cum tax price (inclusive of VAT and Service Tax) with the post-GST commensurate price (inclusive of GST on the recalibrated base price) was just and fair. The above contention of the DGAP is reasoned and justified and is in consonance 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....
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..... 40,70,558/- to the other buyers as per the details given in Annexure-18 of the DGAP's Report dated 05.12.2018 along with interest @18% per annum to the flat buyers from the dates from which the above amount was collected by him from the buyers till the payment is made as per the provisions of Rule 133 (3) (b) of the above Rules. The Respondent is also directed to reduce the prices of his flats commensurately as per the details mentioned above in terms of Rule 133 (3) (a) of the above Rules. 36. It is also clear from the facts of the case that the Respondent has been directed to pass on the benefit of ITC till 31.08.2018. Any benefit of ITC which may become available to the Respondent post 31.08.2018 would also be passed on by the Respondent to the eligible buyers. The Concerned Commissioner GST shall ensure that the above benefit is passed on to the eligible buyers and report submitted to this Authority. 37. It is also evident from the above narration of facts that the Respondent has denied the benefit of ITC to the buyers of the flats being constructed by him in his Project 'Vedantam' in contravention of the provisions of Section 171 (1) of the CGST Act, 2017. Therefore, h....