TaxTMI 
TaxTMI 
2020 (6) TMI 675
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....e benefit of Input Tax Credit (ITC) availed by him by way of commensurate reduction in the price of the above flat. The aforesaid reference was considered by the Standing Committee on Anti-profiteering, in its meeting held on 15th May, 2019, wherein it was decided to forward the same to the DGAP to conduct detailed investigation in to the complaint according to Rule 129 (1) of the CGST Rules, 2017. 2. On receipt of the recommendation from the Standing Committee on Anti-profiteering, the DGAP had issued Notice dated 08.07.2019 under Rule 129 (3) of the above Rules, asking the Respondent to intimate as to whether he admitted that the benefit of ITC had not been passed on to the above Applicant by way of commensurate reduction in the price of the flat and in case it was so to suo-moto compute the quantum of the same and mention it in his reply to the Notice along with the supporting documents. The Respondent was given opportunity to inspect the non-confidential evidence/information furnished by the Applicant No. 1 during the period between 15.07.2019 to 17.07.2019 in accordance with Rule 129 (5) of the above Rules but the Respondent did not avail of the said opportunity. Vide e-mai....
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....im and he had found that the main issues for determination were whether there was reduction in the rate of tax or benefit of ITC on the supply of construction service by the Respondent after implementation of the GST w.e.f. 01.07.2017 and in case it was so, whether the Respondent had passed on the above benefits to the home buyers as per the provisions of Section 171 of the CGST Act, 2017 or not. 8. The DGAP has further stated that the Respondent vide his letter dated 19.07.2019 had submitted that he had informed the Applicant No. 1 over telephone and through e-mail regarding passing on the benefit of GST input tax credit and he had already passed on GST benefit of Rs. 23,575/-(inclusive of GST) to the Applicant No. 1 in the month of March-2019. The Respondent had further submitted that he had passed on the ITC benefit to all the eligible home buyers. 9. The Respondent had submitted a copy of RERA Registration Certificate of his Project "Devaan" and the payment schedule for the purchase of flats at the basic sale price of Rs. 4,000/- per square feet for the carpet area and Rs. 500/-per square feet for balcony area. The Respondent, vide letter dated 19.07.2019 and subsequent e....
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....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". In the light of these provisions, the DGAP has contended that the ITC pertaining to the units which were under construction but not sold was provisional ITC that would be required to be reversed by the Respondent, if such units would remain unsold at the time of issue of Completion Certificate, in terms of Section 17 (2) & Section 17 (3) of the Central Goods and Services Tax Act, 2017 which read as under:- 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. 17 (3) The value of exempt supply under sub-section (2) shall be such as may be prescribed, and shall include supplie....
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....A+B) 73,80,197 - - - 4. Input Tax Credit of GST Availed (D) - 1,74,57,223 3,33,89,872 5,08,47,095 5. Turnover for Residential Flats as per Home Buyers List (E) 58,05,36,000 - - - 6. Turnover for Commercial Shops as per Home Buyers List (F) 4,50,45,463 - - - 7. Total Turnover (G)= (E)+(F) 62,55,81,463 22,06,62,493 19,35,12,000 41,41,74,493 8. Total Saleable Carpet Area (Excluding Balcony Area*)(in SQF)(H) 4,04,445 3,76,424 (Residential) 28,021 (Commercial) 4,04,445 9. Total Sold Carpet Area (Excluding Balcony Area*) (in SQF) relevant to turnover (I) 3,88,602 3,76,424 (Residential) 9,765 (Commercial) 3,86,189 10. Relevant ITC [(J)=(C)*(I)/(H)] or [(J)=(D)*(I)/(H)] 70,91,098 4,85,51,939 Ratio of Input Tax Credit Post-GST [(K)=(J)/(G)] 1.13% 11.72% 12. The DGAP has also submitted from the Table-'B' that the IT as a percentage of the total turnover that was available to the Respondent during the pre-GST period (April, 2016 to June, 2017) was 1.13% and during the post-GST period (July, 2017 to June, 2019), it was 11.72% which ....
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....0 19,35,12,000 41,41,74,493 7. GST raised over Base Price (Rs.) F= E*B 32,58,059 2,32,21,440 1,54,80,960 4,19,60,459 8. Total Demand raised G=E+F 3,04,08,552 21,67,33,440 20,89,92,960 45,61,34,952 9. Recalibrated Base Price H=E*(1-D) or 89.41% of E 2,42,75,256 17,30,19,079 17,30,19,079 37,03,13,414 10. GST @12% or 8% I = H* B 29,13,031 2,07,62,290 1,38,41,526 3,75,16,847 11. Commensurate demand price J = H+I 2,71,88,286 19,37,81,369 18,68,60,606 40,78,30,261 12. Excess Collection of Demand or Profiteering Amount K= G-J 32,20,266 2,29,52,071 2,21,32,354 4,83,04,691 14. The DGAP has also observed from Table-'C' that the additional ITC of 10.59% of the turnover should have resulted in commensurate reduction in the base prices as well as cum-tax prices. Therefore, in terms of Section 171 of the Central Goods and Services Tax Act, 2017, the benefit of the additional ITC was required to be passed on to the recipients. 15. On the basis of the aforesaid CENVAT/ITC availability pre and post-GST and the details of the amount collected by the Respondent fro....
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....65 2,74,75,785 Further Benefit to be passed on as per Annex-14 3. Other Buyers (Residential) 3 1,020 11,63,250 1,23,188 1,36,216 -13,028 Excess Benefit passed on. List Attached as Annex-15 Total (Residential A) 848 3,76,424 42,57,26,400 4,50,84,426 1,75,87,938 - 4. Commercial Shop Buyers 39 9,765 2,71,50,493 32,20,266 9,37,648 22,82,618 Further Benefit to be pass on as per Annex-16 5. Commercial Shop Buyers 37 8,138 - - - - No Consideration Paid Post-GST. No benefit passed on. 6. Commercial Shop Buyers 36 10,118 - - - - Unsold as on 30.06.2019 7. Total Commercial (B) 112 28,021 2,71,50,493 32,20,266 9,37,648 22,82,618 Grand Total (C) = (A) + (B) 960 4,04,445 45,28,76,893 4,83,04,692 1,85,25,586 - 17. The DGAP has observed from the above Table-D that the benefit already passed on by the Respondent was less than what he ought to have passed on in case of 844 residential flats (Sr. 2 of Table-D), by an amount of Rs. 2,74,75,785/- and in case of 39 commerci....
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....e-D that the Respondent has not passed on the additional benefit of Input Tax Credit @10.59% of the Base Price to (i) One flat of Applicant at Sr. No. 1 of Table-D involving amount of Rs. 33,731/-. (ii) 844 residential flats at Sr. 2 of Table-D involving amount of Rs. 2,74,75,7851- and (iii) 39 Commercial shops at Sr. No. 4 of Table-D involving amount of Rs. 22,82,6181-.The DGAP has further stated that the benefit already passed on by the Respondent to the buyers in column-G of Table-D has already been factored in the calculations and it was found that Section 171 of the Central Goods and Services Tax Act, 2017 appeared to have been contravened by the Respondent, inasmuch as the additional benefit of input tax credit @10.59% of the base price i.e. Rs. 2,97,92,134/- received by the Respondent during the period from 01.07.2017 to 30.06.2019, had not been passed on by the Respondent to 884 recipients (845 buyers of residential flats plus 39 buyers of commercial shops). These recipients were identifiable as per the documents provided by the Respondent, giving the names and addresses along with unit no. allotted to such recipients. Therefore, this additional amount of Rs. 2,97,92,134/- ....
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....07.2017 to 30.06.2019 vi. Copy of CENVAT Credit Register, ITC register. vii. List of Home Buyers along with the ITC benefit Passed. viii. Copies of Ledgers of customers ix. Copy of TRAN-1. c) That he has submitted the following information/ documents to this Authority during the hearings in respect of the other projects of the Respondent:- 1. Statement showing project-wise ITC/Cenvat credit availed and Turnover as per the Statutory Return (GST/ST/VAT Returns) for the period from 01.04.2016 to 30.06.2019:- (i) Turnover Summary and CENVAT Summary for 2016-17. (ii) Turnover Summary and CENVAT Summary for the period from April-2017 to June-2017. (iii) Turnover Summary and ITC summary for the period from July-2017 to March-2018. (iv) Turnover Summary and ITC Summary for the period from April-2018 to March-2019. 2. Project-wise list of all payments received from each of his buyers. 3. Balance Sheets for the year 2016-17, 2017-18 along with the Project-wise Trial Balance for the same period. 4. Summary of the Total number of apartment/flats/ commercial units/ residential un....
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....equired to pass on to the flat buyers of this project. The DGAP has also found that the Respondent has not reduced the basic prices of his flats/shops by 10.59% due to additional benefit of ITC and by charging GST at the increased rate of 12% on the pre-GST basic prices, he has contravened the provisions of Section 171 of the CGST Act, 2017. The DGAP has further submitted that the amount of benefit of ITC which has not been passed on by the Respondent or the profiteered amount came to Rs. 4,83,04,692/- which included 12% or 8% GST on the basic profiteered amount. The DGAP has also intimated that this amount of profiteering also included the profiteered amount of Rs. 57,488/- including 12% or 8% GST in respect of the Applicant No. 1. He has also supplied the details of all the buyers who have purchased flats/shops from the Respondent along with their unit numbers and the profiteered amount vide Annexures 14, 15 and 16 attached with the Report. 23. It is also revealed from the record that the Respondent has not raised any objection against the methodology adopted by the DGAP while arriving at the quantum of profiteered amount. The above methodology has also been approved by this A....
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....ssed on and the benefit claimed to have been passed on by the Respondent have been given by the DGAP in Table-'D' supra. The DGAP has specifically admitted in his Report that for verification of the benefit already passed on by the Respondent he had summoned the credit notes and the payment ledger of the home buyers mentioned at Sr. No. 1 to 50, 201 to 250, 401 to 450 and 601 to 650 of the home buyers list which have been duly verified by him with the details submitted by the Respondent and found to be correct. In view of the above statement of the DGAP the Respondent is directed to return the ITC benefit of Rs. 33,731/- including the GST to the Applicant No. 1, Rs. 2,74,75,785/- including the GST to the 844 other flat buyers as per the details given in Annexure-14 and Rs. 22,82,618/- including the GST to the 39 commercial shop buyers mentioned in Annexure-16 as per the provisions of Rule 133 (3) (c) of the above Rules along with the interest @ 18% to be charged from the date when the above amounts were collected by the Respondent from the flat/shop buyers as all these buyers are identifiable as per the details furnished by the Respondent. However, the Respondent shall not adjust t....