TaxTMI 
TaxTMI 
2020 (7) TMI 442
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.... of commensurate reduction in the price of the flat, on implementation of GST w.e.f. 01.07.2017. 2. The DGAP has submitted that the Rajasthan State Screening Committee on Anti-profiteering has examined the above application in its meeting held on 30.04.2019 and observed that the benefit of ITC had not been passed on by the Respondent and forwarded the said application with its recommendations to the Standing Committee on Anti-profiteering for further action, in terms of Rule 128 (2) of the above Rules. 3. The above application was then considered by the Standing Committee on Anti-profiteering in its meeting held on 13.06.2019 and was recommended to the DGAP for detailed investigation under Rule 129 (1) of the CGST Rules, 2017. 4. The DGAP on receipt of the above reference had issued notice to the Respondent under Rule 129 (3) of the above Rules to submit reply as to whether the ITC benefit was passed on by him to his recipients and if not to suo-moto determine the quantum of benefit which was not passed on and intimate the same to run. The Respondent was also given opportunity to inspect the evidence produced by the above Applicant during the period from 18.07.2019 to 22.0....
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....ondent and forward the same to the DGAP for further investigation, In response to the aforesaid letter dated 11.09.2019. Additional Commissioner, State Tax had informed vide his letter dated 23.09.2019 that he had deputed She Bharat Bhushan Badesra, Commercial Tax Officer, Jaipur III, Special XI. Vide letter dated 04.10.2019, Additional Commissioner (Tax Evasion), office of the Principal Commissioner. CGST & C. Ex- Commissionerate, Jaipur informed that a visit was made by the Superintendent and Inspector of CGST & C, Ex. {A E.) on the Respondent's premises on and no one was found present except Sh. Pankaj Sharma (Group D Employee). It was also stated that all the Directors of the Respondent had already been arrested by the SOG (Special Operations Group), Rajasthan Police. The Additional Commissioner (Tax Evasion) requested that as the Respondent fell under the State jurisdiction, any further communication should be made directly with the State Commercial Taxes Department. 8. The DGAP has further reported that after exhausting all the options to collect the desired documents/information it was decided to depute a team of officers from the office of the DGAP to visit the premises ....
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....Copies of documents issued in the name of the Applicant. i. Other details pertaining to the project -Sky Terraces" available in the soft copies like clearance certificates. j. Copies of ST-3 Returns for the period from April, 2016 to June, 2017. k. Copy of the Bank statement for the period from 01.04.2018 to 31.05.2019. l. Copies of RERA documents. 11. The DGAP in his Report has also submitted that according to the Safe agreement dated 05.05.2014, demand letters and payment recipients collected during the course of the visit, it was observed that the Applicant No. 1 had purchased Flat no. B-1806, measuring 1989 square feet, at total basic sale price of Rs. 66,44,700/- (Rs. 3,200/- basic sale price per square feet, Rs. 99,450/- for Electrification Charges, Rs. 99,450/- for Lease Money, Rs. 50,000/- for corpus fund and Rs. 31,000/- for Copper Wiring), The details of amounts and taxes paid by the Applicant No. 1 to the Respondent have been furnished by the DGAP as per the Table-'A' below.- Table- 'A' (Amount in Rs.) S.No. Payment Stages Due Date Basic % BSP Electricity charges Lease Money, Corpus Fund and Copper Wiring ....
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....d 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.". Section 17 (3) "The value of exempt supply wider sub-section (2) shall be such as 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 II, sale of building". 13. Therefore, the DGAP has stated that the ITC pertaining to the unsold units was not taken in to account by him during the present investigation and the Respondent was required to re-fir the selling prices of such units by considering the net benefit of additional ITC which would be available to him post-GST. 14. The DGAP has also informed that as the Respondent had not submitted any details/information, he has put his best efforts to collect and arrange the information to initiate and conc....
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....dent during the pre-GST period (April, 2016 to June, 2017) was 1.41% and during the post-GST period (July. 2017 to April, 2019). it was 6.79% which showed that post-GST. the Respondent has benefited from additional ITC to the extent of 5.38% [6.79% (-) 1,41%] of the taxable turnover. 17. Based on the above factors the DGAP has computed the profiteered amount by comparing the applicable tax and the ITC available in the pre-GST period (April, 2016 to June, 2017) when Service Tax and VAT @1% were payable (total tax rate of 5.50% approx,) with the post-GST period (July, 2017 to April, 2019) when the effective GST rate was 12% (GST along with 1/3rd abatement for land value) on construction service, vide Notification No. 11/2017-CentraI Tax (Rate). dated 28.06.2017. The comparative computation of the ITC availed/available during the pre-GST period and the post-GST period and the profiteered amount has been tabulated by the DGAP in the Table-'C' below.- Table-'C' (Amount in Rs.) S.No. Particulars Post-GST 1. Period A July, 2017 to April, 2019 2. Output GST rate (%) B 12% 3. Ratio of CENVAT credit/ ITC to Total Turnover as per Table....
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....s considered to calculate profiteering in respect of 177 units where payments had been received after GST implementation, the ITC as a percentage of turnover may be erroneous, Therefore, the benefit of ITC in respect of these 40 units may be calculated when the consideration was received from such units by taking into account the proportionate ITC in respect of such units. 21. He has further averred that profiteering, if any, for the period post April, 2019, has not been computed by him as the exact quantum of ITC which would be available to the Respondent in future could not be determined at this stage. It has also been observed by the DGAP that the Respondent has supplied construction services in the State of Rajasthan only. 22. The above Report was considered by this Authority in its sitting held on 12.12.2019 and it was decided to hear the Applicants and the Respondent on 08.01.2020. The Respondent was also directed to explain why the Report dated 10.12.2019 filed by the DGAP should not be accepted and his liability for violation of the provisions of Section 171 of the above Act should not be fixed. As the notice of hearing was returned undelivered another notice was issu....
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....(1) of the CGST Rules, 2017. 24. Accordingly, the DGAP has collected the record and after its examination he has furnished his Report dated 10.12.2019, It is evident from Table-B mentioned above that the ratio of ITC as a percentage of the total turnover which was available to the Respondent during the pre-GST period from April. 2016 to June, 2017 was 1.41% and during the post-GST period w.e.f. July, 2017 to April, 2019 it was 6.79% which showed that post-GST, the Respondent has benefited from additional ITC to the extent of 5.38% [6.79% (-) 1.41%) of the taxable turnover. It is also apparent from Table-C supra that the additional ITC of 5.38% of the taxable turnover should have resulted in commensurate reduction in the base prices as well as cum-tax prices of the flats the benefit of which as per the provisions of Section 171 of the CGST Act, 2017, is required to be passed on to the recipients/flat buyers by the Respondent, Both the above Tables have been prepared by the DGAP on the basis of the Returns and the details of flat buyers submitted by the Respondent himself or from the documents collected from his office which have been duly verified by the DGAP. The mathematical me....
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.... of the actual payment made by him and therefore, there is bound to be difference in the two. Even if the Copper Wiring Charges of Rs. 31,000/- are not part of the sale agreement they are not going to make difference in the ITC benefit of the above Applicant as the DGAP has computed the profiteered amount on the basis of the payments made by Applicant as has been shown in Annexure-25. Therefore, there would be no impact on the entitlement of the above Respondent on account of ITC benefit. 27. The above Applicant has also submitted that as per 16 (a) of the Report the DGAP has stated that the Respondent has applied for the completion certificate however, a number of facilities as per the agreement and brochure were still required to be provided- In this regard it is mentioned that provision of facilities is not covered under the anti-profiteering measures provided in the CGST Act and the Rules and hence, the above issue cannot be resolved by this Authority. The Applicant may approach the competent forum to get his complaint addressed. 28. Based on the above facts the amount of benefit of ITC which was required to be passed on by the Respondent or the profiteered amount is dete....