TaxTMI 
TaxTMI 
2020 (7) TMI 507
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....roject at Chennai. He had also alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to him. The aforesaid application was considered by the Standing Committee on Anti-profiteering, in its meeting held on the minutes of which were received by the DGAP on 08.06.2013, whereby it was decided to forward the same to the DGAP to conduct a detailed investigation in the matter under Rule 129 (1) of the above Rules. The DGAP in his Report had stated that the Respondent did not cooperate with the investigation and tried to delay the investigation intentionally. The DGAP had also stated that the Respondent had not submitted the complete information required for the investigation. The DGAP had further stated that claim of the Respondent that the benefit of GST Input Tax Credit was already factored in the construction cost was not substantiated as the Respondent had recently communicated this information to the Applicant Vide e-mail dated 01.06.2018. The DGAP had also observed that turnover of Respondent during the period from July, 2017 to August, 2018 did not reconcile With the GST Returns filed by him and the project details submitted by the Respondent could not....
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....considered as it was based on incomplete information. (ii) There was huge difference between the benefit of additional ITC calculated by the DGAP and the Respondent which was required to be re-investigated. (iii) The Respondent was reluctant in providing complete information to the investigation agency as well as to this Authority during the hearings which was required to be obtained from him and Report submitted accordingly. 6. Therefore, this Authority vide its order dated 27.02.2019 had directed the DGAP under Rule 133 (4) of the above Rules to re- investigate the matter and submit a comprehensive investigation Report. The Respondent was also directed to co-operate with the investigating agency and submit complete information to the DGAP. This Authority had also directed the DGAP to investigate other projects of the Respondent and verify their profiteering compliance. 7. The DGAP in compliance to the order dated 27.02.2019 has submitted the present investigation Report dated 18.12.2019 In which he has stated that in order to collect evidence necessary to reconcile the difference in the ratios of Input Tax Credit to the taxable turnovers calculated by him in the Report da....
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....sold units which must be reduced from the post-GST credit computation. b. That in case there was any profiteering amount determined under Section 171 of the CGST Act, 2017 then the said amount should pertain to the customers who had booked units in the pre-GST regime and not for those customers who had booked flats post 30.06.2017. c. That the Respondent had passed benefit of incremental ITC of Rs. 7,75,191/- under Section 171 to the flat buyers of Block D & F. This included incremental ITC benefit of Rs. 4,557/- to the Applicant No. 1 by Credit Note. d. That he had not availed any ITC of Service Tax or VAT in the pre-GST regime with respect to Block D & F Further for the period from 01.07.2017 to 24.01 2018, he had discharged GST @ 12% on the value of demand after one third deduction on account of land and the flat buyers had paid the same. For the period post 25.01.2018 till possession of the flat, the flat buyers had born GST @ 8% on value of demand letter after one third deduction for land. 12. The DGAP has further intimated that apart from the above. during the personal hearing held before this Authority, the Respondent had also submitted the following: - a. Proporti....
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....rdingly, for the purpose of computation of profiteering amount, the credit and turnover details pertaining to Block D and Block F should only be considered and therefore, from the total credit and turnover figures upto December, 2018 as declared in the GST returns, the details pertaining to Block C & Clock G should be excluded. d. The balance demand to be raised for the Block-F should be under the considered for the profiteering purpose: - That construction industry, the credit might accumulate in a particular period but the tax liability with respect to the same might arise in a different period. The construction activity went on gradually which resulted into accrual of CENVAT Credit. However, demand notices for the same were raised as per milestones mentioned in the agreement. Unless the milestone was achieved, the builder could not raise demand notice to the customer. However, CENVAT Credit would still accrue to the builder. In the present case, as on December, 2018, the construction work of Block F was about to complete and the Respondent was about to receive the CC for the said block. Thus, it had been estimated by the him that there would be very minimal ITC on account of ....
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....versal of Credit availed for maintenance- Reply para 2 (849,179) (1,285,453) f) Credit of Block C & G - Reply para 3 (12,023,372) g) Estimated credit of Block F - Reply para 4 365,000 e) Reduction of credit to the extent increase cost of construction when compared to pre-GST regime - Reply para 3(vii) (6,091,063) Total Credit as per company (A) 4,354,904 24,749,762 5. Total Taxable Turnover as per DGAP report 133,129,362 474,552,629 Factual adjustments a) Reversal of turnover pertaining to maintenance- Reply para 2 (45,108,101) c) Turnover of Block C & C Reply para 3 (21,569,649) d) Balance demand to be raised for F Block - Reply para 4 31,511,259 Total Taxable Turnover as per company (B) 88,021,261 484,494,239 6. Revised Input / Output Ratio (A/B) 4.95% 5.11% 13. Vide the aforementioned letters and e-mails. the Respondent had also submitted the following documents/information:- a. Copies of GSTR-1 Returns for the period from July, 2017 to March, 2019. b. Copies of GSTR-3B Returns for the period from Ju....
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....also clear that the said Section 171 simply did not provide a supplier of goods or services any other means of passing on the benefit of ITC or reduction in the rate of tax to the consumers. Thus, the legal position was unambiguous and could be summed up as follows.- a. That a supplier of goods or services must pass on the benefit of ITC or reduction in rate of tax to the recipients by commensurate reduction in prices. b. That the law did not offer a supplier of goods and services any flexibility to suo moto decide on any other modality to pass on the benefit Of ITC or reduction In rate of tax to the recipients. Therefore, in terms of Section 171 of the CGST Act, 2017, the claim of increase in cost on account of various factors could not be considered and could also not be set off against the benefit of Input tax credit. 17. The DGAP has further contended that the claim of the Respondent that the credit to the extent of unsold area must be reduced from the post-GST period could not be accepted. In this regard, the DGAP has made reference to para 5 of Schedule-Ill of the CGST Act, 2017 (Activities or Transactions which shall be treated neither as a supply of goods nor a suppl....
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....er, the demand which had already been raised post-GST and which was to be raised for the sold units was also known to the Respondent. Therefore. for the purpose of computation of ratio of ITC to taxable turnover during post-GST period, the demand pending to be raised had also been considered. 19. The DGAP. on the basis of revised information and documents submitted by the Respondent. has submitted that prior to 01.07.2017, i.e. before the GST was introduced, the Respondent had not availed any credit of Service Tax paid on input services. Further, no credit was available in respect of Central Excise Duty and VAT paid on the inputs. However, post-GST, the Respondent could avail ITC of GST paid on all the inputs and the input services including the sub-contracts. From the information submitted by the Respondent for the period from April, 2016 to October, 2019. the details of the ITC availed by him, his turnover from the impugned project "Avadi", the ratios of ITC to turnovers, during the pre-GST (April, 2016 to June. 2017) and the post- GST (July, 2017 to October, 2019) periods. have been furnished by the DGAP as per Table-'Bi given below:- Table-'B' (Amount in Rs.) Sr. No. ....
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.... periods as well as the turnover, the recalibrated base price and the excess realization (profiteering) during the post-GST period, has been tabulated by the DGAP as is given in Table-'C' below:- Table -'C' (Amount in Rs.) S.No. Particulars Post- GST 1. Period A After 01.07.2017 2 Output GST Rate (%) B 12.00% 3 Ratio of CENVAT credit/ ITC to Total Turnover as per table- 'B' above (%) C 7.06 4 Increase in ITC availed Post-GST (%) D=7.06% less 7.06% 0.00% 5 Analysis of increase in input tax credit : 6 BSP amount to be collected/raised as on 30.06.2017 from Customers made booking in pre-GST period E 7,52,51,422 BSP Amt. (Agreement Value) to be Collected/raised from Customers made booking during 01.07.2017 to 25.02.2019 7. Receiving CC F 30,14,43,368 8. Total Turnover Post-GST G=E+F 37,66,94,790 9. Base Price raised during 01.07.2017 to 24.01.2018 H 1,48,55,971 10. Base Price to be raised post 24.01.2018 I=G-H 36,18,38,819 11. GST @ 12% over Base Price (during 01.07.2017 to 24.01.2018) J=(H*12%) 17,82,717 12. GST @ 8% over Base Price (post 24.01.2018) K=(I*8%) 2,89,47,106 13. Total GST L=J+K 3,07,29,822 ....
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....iculars Post-GST Period As per respondent's Table-'A' above As per DGAP's table - 'C' above Remark 1. Input Tax Credit of GST Availed (A) 4,89,80,744 3,05,71,822 ITC pertaining to Block F & D taken only. 2. Less: Reduction of credit to the extent booking done in the period after August, 2018-F Block (21.50%) 51,96,094 23,93,212 Credit reversal pertaining to Unsold Area on receiving CC. 3. Less: Reversal of Credit availed for maintenance (C) 12,85,453 - Credit for Maintenance has already been excluded. 4. Less: Credit of Block C & G (D) 1,20,23,372 - ITC of C & G had already been excluded. 5. Add: Estimated credit of block F(E) 3,65,000 - Actual Credit availed till Oct. 2019 for Block-F & D had been considered. Therefore, no estimated Credit added. 6. Less: Reduction of credit to the extent increase in cost of construction when compared to pre-GST regime (F) 60,91,063 - Setting off of increase in cost on account of various factors with the benefit of ITC not considered as detailed in para-15 above 7. Less: Reversal of Credit on account of Credit Notes given by Contractors (G) - 15,80,262 ITC reversed on account of Credit Notes given be Contra....
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....65 2,91,831 1,06,48,834 Further Benefit to be passed on as per Annex-16 6. 1 963 49,68,782 - - - Units sold post receiving of Completion Certificate Total 244 1,37,212 44,80,88,531 2,87,64,178 7,71,830 2,79,92,348 27. From the Table 'E' supra, the DCAP has submitted that the benefit already passed on by the Respondent to the recipients was less than what he ought to have passed on in case of 206 residential flats including the Applicant No- 1 (Sr.1, 2 & 5 of above Table) by an amount of Rs. 2,79,92,348/- 28. The DGAP has also submitted that the benefit of additional ITC to the tune of 7.06% of the amount collected by the Respondent from the Applicant No. 1 and the other home buyers and the new bookings made post 01.07.2017 till receiving of the CC, has accrued to the Respondent and the same was required to be passed on to the Applicant No. 1 and other recipients. Therefore, the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent inasmuch as the additional benefit of ITC @ 7.06% of the amount collected by the Respondent from the Applicant No. 1 and other home buyers and the new bookings made post 01.07.2017 till....
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....ating that the project had been launched by the Respondent after the GST Act had been passed by the Parliament and therefore, the sale value which as agreed upon by the above Applicant had taken in to account the benefits arising due to implementation of GST and no further benefits were to be passed on to the Applicant No. 1 on account of GST. It was also submitted that in the 9th Meeting of the GST Council held on 16.01.2017 it was decided that the GST would be rolled out from 01.07.2017 and the model GST law was also made available in the public domain. The model law already had the provision for availment of ITC by the Respondent which was not earlier available to him and also the provision of anti-profiteering- Further, the CGST Act was passed by the Parliament in March, 2017 and the builders were given sufficient time to ensure implementation of the GST law. Therefore, the Respondent had envisaged that he was supposed to pass on the additional benefit arising to him due to GST and hence, the agreement price was accordingly reduced to factor in the benefit arising due to GST. It was further submitted that the entire construction activity was undertaken in the GST regime and the....
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....builder / developer. However, the revenue of the builder was earned only when each milestone as set out in the agreement was achieved by the Respondent Therefore. the cost incurred by the developer in a particular period and the subsequent ITC availed on such cost need not synchronize with the turnover of that particular period, because if the milestone was not achieved in the particular period then demands could not be raised and therefore, there would be no revenue for the Respondent. The Respondent has further submitted that Since the work of the current project had been carried out by the Respondent only in the GST regime, entire ITC pertaining to the project had also been availed in the GST regime and therefore, the turnover pertaining to the flats booked in the pre-GST regime did not reflect the actual work done and therefore the turnover considered in the pre-GST regime should have been considered to be the turnover of the GST regime because the work in respect of the same had been done in the GST regime only. 34. The Respondent has also submitted that the DGAP in Table-B of the reinvestigation Report had calculated that the Respondent had benefited by 7.06% of the total tu....
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....Input Services (pure service contracts) A 50,31,600 2 ITC availed on these services (18%) B 9,07,542 3 Service Tax if leviable - 15% C= A*15% 7,54,740 4 Additional input tax credit D = (B-C) 1,52,802 It was further contended that this amount of Rs. 1,52,802/- was not an additional benefit which has accrued to the Respondent due to advent of GST but this credit was available to the Respondent even under the pre-GST regime. Thus. the same must be reduced from the post- GST period calculation in Table-C of the DGAP's report. The Respondent has further computed the impact of his above contention as is given In the Table below: - Particulars Total Post GST Total Credit As per DGAP 2,65,98,348 Factual adjustments a) Increase in credit due to increase in rate of tax applicable on services - Reply paragraph 5.2 (1,52,802) b) increase in ITC due to increase in cost of construction (19.75% of balance ITC) - Reply paragraph 5.1 (52,22,995) Balance Credit 2,12,22,551 He further submitted that in view of the above, the final amount of profiteering should be calculated as is given in the Table below:- Particulars Pre-GST GST Total ITC - 2,12,22,551 ....
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....pleting the investigation, Hence, the Report of DGAP was beyond the prescribed time limit given under rule 129 (6) and accordingly the demand raised on the basis of said Report could not be sustained. It was also argued that even if it was assumed without admitting that the re-investigation under rule 133 (4) pursuant to the Order No. 1/2019 dated 27.02.2019 of this Authority was a fresh investigation (as per rule 133 (5) (b)), even then the DGAP must have filed his Report within 6 months from the date of order passed on 26.08.2019. However, the reinvestigation Report by the DGAP had been filed on 18.12.2019 and no evidence of any extension being approved by this Authority had been given in the Report, Even if the extension was allowed. then the period of nine months (six months regular period + three months extended period) had expired on 26.11.2019 Whereas the Report had been furnished by the DGAP on 18.12.2019. Therefore, the reinvestigation Report submitted by the DGAP was time barred and therefore, it must be set aside. 37. The Respondent has also averred that the Report of the DGAP was beyond the scope of this Authority's above Order, The DGAP in his re-investigation Report ....
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....39. The Respondent has also contended that the DGAP had computed the total benefit to be passed on to the buyers of the flats by the Respondent as Rs. 287 Crore (inclusive of tax) which included Rs, 1,71 ,830/- (inclusive of tax} to be passed on to the Applicant No. 1. The Respondent has further contended that the GST amount should not have been considered as a benefit to the Respondent. It was also submitted that the term 'profiteering' had been described in various dictionaries as follows:- * Black's Law Dictionary - Taking advantage of unusual or exceptional circumstances to make excessive profits * Law Lexicon - To seek or obtain excessive profits, one who is given to making excessive profits * Shorter Oxford English Dictionary - Make or seek to make an excessive profit * Mount vs Welsh - Any conduct or practice Involving the acquisition of excessive profit * Islamic Academy of Education vs State of Karnataka = 2003 (8) TMI 469 - SUPREME COURT - Profiteering would mean taking advantage of unusual or exceptional circumstances to make excessive profits. It was further submitted from the above definitions that only those amounts which had been collected and kept by....
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.... be raised on 30-06.2017. 29.112019 Summons was attended by Mr. Manoj Kasture and all the information was submitted and explained. 11 From the above chronology, the Respondent has further stated that whenever the DGAP had asked for the data it was provided by the Respondent promptly- 41. The submissions of the Respondent dated 28,01.2019 were forwarded to the DGAP for his Report. The DGAP Vide his supplementary Report dated 10.02.2020 has replied on the issues raised by the Respondent as follows:- a. On the claim of the Respondent that construction activity commenced in the GST regime. therefore. Anti-profiteering proceeding cannot be initiated against the company:- The DGAP has stated that the submissions made by the Respondent on this issue had already been dealt in his Report dated 05.11.2018 vide para 15 and 16. The DGAP has further stated that the Respondent had himself admitted in his submissions dated 25.01.2019 made before this Authority that the profiteering should be computed for Tower D and F rather than for the whole project. Apart from the above, the Respondent had also submitted during the course of the investigation that he had already passed benefit of incre....
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....rnover therefore, DGAP had correctly considered the turnover in the pre-GST regime. e. On the claim of the Respondent that increase in ITC availed in GST regime due to increase in the cost of construction:- The DGAP has stated that the increase in cost was a business risk which had already been taken care of while entering into an agreement with the home buyers as there was no cost escalation clause in the agreement entered into with the home buyers. f. On the claim of the Respondent that increase in ITC due to increase in the rate of tax chargeable to services:- The DGAP has stated that Section 171 (1) of the CGST Act, 2017, reads as "Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices". Therefore, in terms of the above provisions, the input tax credit availed by the Respondent needed to be quantified and passed on to the recipients (the benefit of input tax credit post introduction of GST would be available only on the amount which bore higher tax incidence, i.e. the amount paid/raised post introduction of GST), which had been quantified in DGAP's Rep....
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....a report of its findings along with the relevant records". In the instant case, the DGAP had received the reference from the Standing Committee on 08.06.2018 to initiate an investigation against the Respondent and he had submitted his Report on 05.11.2018 which was well within the prescribed time frame of 06.11.2018 after obtaining due sanction of this Authority vide Order dated 07.09.2018, to extend the period of investigation by two months till 06.11.2018, Further. vide Order No. 01/2019 dated 27.02.2019. this Authority had referred the matter back to the DGAP under Rule 133 (4) of CGST Rules, 2017, The DGAP has stated that it was amply clear that the second reference was not received from the Standing Committee constituted for the purpose, thus the time frame of Rule 129 (6) was not applicable on the impugned Report as the DGAP had not initiated any fresh or new investigation. Rather, in order to comply with the directions given by this Authority, the DGAP had examined the concerns raised by the Respondent and submitted his Report to this Authority. Though there was a time frame for investigation and submission Of Report in case of a reference received from the Standing Commi....
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....xtent in terms of Section 34 of the CGST Act, 2017. Therefore, the option was always open to the Respondent to return the tax amount to the recipients by issuing credit notes and adjusting his tax liability for the subsequent period to that extent. k. On the claim of the Respondent that all the documents had been timely provided by the company:- The DGAP has stated that as already mentioned in his Report dated 18.12.2019, in spite of the specific directions given by this Authority in its order to the Respondent to promptly supply the information which the DGAP might require to conduct a comprehensive and thorough investigation, the Respondent had not co-operated during the course of investigation. Therefore, the DGAP had to issue two Summons to the Respondent. 42. The DGAP's Report dated 10.02.2020 in reply to the submissions of the Respondent dated 28.01.2020 was supplied to the Respondent for filing rejoinder, if any, before 21.02.2020 vide order dated 11.02.2020. The Respondent has filed re-joinder dated 27.02.2020 in response to the DGAP's Report dated 10.022020, The main contentions of the Respondent have been discussed in the subsequent paras. 43. The Respondent has sub....
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.....50% Material ACC Blocks 3,94,043 9,85,109 CLC Blocks 28,423 71,058 Door 1,96,281 1,36,306 Door accessories 89,088 61,867 Door frame 1,02,699 71,319 Dustbin 32,74 22,740 Gypsum 1,09,930 2,74,825 Lock 1,19 833 Plaster Fiber 21,139 14,680 Reinforcement Steel 35,44,688 24,61,589 Tiles 12,63,181 8,77,209 Waterproofing chem 59,724 41,475 Pure Service 9,07,542 Works Contract 2,38,21,139 Grand Total 3,05,71,822 50,19,008 it was further submitted that the total excise benefit accruing to the Respondent was Rs. 50,19,008/-, thus, the total benefit to be passed on under Section 171 could be maximum of Rs. 50,19,008/- 45. The Respondent has also claimed that only the fiats sold before the introduction of GST should have been considered for passing on the benefit under Section 171 of the CGST Act In this regard it was further claimed that the new prices determined for the flats sold post GST regime were as per the market forces which captured the effect of benefit of ITC and the customers were also aware of this benefit wh....
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.... Screening Committee on Anti-Profiteering in its meeting held on 09.05.2018 and was referred to the Standing Committee on Anti-Profiteering. The Standing Committee on Anti-Profiteering had examined the above application in its meeting held on 25.05.2018 and forwarded it to the DGAP for investigation, who vide his investigation Report dated 05.11.2018 furnished to this Authority had stated that the Respondent had obtained additional benefit of ITC to the extent of 7.57% of the taxable turnover which he had not passed on to his buyers and he had thus profiteered an amount of Rs. in violation of the provisions of Section 171 of the CGST Act, 2017. However, due to the objections raised by the Respondent on the above Report of the Respondent as well as the discrepancies found in the Report the DGAP was directed to re-investigate the above complaint under Rule 133 (4) of the above Rules vide Order dated 27.02.2019. 48. Accordingly, the DGAP has re-investigated the allegations levelled by the Applicant No, I and vide his Report dated 1812.2019 has found that the ITC as a percentage of the total turnover which was available to the Respondent during the pre-GST period was 0.00% and during ....
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....ted to the anti-profiteering proceedings. However, perusal of Home Buyers list submitted by the Respondent himself vide Annexure-10 of the Report dated 18.12.2019 submitted by the DGAP shows that the first flat of the above project bearing No. FB-341 was booked by the Respondent on 19.09.2015 in the name of Ms. Rukmani M- which establishes that the Respondent had firmed up estimates of construction of the project including the per sq. ft. prices of the fiats well before the above date. In fact, on examination of the above list it is revealed that the Respondent had booked 40 fiats in the pre-GST regime out of the total 108 fiats booked till 31.08.2018. Only after fixing the prices of the fiats the Respondent could have offered them for sale. It is also an established fact that the GST rates on various goods and services were fixed by the Central and the State Governments vide Notifications dated 28.06.2017 and therefore. the Respondent had no basis to estimate what would be the GST rates or the benefit of ITC available to him post GST implementation which he could have built in the estimate of cost of the flats prepared before the month of September, 2015. Since, the prices of the ....
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....cks of the project which has been duly confirmed by the DGAP. In case he was not liable to pass on the above benefit there was no reason for him to pass on the above amount, Therefore, all the above contentions of the Respondent are frivolous and hence, they are not maintainable. 52. The Respondent has also stated that in the present the DGAP has computed the pre-GST benefit as 0% and the post-GST benefit as 7.06% which would mean that the Respondent was not entitled to the ITC benefit at all under the pre-GST regime, However, the Respondent has claimed that he was fully entitled to the CENVAT credit of input services as per the Cenvat Credit Rules, 2004. However, perusal of the Service Tax Returns filed by the Respondent from April, 2016 to June, 2017 shows that he has not claimed any ITC on account of the Service Tax. In case he was eligible to claim ITC on CENVAT he should have claimed it. Since, the Respondent has himself not claimed ITC there was no ground for the DGAP to include it while calculating the ratio of CENVAT to turnover for the above period and therefore, the above ratio has rightly been computed as 0% by the OGAP vide Table-B of his Report, Hence, the above claim....
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....onth as the Respondent is availing the ITC every month to discharge his GST liability and nothing is to be paid out of his own pocket as the above benefit flows from the scarce tax revenues of the Central and the State Government, the Respondent should have no objection on passing on the same. Therefore, the computation of the profiteered amount made by the DGAP by comparing the pre and post GST ratios of ITC to turnovers is correct and hence the above contention of the Respondent cannot be accepted. 55. The Respondent has further stated that since the work had been carried out in the GST regime and the entire ITC had also been availed in the GST regime therefore. the turnover pertaining to the flats booked in the pre-GST regime should have been considered to be the turnover of the GST regime. In this connection it would be appropriate to mention that the Respondent has discharged Service Tax liability on the amount realised by him from the buyers during the pre-GST period and no GST was paid on this turnover. There is also no legal provisions to consider the pre-GST turnover as the post-GST turnover on the ground that the construction of the project has been started during the po....
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....gued that in the case of M/s. N. P. Foods 2018 (9) 1763-NAA this Authority had held that when there was an increase in the cost of inputs then profiteering could not be alleged if the price of goods had been increased, However, in the above case there was denial of ITC after rate of tax was reduced due to which the above party was eligible to raise its prices to the extent of recouping the loss of denial of ITC which is not the issue in the present case. Therefore, the above case is of no help to the Respondent, 58. The Respondent has further submitted that due to increase in the rate of tax chargeable on services from 15% to 18% there was no benefit of additional ITC to the extent of Rs. 1,52,802/- which should be reduced from the total ITC post GST, He has also contended that the amount of profiteering should be calculated as 5.63% after excluding the increase in the ITC due to cost and tax on services. In this connection it would be appropriate to mention that the Respondent cannot appropriate the additional ITC to the extent of 3% due to increase in the rate of GST on services as his profit as the same has been given by the Central and the State Government out of the public ex....
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....ng the investigation. Perusal of the record shows that the Standing Committee on Anti-Profiteering had forwarded the complaint of the Applicant No. 1 to the DGAP on 25.05.2018 which was received by him on 08.06.2018. The DGAP was required to furnish the Report within 6 months which he had complied with by submitting the Report on 05.11.2018 after extension for completing the investigation was granted by this Authority by 2 months till 07.11.2018 under Rule 129(6), vide its order dated 07.09.2018. however this Authority vide its order dated 27.02.2019 had directed the DGAP to re-investigate the matter under Rule 133(4) and furnish his Report. Perusal of the above Rule shows that no period has been prescribed for furnishing the Report under the above Rule as has been prescribed under Rule 133(5). Further, the Report under Rule 133(4) has to be submitted by the DGAP as per the period fixed by this Authority as per and an amount of Rs. 1,67,273/- and an amount of Rs. 1,67,273/- and an amount of Rs. 1,67,273/- and an amount of Rs. 1,67,273/- and an amount of Rs. 1,67,273/- Para 9 of the Detailed Guidelines issued by this Authority under the powers conferred on it vide Rule 126 of the ab....
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.... Respondent has wrongly taken the net ITC of GST availed as Rs. 2,47,49,762/- whereas this amount is Rs. 2,65,98,348/-. He has also incorrectly mentioned the amount of total taxable turnover as Rs. 48,44,94,239/- whereas actually this amount is Rs. 37,66,94,790/-. Therefore, the Respondent has wrongly computed the ratio of ITC to turnover as 5.11% post-GST whereas the correct ratio is 7.06%, Hence, the DGAP has not gone beyond the order dated 27.02.2019 passed by this Authority and therefore, the above claim of the Respondent is untenable. 62. The Respondent has also relied upon the following judgments to support his claim that whenever the matter had been remanded back to the lower authority on a limited issue, such authority could not travel beyond the scope of such remand order:- a. M/s. Seshasayee Paper & Boards Ltd. 2011-TIOL-193-CESTAT-MAD b. M/s. Semac Ltd. 2011-TIOL-522-CESTAT-BANG = 2010 (11) TMI 437 - CESTAT, BANGALORE Since, the DGAP has not gone beyond the order dated 27.02.2019 therefore, the law settled in the above cases is not being relied upon. 63. The Respondent has also claimed that no mechanism has been prescribed in Section 171 of the CGST act and the R....
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....way of reduction in the price which has to be computed in respect of each SKU or unit or service based on the price and the rate of tax reduction or the additional ITC which has become available to a registered person. The legislature has deliberately not used the word 'equal' or 'equivalent' in this Section and used the word 'Commensurate' as it had no intention that it should be used to denote proportionality and adequacy. The benefit of additional ITC would depend on the comparison of the ITC/CENVAT which was available to a builder in the pre-GST period with the ITC available to him in the post-GST period w.e.f. 01.07.2017. Similarly, the benefit of tax reduction would depend upon the price and quantum of reduction in the rate of tax from the date of its notification. Computation of commensurate reduction in prices is purely a mathematical exercise which is based upon the above parameters and hence it would vary from SKU to SKU or unit to unit or service to service and hence no fixed mathematical methodology can be prescribed to determine the amount of benefit which a supplier is required to pass on to every buyer. Similarly, computation of the profiteered amount is also a mathe....
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....bove benefits to the common buyers who bear the burden of tax and who are unorganized, voiceless and vulnerable. The Respondent is trying to deliberately mislead by claiming that he was required to carry out highly complex and exhaustive mathematical computations for passing on the benefit of tax reduction which he could not do in the absence of the mechanism under the above Act and the Rules. However, his claim is absolutely wrong as he was only required to compute the benefit of additional ITC which he had obtained after coming in to force of the GST and pass it on to his buyers according to the amount of price received from them during the post GST period. Hence, no mechanism or elaborate mathematical calculations are required to be prescribed separately for passing on the benefit of ITC as such a mechanism has already been provided under Section 171 itself. The Respondent cannot deny the benefit of ITC to his buyers on the above ground and enrich himself at the expense of his buyers as Section 171 provides clear cut methodology and procedure to compute the benefit of tax reduction. Therefore, the above plea of the Respondent cannot be accepted. 64. The Respondent has also cont....
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...., by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether Input Tax Credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him (3). The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed (3A) Where the Authority referred to in sub-section (2) after holding examination as required under the said sub-section comes to the conclusion that any registered person has profiteered under sub-section such person shall be liable to pay penalty equivalent to ten per cent, of the amount so profiteered: PROVIDED that no penalty shall be leviable if the profiteered amount is deposited within thirty days of the date of passing of the order by the Authority. Explanation:- For the purpose of this section, the expression "profiteered" shall mean the amount determined on account of not passing the benefit of reduction in rate of tax on supply of goods or services or both or the benefit of input tax credit to....
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....(13) ELT 1566 (SC) = 1975 (10) TMI 94 - SUPREME COURT b. Bosch Chasis System India Ltd. 2008 (232) E.L.T. 622 (Tri..LB) = 2008 (9) TMI 106 - CESTAT NEW DELHI, c. Mico Ltd. 2001 (136) E.L.T. 649 (T-Bang) = 2001 (2) TMI 714 - CEGAT, BANGALORE d Dodsal Pvt. Ltd. 2006 (193) E.L.T. 518 (Tri-Mumbai) = 2005 (10) TMI 118 - CESTAT, MUMBAI In this context it would be pertinent to mention that it is quite apparent from the facts mentioned above that the Respondent has availed benefit of ITC which he is bound to pass on to his buyers as per the provisions of Section 171 of the above Act. Therefore, there is no question of estoppel in the above case, Hence, the above cases do not support the casse of the Respondent. 70. The Respondent has also submitted that he was entitled to avail the benefit of CENVÅT and VAT and only the credit of the Excise Duty was not admissible to him in the pre-GST regime, The Respondent has further submitted that he had never procured any material wherein Excise Duty was levied. The total excise benefit accruing to him was Rs. 50,19,008/- thus, the total benefit to be passed on under Section 171 could be maximum of Rs. 50,19,008/-. In this regard it wou....
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....e profit margins of the suppliers. Therefore, the Respondent is free to fix the both, However, under the pretext of Article 19 (1) (g) he cannot deny the benefit of ITC to his buyers. The observations of the DGAP made in his Report dated 18.12.2019 nowhere direct the Respondent to fix his prices or profit margins as per the direction passed by the DGAP His observations are only restricted to the computation of the benefit of ITC and of the profiteered amount, Therefore, the above observations of the DGAP do net violate the provisions of the above Article. Accordingly, the law settled in the case of Sodan Singh & Ors. Supra does not help the Respondent. 73. The Respondent has further contended that the DGAP has observed that the reduction in price as per section 171 of CGST Act, 2017 included both the base price and the tax paid on it. It was also submitted that the term 'Price' was not defined in the CGST Act and section 15 of the above act, provide for determination of value of supply for levy of GST. The basic provision of the said section provides the value of supply was the price actually paid or payable for the supply. It was also submitted from the above provision that "Pric....
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.... above amount was collected by him from them till the payment is made, within a period of 3 months from the date of passing of this order as per the details mentioned in Annexure-15 & 16 attached with the Report dated 18.12.2019. 75. Accordingly, this Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats of the above Project commensurate with the benefit of ITC received by him as has been detailed above. 76. The present investigation has been conducted up to 31.10.2019 only however, the Respondent has not obtained the CC yet, Therefore, he is liable to pass on the benefit of ITC which would become available to him till the date of issue of CC. Accordingly, the concerned commissioner CGST/SGST is directed to ensure that the Respondent passes on the benefit of ITC to the eligible flat buyers as per the methodology approved by this Authority in the present case and submit report to this Authority through the DGAP. The Applicant No. 1 or any other flat buyer shall also be at liberty to file complaint against the Respondent before the Tamil Nadu State Screening Committee in case the remai....