TaxTMI 
TaxTMI 
2020 (7) TMI 507
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....ase of a fiat in the Respondent's "Avadi" Project 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 de....
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.... on record had observed that :- (i) The DGAP's Investigation Report could not be 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 th....
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....pletion Certificate for Block D & F of the above project on 25.02.2019 and had reversed ITC of Rs. 23,93,212/- towards unsold 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....
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....ork of the said Block began from September, 2018. The Applicant No. 1 had booked flat in Block F, Block D and Block F were sold and constructed simultaneously. Accordingly, 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....
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.... per DGAP Report 5,204,083 48,980,744 Factual adjustments b) Reduction of credit to the extent booking done in the period after August. 2018 -F Block (21.50%) - Reply para 1 (5,196,094) Reversal 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  ....
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....f benefit of ITC or reduction in the rate of tax, there must be a commensurate reduction in the prices of the goods or services. Such reduction could only be in money terms, so that the final price payable by a consumer got reduced. This was the legally prescribed mechanism for passing on the benefit of ITC or reduction in the rate of tax to the consumers under the GST regime. Moreover, it was 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 s....
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....contended that he had received the CC of Block D & F on 25.02.2019, therefore, for the proper computation of the benefit, the pending turnover to be raised for the flats sold prior to receiving of CC must had been added to the post-GST turnover. The DGAP has stated that this contention of the Respondent held good as the ITC availed (after reversal for unsold area) pertained to the units sold before the CC was received. Further, 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....
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....xamined by comparing the applicable tax rate and ITC available in the pre-GST period (April, 2016 to June. 2017) when Service Tax @ 6% and VAT @ 2% was payable with the post-GST period (July. 2017 to October, 2019) when the effective GST rate was 12% (GST @18% along with 1/3rd abatement for land value) on construction service imposed vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.9017. Accordingly. on the basis of the figures contained in Table-'B' above, the comparative figures of ratios of ITC availed/available to the turnovers in the pre-GST end post-GST 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 ....
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....1 ,830/- (including GST on the base profiteered amount of Rs, 1,58.515/-) which was the benefit of ITC required to be passed on to the Applicant No, 1, mentioned at Serial No. 31 of the above mentioned Annexure-14. 23. On the basis of the details of the outward supplies of the construction service submitted by the Respondent, it was intimated by the DGAP that the said service had been supplied by the Respondent in the State of Tamil Nadu only. 24. On the basis of Table- 'A' and 'B' above, the reconciliation of ratios of ITC to the taxable turnovers calculated by the DGAP in his Report and the Respondents submissions dated 25.01.2019 has been furnished by the DGAP as given in the Table- 'D' below:- Table- 'D' (Amount in Rs.) Sr. No. Particulars 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.....
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....of category- wise ITC benefit required to be passed on and the benefit already passed on, was furnished by the DGAP as in given in Table- 'E' below:- Table-'E' (Amount in Rs.) Sr. No. Category of Customers No. of units Area (In Sq. ft.) Amount raised to be raised post GST Benefit to be passed on as per Annex-14 Benefit passed on by the Respondent (Excess)/Shortage of benefit (Profiteering) Remark A B C D E F G H=F-G I 1. Applicant (Block-F) 1 677 22,45,250 1,71,830 4,557 1,87,273 Further Benefit to be passed on as per Annex-15 2. Buyers other than Applicant (Block-F) 138 76,290 23,25,93,580 1,77,51,683 4,75,442 1,72,76,241 Further Benefit to be passed on as per Annex-15 3. 38 19,168 5,54,24,959 - - - Units sold post receiving of Completion Certificate 4. 1 514 - - - - Unsold Units 5. Buyers other than Applicant (Block-D) 67 39580 14,15,55,980 1,08,40,665 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 ....
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....020. The Respondent was issued notice on 20.12.2019 to explain why the above Report of the DGAP should not be accepted and his liability for violating the provisions of Section 171 of the CGST Act, 2017 should not be fixed. During the course of the hearings no one appeared for the Applicants and the Respondent was represented by Sh. Manoj M. Kasture, General Manager, Sh. Akhilesh Thakur Employee, Sh. S. S. Gupta and Sh. Archit Agarwal, Chartered Accountants. The Respondent has filed written submissions dated 28.01.2020 and 27.02.2020. The issues raised by the Respondent have been mentioned in the subsequent paras. 30. The Respondent has submitted that the construction activity for Block D & F had commenced in the GST regime (i.e. in Sept 2017). All the activities related to construction of the project had been undertaken in the GST regime only. Since the project had commenced only under the GST regime, hence, the project could not be subject to the anti- profiteering proceedings at all, Further, he had also sent an e-mail dated 01.06.2018 to the Applicant No, 1 intimating that the project had been launched by the Respondent after the GST Act had been passed by the Parliame....
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....lected from the complainant. The Respondent has reproduced the Table as is given below:- Particulars BSP Development & other charges ST & VAT GST@ 12% Total Agreement Value (A) 20,64,850 2,31,175 1,57,279 - 24,53,304 Paid in pre-GST era (B) 4,49,050 - 21,256 - 4,70,306 Balance to be paid post-GST (C = A-B) 16,15,800 2,31,175 1,36,023 - 19,82,998 Demanded by the Noticee (D) 16,15,800 2,31,175 - 2,22,858 20,69,833 Excess Demand by the Noticee (D - C) 86,835 The Respondent has submitted that he had collected Rs- 86,835/- as tax from the above Applicant which itself showed that there was gross error in the calculation made by the DGAP. The extra tax collected from the Applicant No. 1 was Rs- 86,835/- but benefit as per DGAP was Rs. 1,71,830/- which was to be passed on to the above Applicant. 33. The Respondent has also submitted that in case of construction industry, each project went on for 2-3 years and cost was constantly incurred by the builder f developer at each stage of development to finish the project and ITC of such cost was availed by the builder / developer. However, the re....
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....ng could not be alleged if the price of goods had been increased. b. Increase in ITC was also due to increase in the rate of tax chargeable to services: The Respondent has also contended that under the pre-GST regime, services were subject to Service Tax at the rate of 15%. under the GST, in most of the cases, services were taxable at 18%. Therefore, there was an increase of 3% (18% - 15%) in the ITC available to the Respondent. This increase of 3% was not due to any additional benefit that the Respondent was getting due to the advent of GST but it was due to increase in the rate of tax applicable to services which was more than what was applicable under pre-GST regime. Therefore, the Respondent had not benefitted from this increase in credit due to increase in the rate of Service Tax. Hence, in order to arrive at the correct profiteering figures, the credit figures must be revised for the services availed by the Respondent during the period from July, 2017 till August, 2018. The said calculation has been submitted by the Respondent as is given in the Table below: - Period: July 2017 to October - 2019 Sr. No. Particular Amount 1 Taxable Value of Input Ser....
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....x} 8,12,71,535 Re-calibrated Base Price for demand from 01.07.2017 to 24.01.2018 - GST @ 12% - Re-Calibrated Base Price for demand from 25.01.2018 onwards 6,99,38,671 GST @ 8% 55,95,094 Total Revise Demand (inclusive of Tax) 7,55,33,764 Profiteering Amount 57,37,770 In view of the above, it was further submitted that the profiteering amount should have been restricted to Rs, 57.37 Lakhs only. 36. The Respondent has also argued that Rule 129 of CGST Rules prescribed the methodology for conduct of investigation to be carried out by the DGAP. In the present case, minutes of the meeting of the Standing Committee in which reference for investigation to the DGAP was made, had been received by the DGAP on 08.06-2018. As mentioned in Rule 129 (6), the investigation was supposed to be finished within 6 months from date of receipt of reference from the Standing Committee, Permission had been obtained by the DGAP from this Authority, as has been mentioned in Paragraph 8 of the DGAP's Report dated 05.11.2018, to extend the period of investigation This permission was availed by the DGAP to complete the investigation by 06.11201B, however,....
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....ESTAT-BANG = 2010 (11) TMI 437 - CESTAT, BANGALORE It was also submitted that the Report furnished by the DGAP was beyond the scope of directions issued by this Authority in its order dated 27.02.2019 and therefore, the impugned Report needed to be set aside. 38. The Respondent has also claimed that no mechanism had been prescribed in Section 171 of the CGST Act and the Rules prescribed under the said Section to calculate the 'profiteered' amount. It was further claimed that the law in respect of the mechanism to be followed to determine the 'profiteered' amount was unclear and ambiguous. Therefore, it was open to the Respondent to follow a logical and viable mechanism based on the nature of the business and the volatile nature of the industry, It was also submitted that the mechanism considered by the DGAP was arbitrary in nature, Section 171 referred to input tax credit under the CGST Act and there was no provision or Section to compare the pre-GST credits without taking into account the difference in law in the relevant periods; difference in the credit systems: nature of construction business and inability to raise bills in the absence of milestones being achieved. It was....
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.... ITC under VAT, ST and GST 22.04.2019 All the documents which were asked were duly submitted 4 16.10.2019 & 24.10.2019 List of Home Buyers for the 'Avadi Project' 30.10.2019 List of Home Buyers for the 'Avadi Project' was duly submitted 5,6, and 7 05.11.2019 1. Copy of Completion certificate in respect of Block D & F, 2. Details of reversal of ITC/Cenvat for unsold units in respect of Block D & F 3. List of units sod post receiving of completion certificate and GST charges, if any. 4. List of Home buyers Block D. 5. Block wise Bifurcation of Cenvat credit and GST ITC credit bifurcated block Wise and for maintenance services. 6. Soft copies of submission Email dated 22.04.2019. 09.11.2019 All details from Point 1-4 were duly submitted. 8 13.11.2019 1. Details of reversal of ITC/Cenvat for unsold units in respect of Block D & F on receiving of OC. 2. Date upto which ITC in respect of Block D & F has been availed. 3. Block wise Bifurcation of Cenvat credit and GST ITC credit bifurcated block wise and for maintenance services. 4. Soft copies of submission Email dated 22.04-2019. 5. Account Statements of selected cu....
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....as more than the excess demand raised on flat buyers:- The DGAP has stated that, vide his Report dated 18.12.2019, the amount of benefit of input tax credit that needed to be passed on by the Respondent to the recipients or in other words, the profiteered amount was given as is shown in the Table below:- Particulars Period from 01.07.2017 to 24.01.2018 (GST @ 12%) Period from 25.01-2018 to 31.10.2019 (GST@ 8%) Total Base profiteered amount 10,48,832 2,55,45,821 2,65,94,653 Amount of GST at applicable rate 1,25,860 20,43,665 21,69,525 11,74,692 2,75,89,486 2,87,64,179 Therefore, the total profiteered amount during the period from 01.07.2017 to 31.10.2019 came to Rs. 2,87,64,179/- which included GST (@12 % or 8%) of Rs. 21,69,525/- on the base profiteered amount of Rs. Hence, the DGAP has stated that the base amount of profiteering was less than the actual input tax credit of Rs. 2,65,98,348/- availed by the Respondent d. On the claim of the Respondent that turnover of the company did not synchronize with the actual work done by the company, therefore the turnover considered in the pre-GST regime should have bee....
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....urate reduction in prices. Therefore, the approach and methodology adopted by the DGAP was in consonance with the provisions of Section 171 of the above Act. g. On the claim of the Respondent that only flats sold before the introduction of GST should have been considered for passing on the benefit under Section 171:- The DGAP has stated that the Respondent had submitted that the total sale value for agreement entered into between the Respondent and home buyers had already considered the benefit arising to the Respondent due to the advent of GST and the said benefit had already been considered in the final amount charged to the customers, However, no documentary evidence was available which could substantiate this claim of the Respondent and therefore, the flats sold in post-GST period had also been considered for the purposes of computation of profiteering amount. h. On the claim of the Respondent that reinvestigation Report of the DGAP had been issued beyond the time limit given in Rule 129 of CGST Rules, therefore. the same was time barred:- The DGAP has stated that Rule 129 (6) of the Central Goods and Services Tax Rules, 2017 reads as Director General of Anti-....
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....ed 18.12.2019 was hit by limitation, did not hold good. i. On the claim of the Respondent that Re-investigation was beyond the scope of NAA order:- The DGAP has stated that the Respondent had himself requested this Authority to extend the time period vide his submission dated 25.01.2019 as he was about to receive the CC by March, 2019 and requested to include the balance demand to be raised along with Input Tax Credit for the profiteering purposes, Therefore, the DGAP had extended the period of investigation for the reason that the CC was received by the Respondent on 25.02.2019. j. On the claim of the Respondent that GST Amount should not have been considered as a benefit to the company:- The DGAP has submitted that Section 171 of the CGST Act, 2017 and Chapter XV of the CGST Rules, 2017, required the supplier of goods or services to pass on the benefit of tax rate reduction to the recipients by way of commensurate reduction in price. Price included both, the base price and the tax paid on it, If any supplier had charged more tax from the recipients, the aforesaid statutory provisions would require that such amount should be refunded to the eligible recipients or....
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....- 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 44. The Respondent has also submitted that the method applied by the DGAP for computing the profiteered amount was not correct as the credit of Service Tax on input services was admissible to the Respondent under Rule 2 (l) of Cenvat Credit Rules 2004 which was utilised to pay Service Tax. Further. sub-contractor deduction from the gross turnover and credit of TN VAT was also available as per the provisions of Section 19 read with Section 5 of the Tamil Nadu Value Added Tax Act, 2006 read with Rule 8 of the Tamil Nadu Value Added Tax Rules, 2007. Only the credit of the Excise Duty levied on the goods was not admissible to the Respondent in the pre-GST regime, On the advent of GST, the entire credit on purchases was available to the Respondent. Thus, the additional benefit on introduction of GST was only the component of Excise Duty with respect to the materials used in the execution of the project during the GST period. The Respondent has further submitted that he had nev....
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....ted by the DGAP was Rs. 2.87 Crore (inclusive of tax) which Included Rs. 1,71,830/- (inclusive of tax) to be passed on to the complainant. The amount which had been paid by the Respondent to the Government could not be considered as 'profiteering' since the same was not retained by him The DGAP had observed that the reduction in price as per Section 171 of CGST Act, 2017 included both base price and the tax paid on it, however, the term Price' was not defined in the CGST Act. Further, Section 15 of the CGST Act, 2017 provided for determination of value of supply for levy of GST. The basic provision of the said Section provided that value of supply was the price actually paid or payable for the supply. It was submitted from the above provision that "prices of the goods was the value of supply but additionally value shall include taxes but not the GST. Thus, it was submitted that if the term price had already included tax on the same, then the interpretation of Section 15 would lead to vague meaning. Therefore, it was submitted that the observation of the DGAP that the price included GST was incorrect. 47. We have carefully considered all the submissions filed by the Applicants, t....
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....ndent or the profiteered amount came to Rs. 2,87,64,178/- which included 12% GST as is evident from Table-C supra, The DGAP has also intimated that this amount also included the profiteered amount of Rs. 1,71,830/- including 12% GST in respect of the Applicant No. 1 and Rs, including 12% GST in respect of 205 other flat buyers. He has also supplied the details of all the buyers who have purchased flats from the Respondent along with their unit numbers and the profiteered amount in respect of each buyer vide Annexure-14, 15 & 16 attached with the Report. 49. It is clear from the record that the DGAP has computed the ratio of CENVAT as a percentage of the turnover for the pre GST period and compared it with the ratio of ITC to the turnover for the post GST period and then computed the percentage of benefit of additional ITC which the Respondent is required to pass on to the fiat buyers. The above ratios have been computed by the DGAP on the basis of the Service Tax and GST Returns filed by the Respondent during the both the above periods and the ITC Registers maintained for the above periods by him and hence, the ratios calculated by the DGAP are based on the factual record submit....
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.... had been passed and therefore, the sale value which was agreed upon by him included the benefit of ITC. The above contention of the Respondent is not established from the record as he had communicated this information to the Applicant No.1 on 01.06.2018 only whereas the Respondent had executed the agreements for sale and construction with the above Applicant on 20 06.2017 much prior to implementation of the GST. The above agreements also do not mention that the benefit of ITC would not be passed on to the above Applicant as it was included in the price to be paid by the Applicant No., 1. Another claim made by the Respondent is that when the flat was sold to the applicant in June, 2017 and 20% advance received, the GST laws were already enacted by the Parliament and the GST implementation date of 01.07 2017 was also well known. However. as has been discussed supra there is no mention of not passing on the benefit of ITC in the agreements executed by the Respondent with the above Applicant. Moreover, the Respondent had started booking of the flats in the month of September, 2015 and he had no occasion to build in the benefit of ITC which was to be available w.e.f. 01.07.2017, at tha....
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....tion. Since, the CC has been obtained by the Respondent now the DGAP has calculated the exact amount of benefit which is required to be passed on to the Applicant No. I on the basis of the actual ITC availed by him, Hence, the above amount of Rs. 1,71 ,830/- computed by the DGAP is correct and therefore, the above contention of the Respondent is not maintainable. 54. The Respondent has also stated that there was no correlation between the ITC and the turnover in case of the construction industry and hence the computation of the profiteered amount was incorrect In this connection it would be pertinent to mention that as per the provisions of Section 171 the Respondent is liable to pass on the benefit of additional ITC which has become available to him after coming in to force of the GST w.e.f. 01.07.2017. Therefore, comparison has to be made between the ITC which was available to the Respondent during the pre GST period with the ITC which has become available to him in the post GST period. Further the above benefit is required to be passed on the basis of the price which a buyer has paid post GST Therefore, the ratio of ITC to turnover is required to be computed for both the abov....
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....uyers. Hence, the above contention of the Respondent is not correct. 56. The Respondent has also submitted that the DGAP in Table-B of his Report has calculated that the Respondent has benefited by 7.06% of the total turnover in the GST regime due to the introduction of GST. However, the DGAP while calculating the above ratio has not considered that there was increase in the cost of construction due to which there was increase in the ITC and there was no increase in the prices of the flats, The above claim of the Respondent is not borne out from the provisions of the CGST Act, 2017 as the rates of GST are similar to the rate of taxes which were prevalent during the pre-GST regime and hence, the rates of GST have no impact on the cost of construction. It is also evident that the benefit of ITC has also been extended on the goods and services which are used in the construction service which has further reduced the cost of construction. The Respondent was himself not eligible to avail benefit of ITC on Service Tax. VAT, Central Excise Duty and other local taxes during the pre GST period to which he has become entitled during the post-GST period which has also reduced his costs. Sin....
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....e calculation of benefit should be made only in respect of those flat buyers who had purchased them before the introduction of GST as all the flat buyers who had purchased them post GST have already got the benefit due to reduction in the sale prices, Accordingly, the profiteering amount should be restricted to Rs. 57.37 Lakhs only. As has been discussed in para supra the Respondent had started booking the flats on 19.09.2015 when he was not aware what would be the benefit of ITC post GST and hence, he had not built it in his prices. There is also no mention in the sale agreements executed by the Respondent with the post-GST buyers that the prices to be paid by them Included the benefit of ITC and hence, they would not be entitled to the benefit of ITC. In case the post-GST buyers were not entitled to the ITC benefit there was no ground to pass on the benefit of ITC of Rs. 7,71,830/- by the Respondent to the post GST flat buyers including the above Applicant. Therefore, the Respondent is bound to pass on the benefit of ITC to those flat buyers who have purchased them post GST as there is no evidence on record to suggest that the benefit of ITC has been passed on to them, The Respon....
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....y directory and not mandatory as no consequence have been provided in case the time limit prescribed under the above Rules is not followed, The Respondent cannot enrich himself at the expense of the flat buyers and misappropriate the public money under the above claim as he is not required to pass on the benefit of ITC from his own pocket. Therefore, the above argument of the Respondent is not maintainable. 61. The Respondent has also averred that the order of the DGAP was beyond the scope of this Authority's order dated 27.022019 as the DGAP was directed to reconcile the large difference in the ratios of ITC to the total taxable turnovers only whereas he has extended the investigation period from August, 2018 to October, 2019. Perusal of the earlier Report dated 05.11.2018 submitted by the DGAP shows that the period of investigation was from 01.07.2017 to 30 06.2018 whereas the period of investigation in the present Report is from 01.07.2017 to 31.10.2019. In this connection perusal of the submissions dated 25-01.2019 filed by the Respondent shows that he had requested for computation of the profiteered amount till the date of issue of CC- Since, the final CC has not Seen issue....
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.... benefit of ITC' which means that if any reduction in the rate of tax is ordered by the Central or the State Governments or a registered supplier avails benefit of additional ITC as a result of coming in to force of the GST the same have to be passed on by him to his recipients since both the above benefits are being given by the above Governments out of their tax revenue, It also provides that the above benefits are to be passed on any supply i.e. on each Stock Keeping Unit (SKU) of a product or unit of construction or service to every buyer and in case they are not passed on, the quantum of denial of these benefit or the profiteered amount has to be computed for which investigation has to be conducted in respect of all such SKUs/units/services by the DGAP. What would be the 'profiteered amount' has been clearly mentioned in Sub-Section 171 (3A) and the explanation attached to Section 171 of the CGST Act, 2017. These benefits can also not be passed on at the entity/ organisation/ branch/ invoice/ product/ business vertical level as they have to be passed on to each and every buyer at each SKU/unit/service level by treating them equally, The above provision also mentions "any suppl....
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.... case of one real estate project, date of start and completion of the project, price of the flat/shop. mode of payment of price or instalments, stage of completion of the project, rates of taxes pre and post GST implementation. amount of CENVAT and ITC availed/available total saleable area, area sold and the taxable turnover received before and after the GST implementation would always be different from the other project and hence the amount of benefit of additional ITC to be passed on in respect of one project not be similar to the other project. Therefore, no set procedure/methodology/guidelines/principles/modalities/formula can be for determining the benefit of Additional ITC which has to be passed on to the buyers of the units. Moreover this Authority under Rule 126 has been empowered to 'determine' Methodology & Procedure and not to 'prescribe' it. Similarly, the facts of the cases relating to the sectors of Fast Moving Consumer Goods (FMCG), restaurant service, construction service and cinema service are completely different from each other and therefore, the mathematical methodology adopted in the case of one sector cannot be applied in the other sector. Moreover, both the a....
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....ondent has thus defeated the objective of both the Central and the State Government to provide the benefit of ITC by sacrificing their tax revenue. The Respondent was legally not required to collect the excess GST and therefore, he has not only violated the provisions of the CGST Act, 2017 but has also acted in contravention of the provisions of Section 171 (1) of the above Act as he has denied the benefit of ITC to the ordinary buyers by charging excess GST. Had he not charged the excess GST the buyers would have paid less price while purchasing flats from the Respondent and hence the above amount has rightly been included in the profiteered amount as it denotes the amount of benefit denied by the above Respondent. It would also be appropriate to sate here that that price includes GST also. Therefore, an amount of Rs. 21,69,525/-collected as GST by the Respondent cannot be reduced from the profiteered amount. Hence, the above contention of the Respondent is untenable and it cannot be accepted. 65. It has also pleaded that the term 'profiteering' has been described in various dictionaries such as Black's Law Dictionary, Law Lexicon, Shorter Oxford English Dictionary and in the c....
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....e. Similarly, his contention that the above term refers to excessive, exorbitant and unjustifiable profits arising due to supply of essential goods is also not correct. 67. The Respondent has also stated that the of the DGAP that he had not provided complete data as and when asked for by the DGAP were not correct as ha had promptly supplied the required information as was shown in the chart prepared by him. In this connection perusal of the Report dated 05.11.2018 shows that the Respondent had not supplied the required information to the DGAP and repeated reminders and summons under Section 70 of the above Act read with Rule 132 of the Rules had to be issued to the Respondent. Therefore the above contention of the Respondent is incorrect and hence, same cannot be accepted. 68. The Respondent has further stated that merely because he had passed on benefit of input tax credit, it did not mean that the liability could be fastened upon him. In this regard perusal of the record shows that the Respondent has availed benefit of ITC to the extent of 7.06% of the turnover which he is bound to pass on to the buyers of his flats. The Respondent cannot wriggle out of his legal liability ....
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....by him in his GST Returns and which he has also utilised while discharging his tax liability. Therefore, lite amount of additional ITC available to the Respondent has been correctly computed by the DGAP on the basis of the information supplied by the Respondent himself which cannot be based on the amount of Excise Duty paid by the Respondent, Therefore, the profiteered amount cannot be restricted to Rs. 50,19,008/- as has been contended by the Respondent. Hence, the above claim of the Respondent is not tenable. 71. The Respondent has further submitted that the new prices determined for the flats sold post GST regime were as per the market forces which included the benefit of ITC and the customers were also aware of this benefit while negotiating the prices. As has been discussed above the Respondent has not passed on the benefit of ITC as he has not reduced his prices commensurate with the benefit of GST which he has charged to the buyers who had purchased them during the post GST period. There is no evidence or provision in the sale agreements executed by the Respondent with his buyers that the buyers would not be eligible to the benefit of ITC or the impact of benefit has been....
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....is a tax. The Respondent is unnecessarily trying to misinterpret the provision of section 15 therefore, the above contention of the Respondent is wrong and hence it cannot be accepted. 74. It is established from the perusal of the above facts that the Respondent has benefited from the additional ITC to the extent of 7.06% of the turnover during the period from 01.07.2017 to 31.10.2019 and hence the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has not passed on the above benefit to his customers and thus he has profiteered an amount of Rs. 2,87,64,178/- inclusive of GST @ 12% as is evident from the above Report dated 18.12.2019. Further, the Respondent has realized an additional amount of Rs. 1,71,830/-which includes both the profiteered amount @ 7.06% of the taxable amount {base price) and 12% GST on the said profiteered amount from the Applicant No. 1. He has further realized an additional amount of Rs. 2,85,92,348/- which includes both the profiteered amount @ 7.06% of the taxable amount (base price) and 12% GST on the said profiteered amount from the 205 flat buyers other than the Applicant No. 1. The DGAP has also confirmed th....