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2020 (11) TMI 782
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....urate reduction in price to the Applicant in respect of the purchase of flat No. 804, in Tower J in the Respondent project "Logix Blossom County", Sector-137, Noida-Greater Noida Expressway, Uttar Pradesh. The Uttar Pradesh State Screening Committee on prima facie having satisfied itself that the Respondent had not passed on the benefit of ITC had forwarded the application of Applicant No. 1 with its recommendation to the Standing Committee on Anti-profiteering for further action, in terms of Rule 128 (1) of the above Rule, which was examined by the Standing Committee on Anti-profiteering in its meeting held on 06.09.2018 whereby it was decided to forward the same to the DGAP to conduct a detailed investigation in the matter. 2. Another application filed by the Applicant No. 2 against the Respondent was also forwarded by the Standing Committee on Anti-profiteering, vide minutes of its meetings held on 13.12.2018 to the DGAP for detailed investigation. 3. After completing the investigation, the DGAP has submitted his report under Rule 129 (6) of CGST Rules, 2017 on 04.04.2018 pertaining to the period w.e.f. 01.07.2017 to 31.09.2018. 4. The DGAP in his report has stated that....
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....so submitted that he had not taken any credit of VAT in the pre-GST regime. e. A total number of 2381 units spread across 17 towers on an area of 35,63,342 sq. ft., were being constructed in the Project 'Blossom County', out of which Completion Certificates had been received for a total of 1454 units spread across 10 towers on an area of 20,90,333 sq. ft. The remaining 927 units in 7 towers, covering total area of 14,73,009 sq. ft., were still under construction. 6. The DGAP in his Report has further stated that the Respondent had claimed that the benefit of accumulated CENVAT credit (input tax credit) could not have been transferred to the units in respect of which the Completion Certificates had been issued before the introduction of GST, since the accumulated balance of CENVAT credit, as on 30.06.2017, was the CENVAT credit on the input services procured in respect of the units that were still under construction as on 30,06.2017 and the same applied to the input tax credit of GST earned post-GST implementation w.e.f. 01.07.2017, as it pertained only to the inputs and input services used for the under-construction units. The DGAP had also stated that the Responden....
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.....e. before GST was introduced, the Respondent was eligible to avail CENVAT credit of Service Tax paid on input services. However, CENVAT credit of Central Excise Duty paid on inputs was not admissible, as per the CENVAT Credit Rules, 2004, which were in force at the material time. The Respondent had also submitted to the DGAP that he was neither availing any VAT credit nor was charging VAT from his customers, as was evident from the demand letters, but he was discharging his output VAT liability on deemed 20% value added to the purchase value of the inputs and therefore, there was no direct correlation between the turnover reported in the VAT returns for the period April 2016 to June 2017, filed by the Respondent and the actual consideration collected from the home buyers. The DGAP further stated that as no credit of VAT paid on the inputs was availed by the Respondent, hence, the credit of VAT and the VAT turnover were not considered for computation of the ratio of input tax credit to the turnover for the pre-GST period and further, post-GST, the Respondent could avail the input tax credit of GST paid on all the inputs and input services. Upon further scrutiny by the DGAP, it was ....
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.... the pre-GST period (April 2016 to June 2017) was 0.71% and during the post-GST period (July 2017 to August 2018), it was 0.85% which confirmed that post-GST the Respondent had benefited from additional input tax credit to the tune of 0.14% [0.85% (-) 0.71%] of the turnover. 12. DGAP further stated that the quantum of profiteering has been computed by comparing the applicable taxes and input tax credit available to the Respondent during the pre-GST period (April 2016 to June 2017) when Service Tax @ 4.5% was payable with the post-GST period (July 2017 to September 2018) when the effective GST rate was 12%. Based on the figures contained in the table above, the comparative figures of the ratio of input tax credit availed/available to the turnover in the pre and post-GST periods, the recalibrated base price, and the excess collection (Profiteering) during the post-GST period, has been tabulated by the DGAP in the Table-C below:- Table-C (Amount in) S.No. Particulars Pre-GST Post- GST 1. Period A April, 2016 to June, 2017 July 2017 to Sep 2018 2. Output tax rate (%) B 4.50% 12.00% 3. The ratio of CENVAT/ Input Tax Cred....
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.... an adjournment of the hearing on 26.04.2019. Further opportunity of hearing was granted by this Authority on 03.05.2019 but the Respondent did not appear and instead sought adjournment. The hearings could take place only on 21.05.2019 and 28.05.2019. The hearing was attended by Sh. Amit Kumar Agarwal, CA and Sh. Abhinav Kalra, CA on behalf of the Respondent, Sh. Rajender Meena Applicant No. 1, Sh. Chandan Singh Applicant No. 2 and Sh. Shivendu Pandey, Superintendent, DGAP for Applicant No. 3. During the course of the hearings, the Respondent filed his written submissions on 06.06.2019 vide which he submitted that being a law-abiding company he accepted the profiteering of Rs. 13,32,278/- as per the DGAP's report and did want to litigate the matter further and was ready to pass on the said amount to his homebuyers in line with the DGAP's report. He also submitted the following:- a. Working sheet evidencing that each of the home buyers had been passed on the benefit by way of issue of credit notes. b. Copy of the GST registration certificate. c. Copies of Service Tax and GST returns from December 2016 to March 2019. d. He further stated th....
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....he DGAP appears to be Rs. 28,97,48,916.6/-. Hence, the correct figure for turnover needed to be verified. It is also required to be explained why the figures from statutory returns should not be taken to arrive at the profiteered amount. The DGAP's Report in Para 18 has mentioned that there was a mismatch in the total demand made from the customers as per the home-buyers list and its reconciliation with the turnover reported in the GSTR-3B and ST-3 returns, which needed to be reinvestigated and confirmed. (ii) The turnover from the home buyers list submitted before the DGAP by the Respondent is much greater than the corresponding turnover reflected in the statutory returns filed by the Respondent himself. Thus, the area sold relevant to turnover worked out based on the home buyer list as mentioned in Table-C of the DGAP report is required to be reinvestigated. (iii) The Central Government, on the recommendation of the GST Council, had levied 18% GST (effective rate 12% given 1/3^rd abatement on value) on construction service, vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The effective GST rate on construction service in respect of affordab....
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....ents of the turnover of the GSTR1 of the Respondent and did not include the turnover reported by him from other sourced that included turnover from Credit/Debit Notes, Advances Received, Advances Adjusted, Non-GST and Exempted supply of services. The DGAP has further stated that In terms of Section 13 (2) of the Act, the definition of the 'time of supply of services' included components such as Advances Received and that the tax liability was required to be discharged on the amounts received as advances in addition to turnover received from payments made by the homebuyers. The DGAP has nevertheless added that since there was a mismatch between the demand made from the home-buyers and the turnover reported by the Respondent in his statutory GSTR-1 and GSTR-3B returns, the Respondent was asked to submit proper reconciliation of the same. The Respondent vide his email dated 14.02.2020 (Annex-5), submitted reconciliation of the turnover of the Respondent reported by him in his statutory returns and the aggregate of the demands raised by him from his home-buyers. Further, the Respondent has also provided details of actual B2C invoice value and actual advances received which has ....
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.... advances received from his home-buyers and not the turnover in his statutory returns in the report dated 03.04.2019. Accordingly, the area sold relevant to turnover worked out based on the homebuyers list as mentioned in the report was correct. c. In reply to the para that the effective GST rate on construction service in respect of affordable and low-cost housing was further reduced from 12% to 8%, vide Notification No. 1/2018-Central Tax (Rate) dated 25.01.2018 w.e.f. 25.01.2018, however, the same has not been reflected correctly in the GSTR-3B returns, and accordingly, this aspect was also required to be further investigated, the DGAP has reported that as has been stated by this Authority, the effective GST rate on construction service in respect of affordable and low-cost housing was reduced from 12% to 8%, vide Notification No. 1/2018-Central Tax (Rate) dated 25.01.2018 w.e.f. 25.01.2018, however, as the impugned project under consideration was not an affordable housing project, this rate reduction had no bearing whatsoever in this matter. 21. The DGAP has further reported that the amount of profiteering by the Respondent on account of contravention of provisions of ....
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....020 and it was decided to hear the Applicants and the Respondent on 25.03.2020. Accordingly, notice dated 05.03.2020 was issued to the Respondent to explain why the Report dated 27.02.2020 should not be accepted and his liability for violation of the provisions of Section 171 of the CGST Act, 2017 should not be fixed. 24. Personal hearings were given to the parties on 25.03.2020, 20.04.2020, and 13.05.2020. However, due to the Covid-19 pandemic, the scheduled hearings could not be held on the above dates. Therefore, the Respondent and the Applicant No. 1 and 2 were further directed to file their consolidated written submissions. The Respondent vide his submissions dated 05.06.2020 has stated that:- a. He had accepted his liability against the profiteered amount as has been calculated by the DGAP and would not like to litigate the matter further. b. That he had already passed on the benefit of ITC amounting to Rs. 13,32,278/- to his customers/flat buyers by way of credit notes and accordingly reducing the demands raised by him on his customers. c. That he had submitted the ledger of credit passed in respect of the flat/home buyers whom such credit ha....
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....above two complaints were examined by the Standing Committee on Anti-profiteering and were forwarded to the DGAP for detailed investigation as per the provisions of Rule 129 (1) of the CGST Rules, 2017. Accordingly, the DGAP had investigated all the complaints together and submitted his Report under Rule 129 (6) of the CGST Rules, 2017. The present investigation pertains to the period from 01.07.2017 to 30.09.2018. 29. We take note of the fact that Respondent vide his submissions dated 05.06.2020 has accepted his liability of passing on the benefit of additional ITC as per the report of the DGAP and has also submitted that he had passed on the benefit of Rs. 13,32,278/- to his customers/flat buyers by way of credit notes and by way of reducing the instalments to be paid by his homebuyers against the demands pending from them and the proof of the same has also been submitted before the DGAP. This claim of the Respondent has been accepted as verified by the DGAP vide his supplementary report dated 20.07.2020. We observe that the DGAP has verified the detail of the ITC passed on by the Respondent to his homebuyers/ recipients (355 home buyers) from the ledger account, Credit Notes ....
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....-17 attached with the Report of the DGAP, who are required to be passed on the above amount as the benefit of ITC. 32. Based on the above findings this Authority hereby determines the profiteered amount as Rs. 13,32,278/- as per the provisions of Section 171 (1) read with Rule 133 (1) of the above Rules which includes GST @ 12% on the base profiteered amount of Rs. 11,89,534/-. The profiteered amount in respect of the Applicant No. 1 & 2 is held to be Rs. 3,880/- and Rs. 3,929/- respectively. The Respondent has claimed that he had passed on the benefit to his homebuyers and the above claim of the Respondent has been verified by the DGAP vide his supplementary report dated 20.07.2020. The DGAP has reported that the Respondent had submitted the ledger account in respect of 355 home buyers and credit notes (20) on a sample basis wherein the details of the benefit of ITC passed on to the recipients (355 home buyers) have been mentioned and that the details of the ITC passed on to the recipients (355 home buyers) have been verified from the ledger account and the credit notes against Annexure-17 of the report of the DGAP dated 03.04.2019, and the same were found to be in order. Howev....
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....rce w.e.f. 01.01.2020 whereas the period during which violation has occurred is w.e.f. 01.07.2017 to 31.12.2018, hence the penalty prescribed under the above Section cannot be imposed on the Respondent retrospectively. Accordingly, Show Cause Notice directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him is not required to be issued. 37. The DGAP in his report dated 03.04.2019 has reported that in the project 'Blossom County', there were 2381 total number of units spread across 17 towers, out of which Completion Certificate had been received for a total of 1454 units spread across 10 towers. The remaining 927 units in 7 towers were under construction. Keeping in view the above findings of the DGAP there are sufficient reasons to believe that there is need to examine whether the Respondent has passed on the benefit of ITC to the buyers of the remaining 7 towers or not. Therefore, this Authority, in terms of the provisions of Section 171 (2) of the CGST Act, 2017 directs the DGAP to further investigate the above 7 towers of the project of the Respondent for v....