TaxTMI 
TaxTMI 
2020 (12) TMI 936
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....nsurate reduction in price of the Shop and had also charged GST @12% on the instalments paid by him. 2. The above Applicant had also submitted copies of the Notices issued by the Central Board of Excise and Customs (CBEC) and Commercial Taxes Department of the State, published on 16th September, 2017 in leading English & Hindi Newspapers along with his application. 3. The aforesaid application was examined by the Standing Committee on Anti-Profiteering in its meeting and it had forwarded the same to the DGAP for detailed investigation in the matter. 4. Accordingly, the DGAP had issued notice dated 08.07.2019 after receipt of the aforesaid reference from the Standing Committee on Anti-profiteering under Rule 129 (3) of the above Rules calling upon the Respondent to reply as to whether he admitted that the benefit of input tax credit had not been passed on to the recipients by way of commensurate reduction in prices and if so, to suo moto determine the quantum thereof and indicate the same in his reply to the above Notice as well as furnish all documents in support of his reply. The DGAP has further stated that the Respondent was afforded opportunity to inspect the non-confi....
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.... receipts issued to the Applicant No. 1. (g) Tax rates - pre-GST and post-GST. (h) Copy of Balance sheets for FY 2016-17 & 2017-18. (i) Copy of Electronic Credit Ledger for the period from July, 2017 to June, 2019. (j) CENVAT/Input Tax Credit Register for the period from April, 2016 to June, 2019. (k) Details of turnover, output tax liability, GST payable and input tax credit availed for the project "Mercado". (I) List of home buyers in the project "Mercado". (m) Copies of VAT Assessment Order Nos. 285/2016-17 & 286/2017-18 dated 27.09.2019. 9. The Respondent submitted before the DGAP that he was engaged in development of two Commercial projects i.e. "Mercado" and "Epic". Project "Mercado" was launched in the pre-GST regime whereas "Epic" was launched in the post-GST regime. The Respondent had further submitted that the project "Mercado" consisted of total 531 units (comprising total area of 3,11,000 sq. ft.) out of which 409 units having an area of 2,15,457 sq. ft. had been sold as on 30.06.2020. 10. The DGAP has also stated that he has carefully scrutinised various replies of the Respondent and the documents/evi....
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..... On Casting of top Floor Slab 28.09.2018 7.50% 1,33,875 - - 16,065 1,49,940 13. On Start of Brick Work 31.10.2018 7.50% 1,33,875 - - 16,065 1,49,940 14. On Completion of façade Demand Not yet due 5.00% 89,250 31,500 (IFMS) - 10,710 1,31,460 15. On offer of Possession 5.00% 89,250 - - 10,710 99,960 Total 100.00% 17,85,000 3,48,285 46,190 1,48,601 23,28,076 12. The DGAP has also submitted that Para 5 of Schedule-III of the Central Goods and Services Tax Act, 2017 (Activities or Transactions which shall be treated neither as a supply of goods nor a supply of services) reads as "Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building". Further, clause (b) of Paragraph 5 of Schedule II of the Central Goods and Services Tax Act, 2017 reads as "(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent....
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....he project "Mercado", the ratios of input tax credits to turnovers, during the pre-GST (April, 2016 to June, 2017) and the post-GST (July, 2017 to June, 2019) periods, were as per the Table-'B' given below: Table-'B' (Amount in Rs.) S.No. Particulars April, 2016 to March, 2017 April, 2017 to June 2017 Total (Pre-GST) July to March, 2018 April, 2018 to June, 2019 Total (Post-GST) (1) (2) (3) (4) (5)=(3)+(4) (6) (7) (8)=(6)+(7) 1. CENVAT of Service Tax Paid on Input Services used for Commercial Shops as per ST-3 (A) 76,09,324 62,98,588 1,39,07,912 - - - 2. Input Tax Credit of VAT Paid on Purchase of Inputs as per VAT Returns (B) 62,92,962 15,00,460 77,93,422 - - - 3. Less: Disallowances of ITC by VAT Assessing Authority (C) 62,803 - 62,803 - - - 4. Rebate of VAT(WCT) for the payment made to registered Sub-contractors (D) 25,16,156 16,89,115 42,05,271 5. Input Tax Credit of GST Availed (E) - - - 3,14,66,224 5,88,67,573 9,03,33,797 6. Total CENVAT/Input Tax Credit Availed (F)= (A+....
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....Total amount to be collected/raised G=E+F 41,42,27,328 9. Recalibrated Base Price H=(E)*(1-D) or 94.09% of (E) 34,79,87,940 10. GST @12% I=H*12% 4,17,58,553 11. Commensurate demand price J=H+I 38,97,46,493 12. Excess Collection of Demand or Profiteering Amount K=G-J 2,44,80,835 15. The DGAP has also stated from the Table-'C' that the additional input tax credit of 5.91% of the turnover should have resulted in the commensurate reduction in the base prices as well as cum-tax prices. Therefore, in terms of Section 171 of the Central Goods and Services Tax Act, 2017, the benefit of such additional input tax credit was required to be passed on by the Respondent to the respective recipients. 16. The DGAP has further stated that on the basis of the aforesaid CENVAT/Input Tax Credit availability in the pre and the post-GST periods and the details of the amount raised/collected by the Respondent from the Applicant No. 1 and the other shop buyers during the period from 01.07.2017 to 30.06.2019, the Respondent had benefited by an additional amount of input tax credit of Rs. 2,44,80,835/- which included GST @12% on the base pr....
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....nt has also realized an additional amount of Rs. 2,44,14,372/- which included both the profiteered amount @ 5.91% of the base prices and GST on the said profiteered amount, from 228 other recipients who were not Applicants in the present proceedings. These recipients were identifiable as per the documents provided by the Respondent which mentioned the names and addresses along with Unit Nos. allotted to such recipients. Therefore, this additional amount of Rs. 2,44,14,372/- was required to be returned to such eligible recipients. 20. The DGAP has also contended that the present investigation covered the period from 01.07.2017 to 30.06.2019. Profiteering, if any, for the period post June, 2019, has not been examined as the exact quantum of input tax credit that would be available to the Respondent in future could not be determined when the Respondent was continuing to avail input tax credit in respect of the present project. 21. The DGAP has further contended that Section 171 (1) of the Central Goods and Services Tax Act, 2017, requiring that "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 ....
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....cise Duty and VAT) on goods was not available which has become available under the GST regime. Therefore, the benefit that actually arose due to GST implementation was that of ITC of taxes paid on goods. The Respondent has further submitted that in the calculation of DGAP, the benefit which has accrued to him from the additional ITC has been taken into consideration for goods as well as for services. Out of total ITC of INR 9,03,33,797/-, INR 2,52,00,202/- was related to goods. Therefore, the amount of profiteering calculated by the DGAP should have been restricted to the ITC availed by the Respondent on procurement of goods only and that too in ratio of sold and unsold area because on completion of the project Respondent would be required to reverse the ITC related to the unsold portion. 25. The Respondent has also claimed that in the early stages of GST implementation, real estate sector was going through a rough phase. To overcome this situation, Respondent had to incur some additional expenses including marketing and payment of commissions which has resulted in overall project cost. Therefore, increased cost of the project should also have been considered while calculating t....
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....ruction service, while the input tax credit of Service Tax was available, the input tax credit of Central Excise Duty paid on inputs was not available to the service providers. Such input taxes, the credit of which was not allowed in the erstwhile tax regime, used to get embedded in the cost of the goods or services supplied, resulting in increased price. With the introduction of GST with effect from 01.07.2017, all these taxes have got subsumed in the GST and the input tax credit of GST was available in respect of all the goods and services, unless specifically denied. Further, there was no such one to one link that the Central Tax (CGST) subsumed erstwhile Service Tax and the Central Excise Duty while State Tax (SGST) subsumed erstwhile VAT and Works Contracts Tax. Therefore, the contention of the Respondent that Excise Duty was converted in central tax was not correct. Further, Section 171 of Central Goods and Services Tax Act, 2017 which governed the anti- profiteering provisions under the GST 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 pri....
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....t and the other material placed on record and find that the Applicant No. 1 had alleged that the Respondent was not passing on the benefit of ITC to him on the Shop No. GF-0131-A, which he had purchased in the "Mercado" Project being executed by the Respondent in Sector-42, Gurugram, in spite of the fact that he was availing ITC on the purchase of the inputs at the higher rates of GST which had resulted in benefit of additional ITC to him and was also charging GST from him @12%. This complaint was examined by the Standing Committee on Anti-Profiteering and was forwarded to the DGAP for investigation who vide his Report dated 23.03.2020 has found that the ITC as a percentage of the total turnover which was available to the Respondent during the pre-GST period was 2.66% and during the post-GST period this ratio was 8.57% as per the Table-B mentioned above and therefore, the Respondent has benefited from the additional ITC to the tune of 5.91% (8.57% - 2.66%) of the total turnover which he was required to pass on to the buyers of this Project. The DGAP has also found that the Respondent has not reduced the base prices of his shops by 5.91% due to additional benefit of ITC and by charg....
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....led in respect of goods only. In this regard it would be relevant to mention that the Respondent has not only availed benefit of ITC on the purchase of goods but he has also availed it on the purchase of services. Therefore, the whole amount of ITC which has additionally become available to him in the post GST period as compared to the pre GST period has to be taken in to account while passing on the benefit of ITC in terms of Section 171 (1). Any additional ITC earned on account of increase in the tax rate from 15% to 18% on the purchase of services also comes from the public exchequer and the Respondent cannot claim that only the ITC which has become available to him on the Central Excise Duty and VAT, which was not available to him during the pre GST period on the purchase of goods, should be considered. It is also clear from the perusal of Table-B supra that the ITC of Rs. 77,93,422/- had become available to the Respondent on account of the VAT, while purchasing goods during the pre GST period, which has been duly taken in to consideration by the DGAP while computing the ratio of ITC to turnover for the above period and hence, the claim of the Respondent that he has not availed....
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.... the Applicant No, 1. The details of the profiteered amount and the buyers have been mentioned by the DGAP in Annexure-14 of his Report dated 23.03.2020. These buyers are identifiable as per the documents placed on record. Therefore, as per the provisions of Section 171 (1) read with Rule 133 (3) (b) the Respondent is directed to pass on an amount of Rs. 2,44,80,835/- and an amount of Rs. 66,463/- to the other flat buyers and the Applicant No. 1 respectively along with the interest @ 18% per annum from the dates from which the 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-14, attached with the Report dated 23.03.2020. 34. 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 shops of the above project commensurate with the benefit of ITC received by him as has been detailed above. Since the present investigation is only up to 30.06.2019 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondent. The....