TaxTMI 
TaxTMI 
2022 (5) TMI 738
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.... that the Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in price. As mentioned in the application, the Applicant no. 1 had lodged the complaint with the Haryana State Screening Committee which had sent it to the standing committee after satisfying itself in initial scrutiny. The said reference was examined by the Standing Committee on Antiprofiteering, in its meeting held on 15.05.2019, the minutes of which were received by the DGAP on 28.06.2019, whereby it was decided to forward the same to the DGAP, to conduct a detailed investigation in the matter. 2. The DGAP has submitted that on receipt of the said reference from the Standing Committee on Anti-profiteering, a Notice under Rule 129 of the Rules was issued by the Director General of Antiprofiteering on 10.07.2019, calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the Applicant no. 1 by way of commensurate reduction in price and if so, to suo moto determine the quantum thereof and indicate the same in his reply to the Notice as well as furnish all supporting documents. Vide the said Notice, the Respondent was also afforde....
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....ns for the period July, 2017 to June, 2019. (b) Copies of GSTR-3B returns for the period July, 2017 to June, 2019. (c) Copies of Tran-1 filed. (d) Electronic Credit Ledger for the period July, 2017 to June 30, 2019. (e) Copies of VAT& ST-3 returns for the period April, 2016 to June, 2017. (f) Copies of all demand letters, sale agreement/contract issued in the name of the Applicants. (g) Details of applicable taxes pre-GST and post-GST. (h) Copy of Balance Sheet and Cost Audit Report for FYs. 2016-17, 2017-18. (i) Details of VAT, Service Tax, ITC of VAT, CENVAT Credit for the period April, 2016 to June, 2017, Output GST and ITC for the period July, 2017 to June, 2019 for the impugned Project. (j) CENVAT/lnput Tax Credit Ledger for the FY 2016-17, 2017-18 and 2018-19 reconciled with VAT, ST-3 and GSTR-3B returns. (k) List of home-buyers for the impugned Project. 6. The DGAP also stated that the Respondent did not claim confidentiality of any of the details/information furnished by him, in terms of Rule 130 of the Rules. The DGAP had further submitted that vide e-mail dated 02.03.2020, the App....
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....nt to refer to Para 5 of Schedule-III of the CGST Act, 2017 (Activities or Transactions which should be treated neither as a supply of goods nor a supply of services) which reads as "Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building "along with clause (b) of Paragraph 5 of Schedule II of the CGST Act, 2017 which 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 had been received after issuance of completion certificate, where required, by the competent authority or after his first occupation, whichever was earlier". Thus, it was apparent to the DGAP that the ITC pertaining to the residential units which were under construction but not sold was provisional ITC which might be required to be reversed by the Respondent, if such units remained unsold at the time of issue of the Completion Certificate, in terms of Section 17(2) & Section 17(3) of the CGST Act, 2017, which read as under: Section 17 (2) 'Where the goods or services or both was used by the registered person partly for effe....
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....e DGAP that there was no deduction claimed on account of payment to work contractors to claim WCT credit for the project in his VAT returns submitted to the DGAP. 15. The DGAP has claimed that on-going through the details submitted vide the Respondent's submissions dated 10.10.2019, it appeared to him that prior to 01.07.2017, i.e., in the pre-GST era, the Respondent was eligible to avail CENVAT credit of Service Tax paid on input services and VAT paid on inputs only (no credit was available in respect of Central Excise Duty paid on inputs). However, post-GST, the Respondent could avail ITC of GST paid on all inputs and input services. From the data submitted by the Respondent, the details of the ITC availed by the Respondent, his turnover for the project "Heritage Max", and the ratios of ITC to the turnover during the pre-GST (April, 2016 to June, 2017) and the post-GST (July, 2017 to June, 2019) periods, were furnished in table- 'A' below. Table 'A' (Amount in Rs) S. No. Particulars (Pre-GST) (Post-GST) 1 Credit of Service Tax Paid on Input Services (A) 2,92,60,200 2 Input Tax Credit of VAT paid on Inputs (B) 93....
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....ly, 2017 to June, 2019 G 88,08,68,562 9. GST @12% H=G*12% 10,57,04,227 10. Total demand I=G+H 98,65,72,789 11. Recalibrated Basic Price J=G*(1-D) or 95.19% of G 83,84,98,784 12. GST @12% K=J*12% 10,06,19,854 13. Commensurate demand price L=J+K 93,91,18,638 14. Excess Collection of Demand or Profiteered Amount L=I-L 4,74,54,151 17. From Table-'B' above, it was observed by the DGAP that additional ITC of 4.81% of the turnover should have resulted in commensurate reduction in the base price as well as cum-tax price. In terms of Section 171 of the CGST Act, 2017, the benefit of the additional ITC was required to be passed on to the recipients. Whereas, the Respondent had contended that any such benefit would eventually be passed on to the recipients at the time of giving possession of the flats, but as observed earlier, the profiteering had to be determined at a given point of time, in terms of Rule 129(6) of the Rules. For the present, the Respondent had retained the benefit on account of additional Input Tax Credit. In other wo....
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....Benefit to be pass on 2. Other Than Applicant 301 6,61,806 87,31,51,195 4,70,38,401 3,69,74,000 1,00,64,401 Further Benefit to be pass on 3. Other Than Applicant (EWS) 88 17,600 54,30,000 2,92,525 0 2,92,525 EWS unit 4. Other Than Applicant 13 27,504 (10,60,75,892) 0 0 0 As per Clause 2.11 of Buyers Agreement, Fiats sold after 01.07.2017 and agreement done after adjusting benefit GST input tax credit 5. Other Than Applicant 147 3,03,130 - No Consideration raised Post-GST Sub Total 550 10,12,189 88,08,68,562 4,74,54,151 3,70,88,000 1,03,66,151 6. Other Than Applicant 20 43231 Unsold Units as on 30.06.2019 7. Other Than Applicant 20 40531 Cancelled/other units Sub Total 40 83,762 Grand Total 590 10,95,951 21. The DGAP had further submitted that from the above Table "C", ....
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....yers, by taking into account the proportionate ITC in respect of such units. On the basis of the details of outward supplies submitted by the Respondent, it was observed that construction service had been supplied by the Respondent in the State of Haryana only. 23. The DGAP had stated that on the basis of above discussion, it appeared to him that post-GST, the benefit of additional ITC of 4.81 % of the turnover had accrued to the Respondent for the project "Heritage max". This benefit was required to be passed on to the recipients but this was not done. Section 171 of the CGST Act, 2017 appeared to had been contravened by the Respondent, in as much as the additional benefit of ITC @ 4.81% of the base price received by the Respondent during the period 01.07.2017 to 30.06.2019, had not been passed on by the Respondent to 390 recipients including the Applicant No. 1. These recipients were identifiable as per the documents provided by the Respondent, giving the names and addresses along with Unit No. allotted to such recipients. Therefore, the total additional amount of Rs. 1,03,66,151/- (Rupees One Crore, Three Lakh, Sixty-Six Thousand, One Hundred and Fifty-One only) was required ....
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....i.e. prior to 01.07.2017. In the pre GST regime, the Respondent was not entitled to the benefit of additional CENVAT credit paid on inputs. (b) The extent of the input tax credit availed by the Respondent was insufficient to offset the increase in costs that had to be incurred due to implementation of GST. (c) In the pre-GST regime, credit of CENVAT paid on services was already available as credit which was already considered while determining the pricing of the unit. Thus, GST credit on services did not result in any additional benefit to the Respondent. (d) ln the pre-GST regime, Service Tax was payable @15% and in the Post-GST regime, GST was payable @18%. Therefore, there was increase in tax rate of 3% from pre-GST to the post-GST period. This was not an additional benefit to the Respondent as the tax paid on services was never a part of cost to the Respondent because the same was available as input tax credit in both the regime. Also there was continuous increase in the cost of raw material procured by the Respondent due to market inflation. (e) The Respondent had already, on his account, passed on an amount of Rs.3,70,88,000/- as GST Input ....
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....ons under Rule 133(2A) of the CGST Rules, 2017. In response, the DGAP has submitted his interim clarification dated 06.10.2020 received on 07.10.2020 wherein the DGAP had submitted that: (a) The Respondent vide his letter had submitted the statement of account, intimation letter to the customers and Credit Notes in support of his claim of passing on the benefit of ITC and interest. (b) On verification of the said documents, it was observed by the DGAP that in case of Unit No. F-1102 in the name of Mrs. Kuljit Kaur Dhillon, the Respondent had not submitted any documentary evidence for verification of the benefit passed on and claimed the said unit as cancelled. However, it was pertinent to mention that the said unit did not stand cancelled at the time of submission of DGAP's Investigation Report dated 23.03.2020. (c) ln case of all other remaining buyers, the amount of benefit of ITC passed on along with due interest was being verified from the documents submitted by the Respondent. Further, to verify the authenticity and veracity of the documents submitted by the Respondent in support of his claim of passing on the benefit of ITC and interest, emails ....
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....t of the 36 who had responded, had confirmed the receipt of ITC benefit from the Respondent, whereas, 4 homebuyers had denied receiving any benefit from the Respondent. 31. Further, this Authority vide its Order dated 04.02.2021 directed the DGAP to verify the claim of the Respondent that he had already passed on the benefit of the ITC in respect of 27 home buyers selected randomly from the total 390 homebuyers. The DGAP was also directed to produce acknowledgements/receipts regarding passing on the benefit to the buyers of Flat Nos. D-1802, D-201, C803 and C-1701, who had previously denied to have received the benefit of ITC from the Respondent. In response, the DGAP has submitted his report dated 04/05.03.2021 wherein, he has stated that the Serial no. 1 & 2 were repeated at serial no. 26 & 27 respectively. Hence, there were actually 25 homebuyers from whom the acknowledgement were to be received from the Respondent other than the 04 homebuyers who had previously denied to have received the benefit of ITC. The Respondent had provided the Emails of the 25 homebuyers to the DGAP. The DGAP vide his letter dated 04.03.2021 has submitted that all 25 homebuyers have confirmed the re....
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....sion to the homebuyers and the Respondent had submitted the Journal Vouchers along with invoices issued to the homebuyers and Acknowledgment letters (on sample basis) from the Homebuyers as supporting documents against his claim. The Respondent had submitted that he had passed on the benefit of Rs.3,70,88,000/- to 245 homebuyers who had already booked their flats up to 30.06.2019. 34. In view of the above facts, the Authority finds that the benefit of additional Input Tax Credit of 4.81% of the turnover has accrued to the Respondent for the project "Heritage Max". This benefit was required to be passed on to the recipients, however, the same was not done by the Respondent. Thus, Section 171 of the CGST, 2017 has been contravened by the Respondent, in as much as the additional benefit of ITC @4.81% of the base price received by the Respondent during the period 01.07.2017 to 30.06.2019, has not been passed on by the Respondent to 390 recipients including the Applicant no. 1. These recipients were identifiable as per the documents provided by the Respondent, giving the names and addresses along with Unit no. allotted to such recipients. Therefore, the total additional amount of Rs.....
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.... Mr. Sanjay Malhotra E-1101 78844.04 14 Mrs. Sneh Kwatra E-701 78844.04 15 Mr. Mohit Jain C-904 76892.96 16 Mr. Gaurav Mehra C-2303 75143.84 17 Mr. Lalhmangaihzuala Pachuau C-1102 73955.91 18 Mr. Rajat Pratap C-504 71895.25 19 Dr. Chandan Arora C-2203 71731.97 20 Mr. Sandeep Seth C-1504 71650.30 21 M/s. French Food India Pvt. Ltd C-703 69887.45 22 Mr. Pankaj Kumar Tyagi C-1403 69884.16 23 Mr. Rajneesh Dutta C-702 64514.20 24 Mr. Rajiv Ranjan Singh C-803 64479.29 25 Mr. Gautam Sharma C-101 63896.99 26 Mr. Inder Dhawan C-1901 61652.36 27 Mrs. Simmi Tyagi C-1501 61635.76 28 Mr. Samrat Singh Yadav C-601 61635.76 29 Mr. Chinmay Jagga A-1504 11577.09 30 M/s. Horizons Dream Vacations (P) Ltd. B-2102 1847.81 31 Mr. Gaurav Gulati B-402 1847.81 32 Mrs. Swati Nagpal A-403 14416.36 33 Mr. Mahendra Swarup B-504 13967.82 34 Mr. Surajit Deb C-604 85031.67 35 M/s. Lassis Devel C-804 76076.64 36 Mr. Vishal Dhawan C-801 ....
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....12 83 Mrs. Neeru Devi Jain F-2601 77092.56 84 M/s. MMX Infrastructure LLP F-1401 76747.83 85 M/s. MMX Infrastructure LLP F-502 76747.83 86 M/s. MMX Infrastructure LLP F-2602 76649.51 87 M/s. MMX Infrastructure LLP F-2502 76647.52 88 Mrs. Rashmi Dewan C-2003 75143.52 89 Mr. Sanjeev Goel C-004 74055.85 90 Mr. Hira Lal Sapru C-404 73743.06 91 Mr. Sandeep Batra C-203 72095.55 92 Mr. Arun Sahai C-1904 71920.20 93 M/s. Gripex Goods Pvt. Ltd. C-1202 68974.75 94 Mr. Arvind Mohan Mathur C-2202 68024.61 95 Mrs. Pushpa Khatri D-504 62815.51 96 Mr. Suraj Mal Bura D-704 62815.51 97 M/s. MMX Infrastructure LLP C-602 56045.95 98 Mr. Chandrabhan Kushwaha D-801 55613.25 99 M/s. MMX Infrastructure LLP D-702 54415.68 100 M/s. MMX Infrastructure LLP D-902 54415.68 101 M/s. MMX Infrastructure LLP D-1001 54034.80 102 M/s. MMX Infrastructure LLP D-401 54034.80 103 M/s. MMX Infrastructure LLP D-601 54034.80 104 Mrs. Priyanka Khanna C-802 53500.61....
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....283.08 152 Mr. Rahul Gaur E-002 116266.66 153 Major Manu Pandey E-201 83541.90 154 Mr. Ajay Kumar Agrawal E-2302 83408.19 155 Mrs. Neha Prakash E-2202 80700.31 156 Mrs. Anshu Jain C-1604 78204.20 157 Mr. Prabhat Sangwan C-901 76641.54 158 Mrs. Lata Choudhary C-1201 74893.50 159 Mrs. Minal Singh C-502 73558.77 160 Mr. Rajat Ray C-1104 71935.71 161 Mrs. Sonu C-201 69588.67 162 Ms. Ragini Jain D-404 68367.50 163 Mrs. Vanita Jain C-603 68352.52 164 Mr. Anuj Jain A-802 1847.81 165 Mr. Rohit Kumar Gupta A-1602 673.40 166 Mr. Adi Ashok Jain A-1004 50127.20 167 Mr. Amorn Narang E-1502 86701.65 168 Mr. Karan Dixit C-2104 73486.26 169 Mr. Amit Kararia C-1803 71991.15 170 Mrs. Anju Gambhir C-1802 65140.35 171 Mr. Ashok Kumar Jain A-1003 673.40 172 Mr. Prateek Dua B-2602 13446.45 173 Mr. Siddharth Kumar Khaitan C-1601 130717.50 174 Mr. Subhendu Mohanty C-402 62574.91 175 Mr. Viraraghavan Sankaran C-2402 81801.7....
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....ndal D-104 461888 223 Mrs. Garima Chhabra D-903 443263 224 Mr. Ravinder Kumar Jaggi D-1502 462167 225 Mr. Shekhar Chandra F-401 383689 226 Mr. Subhash Chandra F-301 379952 227 Mr. Munish Gupta D-202 124399 228 Ms. Mohita Vasudeva D-302 458601 229 Mr. Sarang Dhawan D-303 576759 230 Mrs. Vinita Agarwal D-403 506187 231 Mr. Rash Behari Lal Saxena F-601 399096 232 Mr. Piyush Singhal F-2401 734779 233 Mr. Monish Kumar D-1003 524552 234 Mrs. Neeru Chandra D-503 410324 235 Mrs. Kanta Kashyap C-1004 495087 236 Mrs. Rekha Sharma E-802 639512 237 Mrs, Kuljit Kaur Dhillon F-1102 760039 238 Mr. Ravi Shekhar D-201 175725 239 Mr. Ankit Gupta C-1701 78271 240 Mrs. Swati Aggarwal D-1103 523028 241 Mr. Hernant Kumar Gupta D-203 123225 242 Mr. Gaorav Kapoor D-1104 495033 243 Dr. Meenakshi Thakur D-1704 405357 244 Ms. Pooja Jain F-1001 646670 245 Mr. Surinder Singh Mathur F-701 137011 246 Mr. Puneet Walia D-1603 ....
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.... 296 Ms. Kashish Singh D-2002 82191 297 Ms. Manju Atri D-2504 401449 298 Ms. Maninder Kaur Arora D-1404 70884 299 Mr. Kamal Deep Adlakha D-2204 84126 300 Mrs. Neelam Kumari Shop 1 98025 301 Mr. Saurabh Bhatnagar C-2503 541701 302 Mr. Subhash Chandra Kajala F-902 115399 303 Mr. Rajesh Kumar EWS-I 3232 304 Ms. Rabeena EWS-2 3232 305 Mr. Pawan Kumar EWS-3 3232 306 Mr. Rajesh Kumar EWS-4 3232 307 Ms. Safiya EWS-5 3232 308 Ms. Ram Rati EWS-6 3232 309 Mr. Chhote Lal EWS-7 3232 310 Mr. Kailash Chand EWS-8 3232 311 Mr. Krishan Kumar EWS-9 3232 312 Ms. Parshandi EWS-10 3232 313 Ms. Pushpa EWS-11 3232 314 Mr. Salem EWS-12 3232 315 Mr. Rambir EWS-101 3232 316 Ms. Samina EWS-102 3232 317 Ms. Kirpa EWS-103 3232 318 Mr. Ashok Kumar EWS-104 3232 319 Mr. Ishwar Singh EWS-105 7273 320 Mr. Dushyant EWS-106 3232 321 Ms. Suman EWS-107 3232 322 Mr. Bhupender EWS-108 3232 323 Ms. S....
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.... EWS-606 3232 381 Mr. Umardeen EWS-607 3232 382 Ms. Kamla EWS-608 3232 383 Ms. Asgari EWS-609 3232 384 Ms. Jamila EWS-610 3232 385 Mr. Karambir EWS-611 3232 386 Ms. Natho Devi EWS-612 3232 387 Ms. Mamta EWS-701 3232 388 Mr. Sahun EWS-702 3232 389 Ms. Shashi EWS-703 3232 390 Ms. Geeta Devi EWS-704 3232 Total 47454151 37. It is also evident from the above narration of the facts that the Respondent has denied benefit of ITC to the buyers of his flats in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he had thus resorted to profiteering. Hence, he has committed an offence for violation of the provisions of Section 171 (1) during the period from 01.07.2017 to 30.06.2019 and therefore, appears to be liable for imposition of penalty under the provisions of Section 171 (3A) of the above Act. However, the provisions of Section 171 (3A) have been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.17.2017 to 30.06.2019....