TaxTMI 
TaxTMI 
2022 (5) TMI 781
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.... had referred an application dated 16.11.2018 filed by Applicant No. 1, to the Standing Committee on Anti-profiteering under Rule 128 (2) of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the "Rules"), alleging profiteering by the Respondent, in respect of purchase of Flat No. A-306, 3rd Floor, Tower A, Gurugram, Haryana in his project "Avenue-51". Along with the application, the Applicant No. 1 had submitted copies of his correspondences held with the Respondent. The said reference was examined by the Standing Committee on Anti-profiteering in the meeting held on 13.12.2018 and it was decided to forward the same to the DGAP to conduct a detailed investigation in the matter. 3. On receipt of the reference from the Standing Committee on Anti-profiteering, a Notice under Rule 129 (3) of the above Rules was issued by the DGAP on 18.01.2019, calling upon the Respondent to reply as to whether he admitted that he had charged 12% GST post 25.01.2018 when the GST rate on affordable housing projects was reduced from 12% to 8%, vide Notification No. 01/2018 Central Tax (Rate) dated 25.01.2018 and whether the benefit of input tax credit had not been passed on to t....
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....ort dated 25.06.2019 was considered by the Authority and hearings were accorded to both Applicant No. 1 and Respondent on 23.08.2019, 14.10.2019 and 22.10.2019. After careful consideration of the DGAP's Report and the written submissions filed by both the Applicant No. 1 and the Respondent the Authority referred the case back to the DGAP for further investigation under Rule 133 (4) of the Rules on counts as mentioned from para 11 to para 18 of the said 10. 8. The DGAP vide its present Report dated 27.11.2020 further investigated the issues raised by the NAA in para 11 to 18 of its I.O. No. 23/2019 dated 26.12.2019 in accordance with the provisions of Central Goods and Services Tax Act, 2017, and the Rules made thereunder. 9. The DGAP Reported that the complaint of profiteering was in respect of purchase of a flat in the Respondent's project "Avenue-51", Sector 92, Gurugram, Haryana (hereinafter referred to as "the Project") by Sh. Rachit Jain, on behalf of his brother Sh. Ashish Jain (hereinafter referred to as "the Applicant No. 1"). The project was an affordable Housing project as notified by Town & Country Planning Department, Government of Haryana vide Notification da....
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....bove policy. Additional recovery of Rs. 500 per sq. ft. has been allowed in respect of the Balcony area in a flat adding upto and limited to 100 sq. ft. as permitted in the approved building plan, as per the above para. The above prices were approved by the Government of Haryana on 09.11.2016 when the Letter of Intent was issued to the Respondent. However, the DGAP has stated in his Report dated 25.06.2019 vide Para 10 that "It is observed that the project "Avenue-51" was launched in the post-GST era and there was no price history of the units sold in the pre-GST era which can be compared with the post-GST base price to determine whether there was any profiteering." However, the DGAP has not explained in his Report why the above price of Rs. 4000/- per sq. ft. could not be considered as the pre-GST base price and compared with the post-GST price to determine profiteering as under the above Policy the prices are fixed by the State Government and not the builder. Reply of the DGAP The DGAP submitted that the project "Avenue-51" was launched in the post-GST era and there was no price history of the units sold in the pre-GST era which could be compared with the post-GST base price ....
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....f goods and services. However, the DGAP has not mentioned in his Report whether the Respondent was required to pass on the benefit of ITC which he has availed after coming in to force of the GST or not? Reply of the DGAP The DGAP submitted that perusal of Clause 5 of the Policy dated 19.08.2013, provides maximum allotment rate of 4,000/- for projects in certain geographies, Rs.3,600/- in other high and medium potential towns, Rs. 3,000/- for low potential towns. However, there was no ground to assume that the above ceiling was prescribed after taking in to account the incidence of State and the Central Taxes. Moreover, the rate of VAT varies according to the scheme opted by the service provider. Similarly, rate of Service Tax had changed significantly in the impugned period from 12.36% to 15% to 0% for affordable housing w.e.f. 01.03.2016. Incidence of Central Indirect Tax, i.e. Service Tax and availability of Cenvat Credit has no relation whatsoever with the differential ceiling on allotment rate based on geography as provided by the policy, as rate of Service tax and corresponding availability of Cenvat Credit for the construction service has no geographical/spatial connectio....
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....GST period. Reply of the DGAP The DGAP has submitted that in order to compare the ratio of ITC to turnover, there had to be some figures in respect of turnover and credit/ITC. Since, both turnover as well as credit was nil during the pre-GST period, the ratio of ITC to turnover during the post-GST period cannot be compared with the ratio of ITC to turnover during the pre-GST period, which actually had no value. Resultantly, the differential ratio of both the periods cannot be derived, which is essential to quantify the amount of profiteering, if any, Accordingly, profiteering is not quantifiable in the present case. (v) The NAA further pointed out that it had also not been clarified in the Report dated 25.06.2019 that how the ITC which had become available to the Respondent after coming in to force of the CGST Act, 2017 could be appropriated by the Respondent in his profits without passing on its benefit or why it should not be reversed. Reply of the DGAP The DGAP submitted that he doesn't look into the aspects of costing. Further, the profiteering has been examined in the Report dated 25.06.2019 in terms of Section 171 of the CGST Act, 2017, which stipulates that "An....
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.... project was held on 08.08.2017 in the presence of the committee constituted under the above Policy and the Applicant No. 1 was allotted a flat on 08.08.2017 at the price of Rs. 4000/- per sq. ft. which was fixed during the pre-GST period. However, it has not been mentioned by the DGAP in his Report why the above price could not be compared with the price charged by the Respondent from the above Applicant post-GST when the Respondent was availing benefit of GST and why the above price should not be reduced commensurately as per the provisions of Section 171 (1) of the above Act. Reply of the DGAP The DGAP submitted that the price of Rs. 4000/- per Sq. ft. fixed by the Government was an indicative price and not a real price at which Respondent had sold any flat in the pre-GST price. Furthermore, this price was the highest cap fixed by the Government. It would not be in the fitness of things to compare the real price at which flats have been sold by the Respondent in the post-GST period with the presumptive price of the pre-GST period. This will also be at variance of the policy upheld uniformly by DGAP and Authority in such matters. (viii) The NAA also pointed that it has also....
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....ere also given on 15.01.2021, 01.02.2021, 12.02.2021 and 30.03.2021. However no submissions were made by the Applicant No.2. 14. The Applicant No. 1 vide his e-mail dated 06.08.2019 and 30.03.2021 had submitted that the Respondent had imposed the interest charges of Rs. 42,107/- due to non-deposition of GST demand timely and GST benefit has not been passed on to him. He also submitted that the Respondent had also informed him that he would calculate the benefit of ITC after completion of the project. He had also alleged that the Respondent was earning interest on the flat buyer's ITC benefit and charging interest on late GST payment from homebuyers. 15. The hearing was closed vide order dated 31.03.2021 however, before the order could be passed, one of the Technical Member of the Authority who had heard the matter was transferred out and thereafter the chairman of the Authority also left the Authority. Since, the quorum of the Authority of minimum of three Members, as provided under Rule 134 was not available till 23.02.2022, the matter was not decided. With the joining of two new Technical Members in February, 2022 the quorum of the Authority was restored from 23.02.2022 and....
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....d sale of the flats of the Respondent commenced during the post-GST period and there is no price history of the pre-GST period and hence, the provisions of Section 171 of the CGST Act, 2017 are not attracted. Further, the Applicant No. 1's claim that the Respondent was earning interest on the flat buyer's ITC benefit has no merit as the additional benefit due to the customers of the flats could not be established. 19. In the present case the draw of lots, allotment of units and receipt of payments had taken place in the post-GST era. The draw of lots for allotment of houses was conducted on 08.08.2017 in the presence of the committee constituted under the Affordable Housing Policy, 2013. It is also revealed that an agreement was executed between the above Applicant No. 1 and 2 & the Respondent in which terms and conditions for allotment of the flat were settled only after the draw of flats on 08.08.2017 i.e post GST period. It is also apparent from the record that the Respondent had received the Environment Clearance from the State Environment Impact Assessment Authority Haryana on 21.07.2017 before which he could not have started the execution of the project. On the basis....