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2020 (1) TMI 1578
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....tor-62, Gurgaon. The above Applicants had also alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) availed by him by way of commensurate reduction in the price of the above flats. The aforesaid first application was considered by the Standing Committee on Anti-profiteering, in its meeting held on 13th December, 2018, wherein it was decided to forward the same to the DGAP to conduct detailed investigation in to the complaint according to Rule 129 (1) of the CGST Rules, 2017. The second application was considered by the Standing Committee on Anti-profiteering, in its meeting held on 11 th March, 2018, wherein it was also decided to forward the same to the DGAP to conduct detailed investigation. 2. On receipt of the recommendation from the Standing Committee on Anti-profiteering, the DGAP had issued Notice dated 15.01.2019 under Rule 129 (3) of the above Rules, asking the Respondent to intimate as to whether he admitted that the benefit of ITC had not been passed on to the above Applicant by way of commensurate reduction in the price of the flat and in case it was so, to suo-moto compute the quantum of the same and mention it in his reply to the Noti....
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....d letters issued and sale agreement made with the Applicant. (e) Copies of Balance Sheet for FY 2016-17 & 2017-18. (f) Copy of Electronic Credit Ledger for the period 01.07.2017 to 31.12.2018. (g) CENVAT/lnput Tax Credit register for the FY 2016-17 and 2017-18 and April, 2018 to December, 2018. (h) Details of VAT, Service Tax, ITC of VAT, CENVAT Credit for the period April, 2016 to June, 2017, for the project "Paradise" List of home buyers in the project "Paradise" alongwith details of benefit passed on. (j) Copy of RERA Registration Certificate of the Project "Paradise". (k) Copy of Tran-1. 7. The DGAP has also stated that all the documents placed on record were carefully examined by him and he had found that the main issues for determination were whether there was reduction in the rate of tax or benefit of ITC on the supply of construction service by the Respondent after implementation of the GST w.e.f. 01.07.2017 and in case it was so, whether the Respondent had passed on the above benefits to the home buyers as per the provisions of Section 171 of the CGST Act, 2017 or not. 8. The DGAP has further stated that the....
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.... 3,11,783 8 Within 36 months of the date of Allotment letter 12.50% 2,88,688 23,095 3,11,783 100.00 % 2,309,503 28,869 1,50,118 13,609 24,74,881 10. The DGAP has further stated that para 5 of Schedule-Ill of the Central Goods and Services Tax Act, 2017, defining 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 Il, sale of building". Further, Clause (b) of para 5 of Schedule Il of the Central Goods and Services Tax Act, 2017 reads "(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 authority or after its first occupation, whichever is earlier". In the light of these provisions, the DGAP has contended that the ITC pertaining to the units which were under construction but not sold was provisional ITC that may be require....
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....dise" and the ratio of input tax credit to turnover, during the pre-GST (April, 2016 to June, 2017) and postGST (July, 2017 to December, 2018) periods was furnished by the DGAP as per the Table-B given below:- 12. The DGAP has also submitted from the above Table-'B' that the ITC as a percentage of the total turnover that was available to the Respondent during the pre-GST period (April, 2016 to June, 2017) was 0.43% and during the post-GST period (July, 2017 to December, 2018), it was 3.10% which clearly confirmed that post-GST, the Respondent has been benefited from additional ITC to the tune of 2.67% [3.10% (-) 0.43%] of the turnover. 13. The DGAP has further submitted that the Central Government, on the recommendation of the GST Council, had levied 18% GST (effective rate was 12% in view of 1/3rd abatement for land 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 affordable and low-cost houses upto a carpet area of 60 square metres per house was further reduced from 12% to 8%, vide Notification No. 1/2018-Central Tax (Rate) dated 25.01.2018. In vi....
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....; 12 Excess Collection of Demand or Profiteered Amount K = G-J 1,139,897 6,455,395 11,991,137 19,586,429 14. The DGAP has also observed from Table-'C' that the additional ITC of 2.67% of the turnover should have resulted in commensurate reduction in the base price as well as cum-tax price. Therefore, in terms of Section 171 of the Central Goods and Services Tax Act, 2017, the benefit of the additional ITC was required to be passed on to the recipients. 15. On the basis of the aforesaid CENVAT/ITC availability pre and post GST and the details of the amount collected by the Respondent from the Applicant and other home buyers during the period from 01.07.2017 to 24.01.2018, the amount of benefit of ITC not passed on or in other words, the profiteered amount has been quantified by the DGAP as Rs. which included CST @ 12%, on the base profited amount of Rs. 57,63,746/-. Further, the amount of benefit of input tax credit that needed to be passed on by the Respondent to the home buyers during the period 25.01.2018 to 31.12.2018 has been computed as Rs. 1,19,91,137/- which included 8% GST on the base amount of Rs. 11,102,905/-. In resp....
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.... 0 0 0 0 No Consideration Paid Post-GST and no benefit passed on 6 Unsold Shop 60 16,798 0 Unsold Units Total Commercial (B) 87 24,805 3,81,18,553 11,39,897 1,13,106 Grand Total (C)= (A)+ (B) 827 4,15,905 66,98,28,304 1,95,86,429 81,82,783 17. The DGAP has observed from the above Table - D that the benefit claimed to have been passed on by the Respondent was less than what he ought to have passed on in case of 740 residential flats including that of the Applicants (Sr. 1 & 2 of above table), by an amount of Rs. 1,03,98,855/- and in case of 23 commercial shops (Sr. 3 of above table), by an amount of Rs. 10,24,778/-. The details of these amounts were given in Annexure-18 & 19 of the DGAP's Report. Further, the benefit claimed to have been passed on by the Respondent was higher than what he should have passed on, in respect of one of the already sold commercial shops (Sr. 4 of above Table), by an amount of Rs. 19,987/-. The details of this excess benefit claimed to have been....
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....dent has also realized an additional amount of Rs. 1,960/- which included both the profiteered amount @ 2.67% of the turnover (base price) and GST on the said profiteered amount, from the Applicant No. 2 as well as 761 other recipients who were not Applicants in the present proceedings. 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, this additional amount of Rs. 1,14,11,960/- was required to be returned to such eligible recipients. 20. The DGAP has also stated that the present investigation has covered the period from 01.07.2017 to 31 .12.2018. Profiteering, if any, for the period post December, 2018, has not been examined by him, as the exact quantum of ITC that would be available to the Respondent in future could not be determined at the stage, when the construction of the project was yet to be completed. He has further stated that the provisions of Section 171 (1) of the Central Goods and Services Tax Act, 2017 requiring that "a 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 rec....
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....-2017. iii. Turnover Summary and ITC summary for the period July2017 to March-2018. iv. Turnover Summary and ITC Summary for the period April-2018 to March-2019. v. Total VAT Credit summary and Detailed Chart of VAT Credit for the Sector-62 Project. c) Project-wise list of all payments received from each of his buyers is enclosed. d) Balance Sheet for the year 2016-17, 2017-18 along with the Project-wise Trial Balance for the same period. e) Summary of the Total number of apartment/flats/ commercial units/ residential units in the Project with total area of each flats. f) Status of the project in term of sold and unsold units as on 30.06.2019. g) Registry between the land owner and builder for the Sector-62. h) Sample Credit Letters and Respective Ledger for the period from 01.04.2016 to 31.12.2018. 24. The Respondent vide his above submissions has also submitted the details of other projects which were on-going as on 1st July, 2017 as under:- Sr. No. Project Name ITC Benefit claimed to have passed on till 30.08.2019 (Amount in Lacs) Residential Commercial TOTAL....
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.... 29. We have carefully considered all the submissions filed by the Applicants, the Respondent and the other material placed on record. We find that the Applicant No. 1 and 2, vide their complaints dated 09.10.2018 and 16.12.2019 respectively, have alleged that the Respondent was not passing on the benefit of ITC to them 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 ITC to him and that the Respondent was also charging GST from them @12%. These complaints were examined by the Standing Committee in its meetings held on 13.12.2018 and 11.03.2019 respectively and forwarded to the DGAP for investigation. The DGAP, vide his Report dated 19.06.2019 has found that the ITC as a percentage of the total turnover which was available to the Respondent during the pre-GST period was 0.43% and during the post-GST period this ratio was 3.10% details of which are given in Table-B of the DGAP Report. Therefore the DGAP has reported that the Respondent has benefited from ITC to the tune of 2.67% (3.10% - 0.43%) of his total turnover during the post-GST period which he was required to pass on to the flat buyers of ....
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....ch mention entry/entries indicating "GST benefit pass on to Home buyers" and has also submitted sample acknowledgement letters from his home buyers in support of his having passed on the benefit of ITC to them in terms of Section 171 of CGST Act. We also find that perusal of Table-D of the DGAP Report dated 19.06.2019 suggests an amount of Rs. 81,82,783/- has been claimed to have been passed on by the Respondent to his home buyers on account of ITC benefit. However, it is also clear from Table-D of the DGAP Report and claim of the Respondent of having passed on the benefit of Rs. 81,82,783/-, has not been verified at any stage by the DGAP. Further, the claim made by the Respondent during the hearings held before this Authority of having passed on another tranche of benefit of ITC to his home buyers, taking the total ITC benefit passed on to Rs. 2,18,87,807/-, also needs to be verified by the DGAP. Accordingly the DGAP is directed to further verify the total amount of ITC benefit claimed to have been passed on to his home buyers by the Respondent till date, as per the provisions of Rule 133 (4) of the above Rules and submit his Report clearly mentioning the verified amount of benefi....