TaxTMI 
TaxTMI 
2022 (5) TMI 1417
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....ice Bungalows" and had alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in the prices. 2. The aforesaid Application was examined by the Gujarat State Screening Committee and referred to the Standing Committee on Anti-profiteering. The said application was then examined by the Standing Committee on Anti-profiteering, in its meeting, the minutes of which were received in the DGAP's office on 15.10.2020, forwarding the same to the DGAP to conduct a detailed investigation. Accordingly, investigation was initiated to collect evidence necessary to determine whether the benefit of Input Tax Credit had been passed on by the Respondent to his customers in respect of Construction Service supplied by him. 3. In the report dated 25.03.2021, it was inter-alia, stated by the DGAP that:- (i) A Notice under Rule 129 of the Rules was issued on 09.11.2020, calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to his customers 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 ....
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....period July, 2017 to September, 2020. e. Copies of VAT Returns &ST-3 Returns for the period April, 2016 to June, 2017. f. Details of VAT, Service Tax, ITC of VAT, Cenvat Credit for the period April, 2016 to June,2017 and output GST and ITC of GST for the period July, 2017 to September,2020. g. Details of applicable tax rates, Pre-GST & Post-GST. h. Sale agreement issued to the Applicant No. 1. i. Balance Sheet for the FY 2016-17,2017-18,2018-19 & 2019-20. j. Status of the project "Venice Bungalows" as on 30.09.2020 in terms of tower-wise sold and unsold units along with copies of Occupancy Certificates. k. Project Report submitted to the RERA. I. Cenvat/ITC Register for the FY 2016-17, 2017-18, & 2018-19. m. List of home buyers in the project "Venice Bungalows". n. The copy of the DRC-03 filed on 23.06.2020 for reversal of ITC Rs. 303905/- SGST. (v) Vide Notice dated 09.11.2020, the Respondent was informed that if any information/documents were provided on confidential basis, in terms of Rule 130 of the Rules, a non-confidential summary of such information/documents was required to be furni....
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....empt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies". Section 17 (3) "The value of exempt supply under sub-section (2) shall be such as may be prescribed and shall include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building". Therefore, the ITC pertaining to the unsold units might not fall within the ambit of this investigation and the Respondent was required to recalibrate the selling price of such units to be sold to the prospective buyers by considering the proportionate (benefit of additional ITC available to them post-GST. (iii) The contention of the Respondent that Section 171 of the CGST Act, 2017 could not be invoked in respect of the Applicant No. 1 as the flat was purchased after the introduction of GST was incorrect. The additional amount of benefit accrued to a supplier on account of reduction in rate of tax or benefit of ITC could not be denied to a recipient on the grounds that he had p....
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....C to the tune of 1.85% [1.85% (-) 0.00%] of the turnover. Though the investigation period was from July, 2017 to September, 2020, the period upto March, 2019 instead of September, 2020 had been considered for computation of the profiteering because the Respondent had opted for new scheme launched vide Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019. In terms of this Notification the Respondent was required to pay GST @ 5% without taking/availing the benefit of ITC. Thus, the Respondent was not eligible to avail ITC w.e.f. 01.04.2019. Since, there was no benefit of ITC to the Respondent w.e.f, 01.04.2019 profiteering on account of additional ITC benefit could not be attributed after 01.04.2019. (viii) 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 was 12% for flats. (ix) Accordingly, on the basis of the figures contained in table- 'A' above, the comparative figures of the ratios of ITC availed/available to the turnovers in the pre-GST and p....
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....ents have been furnished by the DGAP in the table below: - Sr.No. Name of Customer Customer Details Final profiteering (in rupees) A B C D 1. Jigar R Shah (Applicant No. 1) 02, Venice Bungalows, Opp Narayan Resicon, Beside Alok Residency, Near Khodiyar nagar 72,520 Cross Roads, New Kareli baug, Vadodara- 390018 72,520 2. Hemaben L Telwani 05, Venice Bungalows, Opp Narayan Resicon, Beside Alok Residency, Near Khodiyar ynagar 51,800 Cross Roads, New Kareli baug, Vadodara- 390018 51,800 3. Mamta Yadav/ Umesh Yadav 12, Venice Bungalows, Opp Narayan Resicon, Beside Alok Residency, Near Khodiyar nagar 69,391 Cross Roads, New Kareli baug, Vadodara- 390018 69,391 4. Pushpaben B Solanki 14, Venice Bungalows, Opp Narayan Resicon, Beside Alok Residency, Near Khodiar nagar 72,520 Cross Roads, New Kareli baug, Vadodara- 390018 72,520 5. Pooja Bahal / Rakesh Bahal 19, Venice Bungalows, Opp Narayan Resicon, Beside Alok Residency, Near Khodiyar nagar 97,384 Cross Roads, New Kareli baug, Vadodara- 390018 97,384 6. Mahesh Kumar J Shah 25 Venice Bungalows, Opp Narayan Resicon, Beside Alok Residency, Near Khod....
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.... prices", appeared to have been contravened in the present case. 8. The above Investigation Report was received by this Authority from the DGAP on 28.03.2021 and was considered in its sitting and it was decided to ask the Respondent and the Applicant No. 1 to file his written submissions in respect of the Report of the DGAP. Notice dated 17.06.2020 was also issued to the Respondent and the Applicant No. 1 directing them to explain why the Report dated 25.03.2021 furnished by the DGAP should not be accepted and liability of the Respondent should not be fixed for violating the provisions of Section 171 of the CGST Act, 2017. 9. Further proceedings in the matter could not be completed by this Authority due to lack of required quorum of Members in the Authority during the period 29.04.2021 till 23.02.2022, and that the minimum quorum was restored only w.e.f. 23.02.2022 and hence the matter was taken up for proceedings vide Order dated 23.03.2022 and the Respondent and the Applicant No. 1 were granted hearing through video conferencing on 31.03.2022. The Respondent was also directed to file his written submissions in respect of the Report of the DGAP dated 25.03.2021. 10. The R....
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.... fresh contracts entered after 01.07.2017. The price offered after 01.07.2017 was after considering the cost of inputs in the post-GST era. The applicable taxes and prices prevailed in the open market for the similar kind of bungalows. Thus, the allegation of profiteering on entire 930 sq. mtr. of area for which agreement to sell had been entered after 01.07.2017 was incorrect. f. That the Central Government vide Notification No. 01/2020- Central Tax dated 01.01.2020 had appointed the 1st day of January, 2020 as the date on which the provisions of sections 92 to 112 of the Finance (No. 2) Act, 2019 should come into force. The provisions of section 171 (3A) inserted vide section 112 of the Finance Act, 2019 were effective prospectively from 01.01.2020 and they could not have retrospective operation and therefore, the penal provisions under section 171 (3A) of the Act read with rule 133 (3) (d) of the CGST Rules, 2017 should not be invoked and penalty should not be imposed on the Respondent. g. That there was no mens-rea and deliberate attempt to violate the provisions of law and therefore the Respondent was of the honest and bonafide belief and opinion that h....
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.... who deposited the cheque on 27.04.2022 which was duly cleared. The details of profiteered amount paid to the customers along with interest @ 18% thereon have been furnished in the table hereunder:- Sr.No. Customer Code Name of Customer Final Profiteering (Rs.) Interest 18% (Rs.) Total (Rs.) Cheque No. (dated 04.04.2022) 1 02 Jigar R Shah 72520 58294 130814 000208 2 05 Hemaben L Telwani 51800 40872 92672 000209 3 12 Mamta Yadav/Umesh Yadav 69391 49551 118942 000210-Rs. 49551/-& 000254- Rs. 69391/- 4 14 Pushpaben B Solanki 72520 57007 129527 000211 5 19 Pooja Bahal/Rakesh Bahal 97384 75111 172495 000212 6 25 Mahesh kumar J Shah 11914 10470 22384 000213 7 26 Satyam kumar B Bhagat 53872 38469 92341 000214 8 27 Bela Pranay Vaidya/Hitesh M Shah 2072 1770 3842 000215 Total 431473 331544 763017 13. The Applicant No. 1 vide his email dated 08.04.2022 has also confirmed the receipt of an amount of Rs. 1,30,814/- (profiteering amount Rs 72,520/- + Interest amoun....
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....h and accepts the above-detailed computation of profiteered amount as per the Report of the DGAP and hence, the profiteered amount for the period from 01.07.2017 to 31.03.2019, in the instant case, is determined as Rs. 4,31,473/- under Section 171 of the CGST Act, 2017. 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 home buyers commensurate with the benefit of ITC received by him as has been detailed above. 16. We also take note of the fact that the Respondent vide his submissions dated 14.04.2022 has claimed to have passed on the benefit of an amount of Rs. 4,31,473/- along with interest @ 18% thereon amounting to Rs. 3,31,544/- to the respective homebuyers/customers to which the benefit of ITC was not passed on by the Respondent as per the Report of the DGAP. The Respondent has also submitted documentary evidence i.e. confirmation of receipt of cheques from all the recipients (8 homebuyers) of benefit of ITC along with a copy of each cheque. The Respondent has also submitted copy of the Bank statement obtained from Bank of Baroda, New VIP Road Branch, Vadodara, stating the cheque nos. and....