TaxTMI 
TaxTMI 
TaxTMI 
2022 (5) TMI 1417
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....spondent 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 the Notice as well as furnish all supporting doc....
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....une, 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 furnished. However, the Respondent did not submit any such information or summary. (vi) Vide e-mail dated 15.03.2021, the Applicant No. 1 was afforded an opportunity to inspect the non-c....
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.... 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 purchased the flat after the introduction of GST as these benefits had arisen due to the policy of the State/Government. (iv) The contention of the Respondent that he had reversed the unutilized credit of Rs. 6,07,810/- su....
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....ched 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 post-GST periods as well as the turnovers, the recalibrated base price and the excess realization (profiteering) during the post-GST period, has been furnished by the DGAP in Table-B below:- Table-B Sr.No. Particulars 1. Period A July, 2017 to March, 2019 2. Output GST rate (%) B 12 ....
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....icon, 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 Khodiyar nagar 11,914 Cross Roads, New Kareli baug, Vadodara- 390018 11,914 7. Satyam Kumar B Bhagat 26, Venice Bungalows, Opp Narayan Resicon, Beside Alok Residency, Near Khodiyar nagar 53,872 Cross Roads, New Kareli baug, Vadodara- 390018 53,872 8. Bela Pranay Vaidya/ Hitesh M Shah 27, Venice Bungalows, Opp Narayan Resicon, Beside Alok Residency, Near Khodiyar nagar 2,072 Cross Roads, New Kareli baug, Vadodara- 390018 2,072 Total 4,31,4....
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....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 Respondent has filed his written submissions dated 15.03.2021, vide which he has stated:- a. That ITC available during the F.Y 2017-2018 was of Rs. 6,85,958/- against which the Respondent had utilized only Rs. 4,13.431/- and ITC available during the year F.Y 2018-2019 was of Rs. 7,06,999/- against which he had utilized only Rs. 3,71,717/-. Accordingly, the Respondent had utilized only Rs. 7,85,148/- during the entire project. The unutilized balance of Rs. 6,07,810/- as on 31.03.2019 wa....
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....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 he was entitled to the benefits of immunity from penalty. 11. Personal Hearing through video conferencing was held in the matter on 31.03.2022. During the hearing the Respondent re-iterated his submissions dated 15.03.2022 and further stated that the RERA approval for the said project was received in 2014. There were total 28 units in the project "Venice Bungalows". There was only single GST registration for only one project i.e. "Venice Bungalows" and there were no other projects of the Respondent. Further, the Respondent state....
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.... 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 amount Rs. 58,294/-) via cheque No. 000208 dated 04.04.2022 issued from Bank of Baroda, New VIP Road Branch, Vadodara. The Applicant No. 1 also attached the copy of the cheque No. 000208 dated 04.04.2022 received from the Respondent along with copy of acknowledgement confirming the passing of the profiteered amount to him. 14. We have carefully considered the Report filed by the DGAP, all the submissions and the documents placed on record, and the arguments advanced by the Respondent. It is clear from the plain reading of Section 171 (1) that, it deals with two situations:- one relating to the passing on the benefit of reduction in the rate of tax and the second pe....
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....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 withdrawals in respect of all 8 home buyers to whom the benefit of ITC was not passed as per the DGAP's Report. Further, the Applicant No. 1 has also confirmed the receipt of said benefit of ITC amounting to Rs. 72,520/- + Interest amount Rs. 58,2940 via cheque No. 000208 dated 04.04.2022 indicating that the Respondent has passed on the benefit of ITC to the said 8 homebuyers which was liable to be passed as per the DGAP's Report. 17. As per Rule 135 of the CGST Rules, 2017 "Any order passed by the Authority under these rules shall be immediately complied with by the registered person failing which action shall be initiated to recover the amount in accordan....