TaxTMI 
TaxTMI 
2022 (6) TMI 1127
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....and the draw of the flats was held on 18.09.2017. Therefore, the DGAP has concluded that the Residential project i.e. 'The Serenas' of the Respondent was launched in the post-GST regime and there was no price history of the residential units sold in the pre-GST regime which could be compared with the post-GST base price to establish whether there was any profiteering by the Respondent or not. However, as per the heading 'Other Current Liabilities' under Note 6 of the Annual Financial Statement of the Respondent for the period 2016-17, it is observed that the Respondent has received an amount of Rs. 16,77,22,611/- as 'Security from Applicants(d)' which is explained as "(d) During the Financial Year, the Company has launched "Affordable Housing Project" by the name & style of "SERENAS" under the Affordable Housing Scheme by Haryana Urban Development Authority Limited. The flats shall be allotted to the applicants by way of a draw of lots which is yet to happen as on 31st March 2017 & pending the same, the application money received has been shown as Security from Applicants." Given the above, it is clear that the Respondent has received the above ment....
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.... of the aforesaid reference from the Standing Committee on Anti-profiteering on 28.06.2019, a notice under Rule 129 of the CGST Rules was issued by the DGAP on 08.07.2019 to the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the recipients 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 documents in support of his reply. Further, the Respondent was allowed to inspect the non-confidential evidence/information which formed the bases of the said notice, during the period 15.07.2019 to 17.07.2019. The Respondent availed of the said opportunity on 22.07.2019 and inspected the documents. iii. Vide E-mail dated 18.02.2020, Applicant No. 1 was also allowed to inspect on 26.02.2020 or 27.02.2020 the non-confidential documents/reply furnished by the Respondent. However, the Applicant No. 1 did not avail of the said opportunity. iv. The period covered by the current investigation was from 01.07.2017 to 30.06.2019 and the time limit to complete the investigation was extended up to 02.03.2020 by this Authority, ....
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....2016 (HRERA) under Registration No. 02 of 2017 dated 19.06.2017, and the Respondent was permitted to develop the project along with certain commercial retail shops in the shopping complex named as "Signum-36" within the Group Housing Project. The Respondent submitted that he had received a sum of Rs 4,49,25,897/- during the pre-GST regime as advance token money/underwrite money in respect of commercial units in the commercial complex "Signum-36" in the Group Housing Project "The Serenas" before the start of any construction activities in the project. The Builder Buyer Agreement (BBA) in respect of Commercial Units sold was first executed on 03.11.2017 i.e. during the post GST period. Further, neither tax was levied/recovered under the provisions of Haryana Value Added Tax Act, 2003 nor had he availed any ITC since, there was no transfer of property in goods that had occurred in the pre-GST period consequently 'NIL' Return under the provision of HVAT Act, 2003 was filed. However, Service tax as applicable was payable on a 'receipt basis' and he was claiming credit in respect of service tax paid on various input services received by him, such as Legal, Architecture & ....
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....rmed that post-GST, the Respondent had benefited from additional input tax credit to the tune of 3.00% [5.26% (-) 2.26%] of the turnover. Accordingly, the profiteering had been examined by comparing the applicable tax rate and input tax credit available in the pre-GST period (April 2016 to June 2017) when Service Tax @4.50% was payable with the post-GST period (July 2017 to June 2019) when the effective GST rate was 12% (GST @18% along with 1/3rd abatement for land value) on construction service, vide Notification No.11/2017-Central Tax (Rate), dated 28.06.2017. Accordingly, based on the figures contained in Table-'B' above, the comparative figures of the ratio of ITC available/availed to the turnover in the pre-GST and post-GST periods as well as the turnover, the recalibrated base price, and the excess realization (profiteering) during the post-GST period has been furnished by the DGAP in the below mentioned Table B:- Table-B (Amount in Rs.) S.No. Particulars Post-GST 1 Period A After 01.07.2017 2 Output GST Rate (%) B 12.00 3 The ratio of CENVAT credit/Input Tax Credit to Total Turnover as per table-`B' above (%) C 5.26 4....
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....Internal Order No. 28/2020 dated 27.11.2020 referred the matter back to the DGAP under Rule 133(4) of the Rules, and directed to re-investigate the matter on the following issues: a) The Authority was of the view that the Security amount received from the Applicants as on 31st March 2017 as per 'Other Current Liabilities' under Note 6 of the Annual Financial Statement merits to be incorporated in the pre-GST turnover while computing the quantum of profiteering. b) The Authority observed that the two projects, namely, 'The Serenas' (comprising residential units) and (Signum 36' (comprising commercial units) had been developed and executed by the Respondent under a single registration on the same plot of land having common facilities and common areas. Further, the ITC paid was also common for the commercial and the residential area of the projects. Further, it was observed that the Respondent had also been maintaining a common ITC Ledger and other connected records for the residential and commercial units of 'The Serenas' and `Signum 36'. Therefore, these two projects deserve to be considered as an integrated project comprising both, ....
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....draw of lots shall be refunded back his 5% booking amount, within 15 days of holding the draw of lots. i) Cancellation of allotment in case of default of payment of instalment within the time period as prescribed in the allotment letter issued by the Respondent. iii. The DGAP has reported that in the present case, the Respondent had received a sum of Rs. 16,77,22,611/-as application security deposit from approx. 1,700 applicants (amounts ranging from Rs. 89,843/- to Rs. 1,07,681/- per applicant) for participation in the draw of lots, which was held in post-GST period. Whereas, the impugned project "The Serenas" consists of only 1,304 residential units available for draw of lots & rest un-successful buyers were to be refunded all the security deposit, without any interest. The question that now arises was that whether the security deposit of Rs. 16,77,22,611/- received as application money, as on 31.03.2017 for participation of draw of lot to be held on 20.07.2017 (post-GST) was to fall under the definition of services in the pre- GST regime? iv. The DGAP referred to various statutory provisions, Circulars and Guidance Notes and to the decision of the the Hon'ble ....
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....Besides above parameters, GST Laws had provided certain exceptions to the requirement of supply being made for consideration and in the course of furtherance of business. Therefore, it was important to find whether the security deposit (application money) taken from the prospective buyers on account of application against allotment of flat. if any, constitute consideration vis a vis any supply under the provisions of CGST Act. Section 2 (31) defines the term consideration as above which was inclusive and the consideration might be in cash or kind. The payment received would not be treated as consideration, if there was no direct link between the payment and supply. There should be a close nexus between the payment and supply and thus any payment/exchange/barter etc. would be treated as consideration for supply and liable to GST. However, any deposit given in respect of the prospective supply shall not be considered as payment made for such supply, unless the supplier appropriates such deposit as consideration for the said supply. In view of the above, the security deposit/application money received by the Respondent cannot be treated as consideration for the supply to be m....
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.... `Signum-36' (Commercial) 01.04.2016 to 30.06.2017 (Pre-GST) 4,49,25,897 28,62,077 Reconciled with ST-3 return 4 01.07.2017 to 30.06.2019 (Post-GST) 12,56,34,568 69,06,757 Reconciled with GSTR-3B Therefore, in the present case, the Turnover as well as CENVAT/ITC reconciled with the ST-3/GSTR-3B returns was available therefore, the profiteering, if any would be computed for residential and commercial project by considering such relevant facts and the data. vii. The DGAP has also intimated that the with regard, to re-computation of the quantum of profiteering in the instant case, the amount received as 'Security Amount' in respect of 'the Serenas' cannot be incorporated in the Turnover as discussed above. The dates of events took place in the residential project 'the Serenas' was given in tabular form in table-'D' below: Table-'D' S. No. Date Event 1. 26.09.2016 Grant of License by the Director General, Town and Country Planning Department, Haryana 2. 19.06.2017 Issuance of registration certificate by the Haryana Real Estate Regulatory Authority 3. 01.07.2017 Introducti....
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.... way of commensurate reduction in prices", had been contravened by the Respondent in the present case. 5. The above Report of the DGAP was considered by this Authority in its sitting held on 05.01.2021 and it was decided to direct the Respondent and the Applicant No. 1 to file their consolidated written submissions in respect of the report of the DGAP by 20.01.2021. The Applicant No. 1 filed his written submissions vide emails dated 08.01.2021 and reiteration/reminder dated 12.02.2021 and inter-alia stated :- i. That it had not been investigated as to how much total GST had been collected from the customers, how much ITC had been availed and how much amount had been deposited in Govt. accounts. ii. Price of the units to be sold has been fixed by the Govt. Authorities as per Affordable Housing Policy-2013, which can be considered as Pre-GST price for comparison and working of Pre-GST and Post GST Scenario. iii. There is a single license on the same piece of land for the residential as well as the commercial area under affordable residential housing policy. iv. Booking was done in the pre-GST period and he was supposed to allot the same in pre-G....
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....counts is outside the scope of provisions of Section 171 of the Central Goods and Services Tax Act, 2017 and the Applicant may approach the appropriate authorities along with documentary evidences. ii. In relation to the contention of Applicant No. 1 that "Price of the units to be sold has been fixed by the Govt. Authorities as per Affordable Housing Policy-2013, which can be considered as Pre-GST price for comparison and working of Pre-GST and Post GST Scenario", it would be appropriate to mention that that as per para 5 of Annexure- A of Affordable Housing Policy 2013, notified by Haryana Government on dated 19.08.2013, Rs. 3,600/- per Sq. ft. (for other High and Medium Potential Towns) is the Maximum allotment rate on per sq. ft. carpet area basis for Sohna and this is not the actual rate at which units is to be sold but supplier of construction service is free to fix their base price subject to the ceiling of Rs. 3,600/- per sq. feet. Therefore, the submission of the Applicant No.1 that prices are fixed by Govt. Authorities is not correct and the same cannot be used for comparison purpose. iii. In relation to the contention of Applicant No. 1 that, there was a....
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....s. 4,49,25,897/- as advance from the Commercial Shop buyers only which is duly considered in Table-'B' of para 21 of this office report dated 19.03.2020. Therefore, the contention of the Applicant of allotment and entering into contract before July-2017 does not hold good. Applicant No. 1 may be requested to furnish documentary evidence to substantiate the claim.' v. In relation to the contention of Applicant No. 1 that, the amount collected by the Builder in pre-GST period, for the residential project also comes under the definition of Goods & Services as the same was received on the basis of agreed-supply of goods/services in due course of time, the DGAP submitted that, such concern had already been addressed in pars 6 & 7 of DGAP Report dated 30.12.2020 which reads as:- "6. In the present case, the Noticee has received a sum of Rs. 16,77,22.611/- as application security deposit from approx. 1,700 applicants (amounts ranging from Rs. 89,843/- to Rs. 1,07,681/- per applicant) for participation in the draw of lots, which was held in post-GST period. Whereas, the impugned project "The Serenas" consists of only 1,304 residential units available for draw ....
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....;activity' as used above has a very wide amplitude and it includes nearly each and every act done by a person. Further, the term 'person" is concerned, has been defined under Section 65B (37) of the Finance Act, 1994. A perusal of section 65B (37) reveals that definition of term 'person' is an inclusive one. It includes almost all forms of a natural and juristic person It specifically includes "firm" under term 'person Use of residuary clause, i.e. "every artificial juridical person, not falling within preceding clauses" leaves no doubt that intention of the legislature is to include every possible entity whether natural or juristic under the ambit of term 'person. The next pre-requisite which is required to be fulfilled in order to cover an activity into the ambit of term 'service' is that such activity should be carried out for a consideration. Further, Guidance Note-2 of Service Tax Education guide dated 20.06.2012 discussed about the term 'Consideration and it reads as 2.2 Consideration 2.2.1 The phrase 'consideration' has not been defined in the Act. What is, therefore, the meaning of '....
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....rritory means the territory to which the provisions of this chapter apply. The Hon'ble Supreme Court of India in the case of M/s Larsen & Toubro Limited & Anr. Vs State of Karnataka & Anr. (2013) held that: "the activity of construction undertaken by the Developer would be work contract only from the stage the Developer enters into a contract with the flat purchaser". As per aforesaid discussion, for an activity to be eligible to Service Tax following three essential pre-requisites are required to be fulfilled: 1) Such activity shall be a service as defined under Section 658 (44) of Finance Act, 1994. 2) Such service shall be provided by one person to another. 3) The place of provision of such service shall be in the Taxable Territory. In view of aforesaid definition, in order to get covered within ambit of aforesaid definition, there must be service which has been made or agreed to be made for a consideration from one person to another. In the case under re-investigation, the Noticee received application money/security deposit from various applicants and after receiving such application money. Noticee was ....
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.... in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply: [Emphasis added] In view of the above legal provisions, it is observed that the taxable event in GST is supply of goods of services or both. The term 'supply' is inclusive in nature which can be understood in terms of following parameters namely: - 1. Supply of goods or services. Supply of anything other than goods or services does not attract GST 2. Supply should be made for a c....
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....in the matter could not be completed by the 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 23.02.2022 and hearing in the matter through Video Conferencing was scheduled to be held on 05.04.2022. Same was attended by Shri Praveen Kumar Bansal, Applicant No. 1 in person. During the personal hearing the Applicant No, 1 has re-iterated his arguments based on his written submissions dated 08.01.2021 and 17,01.2021. The Applicant No. 1 further requested a day's time to file his consolidated written submissions against the Report of the DGAP. 9. Further, the Applicant No. 1 filed his consolidated written submission on 05.04.2022 in which he re-iterated his earlier submission dated 7.04.2021 which were a reiteration of his submissions dated 08.01.2021. 10. The above Report was carefully considered by this Authority and a notice dated 05.01.2021 was issued to the Respondent to explain why the Report dated 30.12.2020 furnished by the DGAP should not be accepted and his liability for pro....
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.... deposit given in respect of the prospective supply shall not be considered as payment made for such supply, unless the supplier appropriates such deposit as consideration for the said supply. In the present case there was an obligation to return the entire amount to the unsuccessful applicants. For successful applicants, till an agreement was signed, such deposits cannot be considered as consideration for such supply of services because till the draw of lots followed by signing of sale agreement by successful applicants, the Respondent cannot assume that the receipt of Security Deposit/Application money was against supply of services as the recipients of Services and extent of services to be provided to him cannot be identified till draw of lots followed by signing of agreements with the applicants. The security deposit/application money received before draw of lots was not linked/identifiable to any particular flat. In this case the security amount of Rs. 16,77,22,611/- was received from approx. 1700 interested buyers whereas the project consists of only 1304 residential units 14. The Authority has considered the facts in the DGAP's Report as reproduced at paragraph ....
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....e rate of tax from 12% to 8%(after Land abatement) vide Notification No. 01/2018 Central Tax-Rate dated 25.01.2018 w.e.f. 25.01.2018. The Authority finds from the DGAP report that the Respondent has charged 12% till 24.01.2018 and 8% from 25.01.2018 in respect of the Project `Serenas'. Therefore, the Respondent has passed on the benefit of reduction in the rate of tax in compliance with the provisions of Section 171 of the Central Goods and Service Tax Act, 2017 to the homebuyers in the Project The Serenas'. Hence the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. On this issue, as per the findings and discussions above, the Authority holds that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 2.26% and during the post-GST period (July-2017 to December-2018), it was 5.26% for the project `Signum 36' (whereas no such benefit accrued with respect to the Project 'The Serenas') This confirms that, post-GST, the Respondent has been benefited from additional ITC to the tune of 3% (5.26% - 2.6%) of his turnover for the ....
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....ove Section cannot be imposed on the Respondent retrospectively. Accordingly, Show Cause Notice directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him, is not required to be issued. 24. We also order that the profiteered amount of Rs. 42,21,321/- for the Project 'Signum 36' along with the interest @ 18% from the date of receiving of such profiteered amount from the shop buyer till the date of passing the benefit of ITC shall be paid/passed on by the Respondent within a period of 3 months from the date receipt of this Order failing which it shall be recovered as per the provisions of the CGST Act, 2017. 25. The concerned jurisdictional CGST/SGST Commissioner is directed to ensure compliance of this Order. It may be ensured that the benefit of ITC .e. profiteered amount is passed on by the Respondent to each recipient of supply as per Annexure-1 attached with this Order along with interest @18% from the date that such amount was profiteered till the date of return of such profiteered amount as per the provisions of Rule 133 of the CGST Rules, 2017. In thi....
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....e 133 (1) of the CGST Rules, 2017. 28. A copy of this order be sent, free of cost, to the Applicant, the DGAP, the Respondent, Commissioners CGST/SGST Haryana, the Principal Secretary (Town and Country Planning), Government of Haryana as well as Haryana RERA for necessary action. Encl: Annexure A (Page 1 to 3) Annexure -`A' ============= Document 1 Annexure -'A' S.No. Reference No Customer name Profiteering Amount to be passed on 1 BOKSG36/00030/16-17 Pardeep khatana 2 BOKSG36/00027/16-17 Mukul Bhandari 16550 3 BOKSG36/00071/17-18 Mr. JAIDEEP ARORA 41262 4 BOKSG36/00128/18-19 Mrs. Naresh 88926 5 BOKSG36/00104/17-18 Mr. Sachin 49186 6 BOKSG36/00041/17-18 DINESH KUMAR 48203 7 BOKSG36/00006/16-17 Mahtab Singh Halwan 24989 8 BOKSG36/00092/17-18 Mrs. SUSHILA 45155 9 10 BOKSG36/00024/16-17 BOKSG36/00107/17-18 Vipul Mehta 20029 Mrs. Abha kumari 6811 11 BOKSG36/00103/17-18 Ashutosh Kumar Dwivedi 28700 12 BOKSG36/00057/17-18 Mr. VIRENDER KUMAR VERMA 38248 13 BOKSG36/00008/16-17 Joginder Khatana 34795 1....
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.... BOKSG36/00123/18-19 Mrs. Prachi Gupta 24114 55 BOKSG36/00119/18-19 Mr. Sukhbir Singh 25326 56 BOKSG36/00017/16-17 Namita Singh 23040 57 57 BOKSG36/00102/17-18 Jayant Agarwal 14203 58 BOKSG36/00117/18-19 Mr. Manish Jain 13733 59 BOKSG36/00074/17-18 Mr. ABHIJEET BARMAN 60593 60 BOKSG36/00013/16-17 Jai Bhagwan Yadav 43013 61 62 BOKSG36/00130/18-19 BOKSG36/00031/16-17 Mr. Lalit Kumar 48124 Ms. SUMAN YADAV 22795 63 BOKSG36/00050/17-18 Mr. NARENDER SINGH 56536 64 BOKSG36/00076/17-18 Mr. Renu Mittal 38933 65 BOKSG36/00044/17-18 REENA NATH 24634 66 BOKSG36/00083/17-18 Roopak Chawla 66964 67 BOKSG36/00049/17-18 Mrs. ASHA RANI GAUBA 50409 68 69 BOKSG36/00011/16-17 BOKSG36/00093/17-18 Asha Ram 34795 Mrs. Rupa Bhowal 59446 70 BOKSG36/00084/17-18 Mrs. Sheela Sawariya 44896 71 BOKSG36/00110/18-19 Mrs. Nita Jain 74046 72 BOKSG36/00038/17-18 SAURABH SINGH 25461 73 BOKSG36/00009/16-17 Mr. SACHIN KUMAR 21111 14 74 75 BOKSG36/00097/17-18 BOKSG36/00028/16....