TaxTMI 
TaxTMI 
2020 (3) TMI 1409
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....ondent situated at Sector-62, Gurgaon. The above Applicant had also alleged that the Respondent had not passed on the benefit of ITC (ITC) availed by him by way of commensurate reduction in the price of the above flat. The aforesaid reference was considered by the Standing Committee on Anti-profiteering, in its meeting held on 11" March, 2019, wherein it was decided to forward the same to the DGAP to conduct detailed investigation in the complaint according to Rule 129 (1) of the CGST Rules, 2017. 2. On receipt of the recommendation from the Standing Committee on Anti-profiteering, the DGAP had issued Notice dated 04.04.2019 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 Notice along with the supporting documents. The Respondent was given opportunity to inspect the non-confidential evidence/information furnished by the Applicant No. 1 during the period between 10.04.2019 to 12.04.2019 in accordance wit....
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....une, 2017. (d) Copies of all demand letters issued and sale agreement made with the Applicant. (e) Copies of Balance Sheets for the FY 2016-17 & 2017-18. (f) | Copy of Electronic Credit Ledger for the period from 01.07.2017 to 31.03.2019. (g) CENVAT/ITC Register for the FY 2016-17, 2017-18 and 2018- 19. (h) Details of VAT, Service Tax, ITC of VAT and CENVAT Credit for the period from April, 2016 to June, 2017, for the project "Riddhi Siddhi'. (i) List of home buyers in the project "Riddhi Siddhi" alongwith details of benefit passed on. (j) Copy of RERA Registration Certificate of the Project "Riddhi Siddhi'. (k) Copy of Tran-1 Statement. 7. The DGAP has also submitted that all the documents placed on record were carefully examined by him and he has 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 made 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 th....
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.... date of Allotment letter 03.02.2018 12.50% 2,49,750 -- -- 19,980 2,69,730 8 Within 36 months of the date of Allotment letter 02.08.2018 12.50% 2,49,750 -- -- 19,980 2,69,730 9 Miscellaneousé & Credit Note 31.03.2019 & 30.04.2019 -- -- -- 62,437 -- (12,517) 49,830 Grand Total 100.00% 19,98,000 26,536 62,437 69,930 (12,517) 21,44,296 10. The DGAP has also claimed that para 5 of Schedule-lll 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 II, sale of building'. Further, Clause (b) of para 5 of Schedule II of the Central Goods and Services Tax Act, 2017 reads as "(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 aft....
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.... all the inputs and input services. From the data submitted by the Respondent covering the period from April, 2016 to March, 2019 the ' details of the ITC availed by him, his turnover from the project "Riddhi Siddhi', the ratio of ITC to turnover, during the pre-GST period from April, 2016 to June, 2017 and post-GST period from July, 2017 to March, 2019 has been furnished by the DGAP as per the Table-B given below:- Table-'B' (Amount in Rs.) Sr. No. Particulars Total (Pre-GST) April, 2016 to June, 2017 Taxable Turnover @12% GST (01.07.2017 to 24.01.2018) for flats & (01.07.2017 to 31.03.2019) for Commercial shops Taxable Turnover @ 8% GST (25.01.2018 to 31.03.2019) Total (Post-GST) 1 CENVAT of Service Tax Paid on Input Services used for Commercial Shops (A) 72,73,736 2 ITC of VAT Paid on Purchase of Inputs (B) 43,75,985 3 Total CENVAT/ITC Available (C)= (A+B) 1,16,49,721 4 ITC of GST Availed (D) 74,57,417 2,16,87,719 2,91,45,136 5 Turnover for Residential Flats as per Home Buyers List (E) 48,54,88,000 &....
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....' above, the comparative figures of the ratio of ITC availed/available to the turnover in the pre- GST and the post-GST periods as well as the turnover, the recalibrated base price and the excess realization (profiteering) during the post-GST period, has been tabulated as is given in Table-C below:- Table-'C' (Amount in Rs.) Sr. No. Particulars Post-GST Period 1 Period A 01.07.2017 to 31-03-2019 (Shops) 01.07.2017 to2 4-01-2018 (Flats) 25.01.2018 to 31-03-2019 (Flats) Total 2 Output GST rate (%) B 12 12 8 3 Ratio of CENVAT credit/ ITC to Total Turnover as per table - 'B' above (%) C 3.72% 3.72% 3.72% 3.72% 4 Increase in ITC availed post-GST (%) D= 3.72% 4 less 2.04% 1.68 1.68 1.68 1.68 5 Analysis of Increase in ITC: 6 Base Price raised during July, 2017 to March, 2019 (Rs.) E 5,99,93,772 23,27,44,000 46,54,88,000 75,82,25,772 7 GST raised over Base Price (Rs.) F=E*B 71,99,253 2,79,29,280 3,72,39,040 7,23,67,573 8 Total Demand raised G=E+F 6,71,93,025 | 26,06,....
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....ent had supplied the construction services in the State of Haryana only. 16. The DGAP has also stated that the Respondent had submitted that he had passed on the benefit of Rs. 1,21,08,722/- to the home buyers. A summary of category-wise ITC benefit required to be passed on and the benefit claimed to have been passed on by the Respondent, was furnished by the DGAP as is given in the Table- 'D' below:- Table-'D' (Amount in Rs.) Sr. No. Category of Customers No. of Units Area (in sq.ft.) Amount Received Post GST Profiterring Amt. as per Annex-14 Benefit claimed to have been Passed on by the Noticee Difference Remark A B C D E F G H=F-G I 1 Applicant (Residential) 1 487 7,49,25,0 13,762 12,517 1,245 Further Benefit to be passed on as per Annex-15 2 Other Buyers (Residential) 991 4,52,601 69,74,82,750 12,811,363 1,03,77,154 24,34,209 Further Benefit to be passed on as per Annex-15 Total Residential (A) 992 453088 69,82,32,000 12,825,125 1,03,89,671 3 Commercial Shop Buyers 34 7783 2,52,05,183 4,74,261 1....
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....ation). Therefore, if the ITC in respect of these 2 commercial shops was considered to calculate the profiteering in respect of 1068 units (992 residential flats + 76 commercial shops) where payments had been received after GST, the ITC as a percentage of turnover would be distorted and erroneous. Therefore, the benefit of ITC in respect of these 2 commercial shops should be calculated when the consideration would be received in the post-GST period by taking into account the proportionate ITC in respect of those 2 commercial shops. 19. The DGAP has also claimed that the benefit of additional ITC of 1.68% of the turnover has, in fact, accrued to the Respondent and the same was required to be passed on to the Applicant and other recipients. The DGAP has stated from the Table-'D' above that the Respondent has not passed on the additional benefit of ITC @1.68% of the Base Price to (i) One flat of Applicant No. 1 mentioned at Sr. No. 1 of table 'D' involving amount of Rs. 1245/-. (ii) 991 residential flats mentioned at Sr. No. 2 of Table-'D' involving amount of Rs. 24,34,209/- and (iil) 34 commercial shops mentioned at Sr. No. 3 of Table-'D' involving amount of Rs. 4,59,501/-.The DGA....
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.....12.2019 and stated that he agreed with the Report furnished by the DGAP and has also claimed that he has passed on the benefit of ITC to the flat and shop buyers. He was directed to submit the evidence showing that the ITC benefit had actually been passed on by him to all the buyers. In this connection, the Respondent has submitted written submissions dated 09.01.2020 and has also submitted soft copy of the ledger accounts of the buyers to show that he has passed on the benefit of ITC. A copy of the soft copy was supplied to the DGAP and he was directed to verify the claim 1,21,08,722/- to the flat and shop buyers and submit clarifications under Rule 133 (2A) of the CGST Rules, 2017. 23. The DGAP vide his Report dated 19.02.2020 filed under Rule 133 (2A) has submitted that necessary verification of the data (soft copy) submitted by the Respondent has been done by him. He has also submitted that the copies of the Ledger Accounts have been verified with the list of 992 home buyers submitted by the Respondent during the investigation of this case. He has further submitted that as per the copies of the Ledger Accounts, the Respondent has already passed on the benefit of Rs. 1,03,89....
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.... price of his flats by 1.68% due to additional benefit of ITC and by charging GST at the increased rate of 12% on the pre- GST basic price, he has contravened the provisions of Section 171 of the CGST Act, 2017. The DGAP has further submitted that the amount Of benefit of ITC which has not been passed on by the Respondent or the profiteered amount came to Rs. 28,94,955/- which included 12% or 8% GST on the basic profiteered amount. The DGAP has also intimated that this amount of profiteering also included the profiteered amount of Rs. 1,245/- including 12% or 8% GST in respect of the Applicant No. 1. He has also supplied the details of all the buyers who have purchased flats and shops from the Respondent along with their unit numbers and the profiteered amount vide Annexures 15, 16 and 17 attached with his Report. 25: The claim of the Respondent that he has already passed on the benefit of Rs. 1,21,08,722/- to his customers required verification from the DGAP. Therefore, the Respondent, vide order dated 09.12.2019 was directed to submit evidence showing that the ITC benefit has actually been passed on by him to all the eligible buyers. In response, the Respondent has filed writt....
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....hy the Respondent was eligible to claim the above ITC. It has also not been explained whether the Respondent was discharging his VAT liability as a regular registered dealer or was as a composition dealer. It has also not been stated in the Report whether the Respondent was eligible to charge VAT from the buyers under the Haryana Affordable Policy-2013 and whether he had collected VAT from his buyers or not? 28. Perusal of the supplementary Report dated 19.02.2020 furnished by the DGAP and Table-'D' of his first Report dated 16.09.2019 shows that the Respondent has passed on the benefit of Rs. 1,21,08,722/- to the flat and shop buyers. In this connection it would be pertinent to mention that the DGAP has not verified even a_ single acknowledgement submitted by the Respondent from the flat or the shop buyers to establish that they have actually received the benefit of GST as has been claimed by the Respondent. The DGAP has also not produced even a single acknowledgement/statement of the buyers obtained/recorded by him to confirm whether the benefit of ITC has been passed on to the buyers or not. In the absence of such acknowledgement/statement the claim of the Respondent that he ....