TaxTMI 
TaxTMI 
2020 (1) TMI 1585
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....ent in respect of purchase of Flats in his "Sports Ville" project located in Sector-2 & 35, Sohna, Gurgaon. The above Applicant also alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) availed by him by way commensurate reduction in the price of the above flats. The aforesaid application was considered by the Standing Committee on Antiprofiteering, in its meeting held on 27th 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. 2. On receipt of the recommendation from the Standing Committee on Anti-profiteering, the DGAP had issued Notice dated 18.01.2019 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 Notice along with the supporting documents. The Respondent was given opportunity to inspect the non-confidential evidence/information furnished by the Ap....
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...., ITC of VAT, CENVAT Credit for the period April, 2016 to June, 2017, i) List of home buyers in the project "Sports Ville". j) Copies of RERA documents. k) Copy of Tran-I filed in December, 2017. 6. 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. 7. The Respondent, vide letter dated 20.02.2018, had submitted the copy of RERA documents of the project "Sports Ville" wherein the basic sale prices of Rs. 3,600/- per square feet for carpet area and Rs. 500/-per square feet for balcony area, were mentioned. The details of payment schedule in respect of the flat purchased by the Applicant No. 1 were furnished by the DGAP as given in Table-CA' below:- Table-'A' (Amount in Rs.) S. No. Payment Stage Demand Date % of BSP Insta....
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....exempt 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. 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 Il, sale of building. Therefore, the DGAP has stated that the ITC pertaining to the unsold units was outside the scope of his investigation and the Respondent was required to recalibrate the selling price of such units to be sold to the prospective buyers by considering the net benefit of additional ITC available to him post-GST. 10. The DGAP has also observed that prior to 01.07.2017, i.e., before the GST was introduced, as the service of construction of affordable housing provided by the Respondent, was exempt from Service Tax vide Notification No. 25/2012-ST dated 20.06.2012 (as amended by Notification No. 9/2016-ST dated 01.03.2016) and thus the Respondent was not eligible to avail CENVAT credit of Central Excise du....
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....2% for commercial shops and 8% for residential flats. Accordingly, on the basis the figures contained in table- 'B' above, the comparative figures of the ratio of input tax credit availed/available 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, were tabulated by the DGAP as has been given in Table-C below:- 13. The DGAP has also observed from Table-'C' that the additional ITC of 3.31% 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. 14. 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 No. 1 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. 67,19,276/- which included GST @ 12%, on....
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....flats, though the booking amount was received in the pre-GST period, no consideration had been received during the post GST period of 01.07.2017 to 31.12.2018 (period covered by the investigation). Therefore, if the input tax credit in respect of these 24 residential units was considered to calculate the profiteering in respect of 768 units where payments had been received in the post-GST period, the input tax credit as a percentage of turnover may have been incorrect. Therefore, the benefit of input tax credit in respect of these 24 flats may be calculated when the consideration thereof would be received in the post-GST period by taking into account the proportionate input tax credit in respect of such units. 18. The DGAP has also claimed that the benefit of additional ITC of 3.31% of the turnover has, in fact, accrued to the Respondent and the same was required to be passed on to the Applicant No. 1 and other recipients. Thus, the Respondent has contravened the provisions of Section 171 of the Central Goods and Services Tax Act, 2017 inasmuch as the additional benefit of ITC @ 3.31% of the turnover (base price) received by the Respondent during the period from 01.07.2017 to 31.1....
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....s:- a) Statement showing project-wise ITC/CENVAT Credit availed and Turnover as per the statutory Returns (GST, ST, VAT Returns) for the period from 01.04.2016 to 31.12.2018. b) Project-wise list of all payments received from each of his buyers. c) Balance Sheet for the years 2016-17, 2017-18 & 2018-19 along with the project wise Trial Balance for the same period. d) Ledger for the period from 01.04.2016 to 31.12.2018. e) Details of the total number of apartments/flats/commercial units/residential units in the project with total area of each flat. f) Tran-2 Returns. g) Details of Credit Reversal, if any. h) Agreement/Registry between the land owner and the builder for the subject project. i) Present status of the project in terms of sold and unsold units and ITC benefit passed on to his consumers. j) Details of payment of ITC benefit as claimed by the Respondent. 22. The Respondent has filed written submissions dated 06.09.2019. The Respondent has submitted following documents vide his above submissions:- a) Statement of ITC / Cenvat Credit availed and Turnover for the period from 01.04.2016 to 31.12.2018. b) Details of Payments received from Buyers u....
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.... reduced the basic prices of his flats by 3.31% on the account of benefit from ITC although he had been charging his home buyers, GST at the increased rate of 12% on the pre-GST basic price. The DGAP has also reported that the Respondent has thus contravened the provisions of Section 171 of the CGST Act, 2017. The DGAP has also reported that the amount of benefit of ITC which has not been passed on by the Respondent, i.e. the aggregate profiteered amount, came to Rs. 1,42,45,741/- including the GST applicable on the basic profiteered amount of Rs. 1,29,68,303/-. The DGAP has also reported that the above aggregate amount of profiteering also included the profiteered amount of Rs. 70,728/- (inclusive of GST as applicable) in respect of Applicant No. 1. 27. It is clear to us from the perusal of the above facts that the Respondent has indeed benefited on account of ITC to the extent of 3.31% of his turnover during the post-GST period, i.e. from July, 2017 to December, 2018 and hence the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent since he has not passed on the above benefit to his home buyers. Further he has profiteered to the extent of Rs. ....