TaxTMI 
TaxTMI 
2022 (8) TMI 43
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....e DGAP to reinvestigate the matter under Rule 133 (4) of the CGST Rules 2017 on the following grounds/issue ;- (i) During the hearings, the Respondent No. 01 informed that the land-owner, Respondent No, 02 had 35% share in the project and that he was not aware whether the land-owner had passed on the ITC benefit to his customers or not, It was also clear that one of the Respondents i.e. Respondent No. 01, had availed the entire ITC and hence was required to pass on the commensurate benefits thereof to his recipients. It was not clear to what extent benefit woad arise, therefore the computation of the benefit of ITC for the project was required to be re-examined by taking into consideration the Development Agreement dated 05.09.2011 between the Respondent No. 2 and the Respondent No. 1. (ii) The Respondent No. 01 had submitted that there was a difference in ITC figures taken by the DGAP and figures in GSTR-3B Returns in as much as the DGAP had considered eligible ITC for the period July 2017 to August 2018 as Rs,9,99,82.384/- whereas the available ITC was only Rs.7,90,53,619/- as per the GSTR-3B Returns. The said figures of ITC were also required to be verified by the DGAP. (i....
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....spondent No. 1. 5. The Authority after carefully examining the DGAP's Report dated 27.02.2019, submissions of the Respondent No. 1 and documents/information placed on record, had remanded the matter back to the DGAP under the provisions of Rule 133 (4) of the CGST Rules 2017, vide Interim Order No. 16/2019 dated 28.11.2019 directing him to further investigate the case on the issues mentioned in paragraph-1. 6. Accordingly the DGAP has submitted instant Report dated 26.08.2020. wherein the DGAP has inter alia stated that:- (a). After receiving reference from the Authority, M/s. Magic Info Solutions Pvt. Ltd. (Landowners) was impleaded as Respondent No. 2 and letters were issued to the Respondent No. 1 and Respondent No. 2 on 11.12.2019, calling upon them to submit the information/ documents required to re-investigate the matter. (b). The Authority vide its order dated 26.08.2020 had approved to revise the period covered by the current investigation i.e. from 01.07.2017 to 30.11.2019. He also reported that the time limit of 03 months to submit his report had been extended from 28,02.2020 to 28.05.2020 by the Authority vide Order dated 04.03.2020 which further stood extended upto ....
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....on the date of Occupancy Certificate 18 8 26 E. Total Units [C+D] [Respondent No.1's Share] 45 70 115 (iv) The details of turnover in pre-GST period and GST period in table- 'D' below: Table-'D' Project Turnover Pre-GST Regime GST Regime April 2016 to June 2017 (In Rs.) July 2017 to November 2019 (in Rs.) Tower A and Tower L. 56,03,78,200 42,02,96,943 Other Towers (including EWS and Commercial) 1,99,35,84249 35,69,01,909 Total 2,55,39,62,449 777,198,852 1. Total Turnover mentioned above includes the turnover pertaining to landowner. The turnover relating to area developed for landowner has been computed in the proportion of area of Tower A and Tower L. 2. Total Turnover mentioned above includes the turnover pertaining to landowner. The turnover relating to area developed for landowner has been computed in the proportion of area of towers (other than A and L). (v) The details of CENVAT credit/ input tax credit pertaining to Tower A and Tower L in pre-GST period and GST period is given in table-'E' below: Table-'E' Details Pre-GST Regime GST Regime April 2016 to June 2017 (in Rs.) July, 2017 to November 2019 (in Rs.) Tower A and L 3,....
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....it available, the same was dependent upon various factors such as stage of construction, etc. (c) he has made his estimated computation of additional benefit which has accrued to the Respondent No. 1 in Tower A and Tower L to the tune of 2.25% which has already been passed on to eligible customers of Tower A and Tower L through credit notes or adjustment in tax invoice. (vii) Comparison of ratio of input tax credit to turnovers for pre-GST and post-GST periods is not the correct mechanism for calculation of alleged profiteering amount. In this regard, he submitted that: (a) The method of arriving at profiteering amount by comparing the ratio of input tax credits to the turnovers of Pre-GST and GST period shall never yield the correct quantum of anti-profiteering, if any. (b) The comparison of above ratios was not appropriate for the reason that under the real estate sector there was no correlation of turnover with the cost of construction or development of a project. The turnover reflected the amount collected as per the payment or booking plans issued by developer which was dependent upon marketing driven strategy. On the contrary, the input tax credit accrued to a develope....
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....t No. 1 during the period July 2017 to November 2019. The amount of credit reversed on account of unsold area at the time of issuance of occupation certificate has been deducted to arrive at the amount of eligible input tax credit in hands Respondent No. 1. 3. Total turnover mentioned above includes turnover pertaining to landowner. This based on the facts that the total Credit availed by the Respondent No.1 relates to total area developed (Including area developed for landowner). Accordingly, the component of total saleable area and total area sold relevant to the turnover (as mentioned in row 4 and 5) shall also includes the area pertaining to landowner. Further, the turnover relating to area developed for landowner has been computed in the proportion of area of Tower A and Tower-L. 3. Occupancy certificates for the Tower A and Tower L have been issued in the month of December 2018, therefore. the unsold area on the date of issuance occupancy certificates have been deducted from the total saleable area. Scenarios-II: Comparison for Tower A and Tower L excluding details relating to area developed for landowner is furnished in Table- 'G' below: Table-'G' S.No. Particular....
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.... dropped. (ix) In the absence of specified procedure and mechanism of calculation of profiteering, the proceedings are arbitrary and liable to be dropped. In this regard, the Respondent has submitted that:- (a) The CGST Act read with the Rules does not provide the procedure and mechanism of determination and calculation of profiteering. In absence of such calculation and methodology the proceedings are arbitrary and are in violation of principle of natural justice. Accordingly, the investigation is liable to be dropped. (b) The Central Government vide Notification No. 10/2017-Central Tax dated 28.06.2017 (amending Notification No. 3/2017-Central Tax) notified Anti-profiteering rules which provide for constitution of Authority, Standing Committee and Screening committee, power to determine the methodology and procedure, duties of Authority, examination of applications, order of the authority, compliance by the registered person etc. (c) The Rule 126 of the Rules contains provisions regarding the power of the Authority to determine the methodology and procedure for determination as to whether the reduction in rate of tax on the supply of goods or services or the benefit of inp....
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....onent of subject levy. (f) On the basis of the aforementioned discussions, in the absence of prescribed method/formula for calculation of profiteering, following a method on case-to-case basis was arbitrary and thus, the investigation was liable to be set aside. (x) The investigation could not go beyond the applications submitted by Sh. Vijay Malhotra and Snit. Sunita MaIhotra. In this regard. the Respondent has stated that:- (a) In terms of Section 171 of the CGST Act read with Rule 128 of the Rules, an anti-profiteering investigation could be initiated only on receipt of written application from the interested party, Commissioner or arty other person. In the instant case, the proceedings were started with the application received from the Applicant No. 1. The said application was filed by Sh. Vijay Malhotra and Smt. Sunita Malhotra, hence, the investigation could not go beyond the application and cover other customers also who have not questioned the benefit passed on to them. In this regard, he has placed reliance on the following orders of the Authority, wherein investigation, Report and final order of the Authority was restricted only on the product for which complaint wa....
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....bmissions for the first time in the second appeal before the Tribunal. Neither adjudicating authority nor the appellate authority had denied the facility of the project import to the respondent on any of these grounds. These grounds did not find mention in the show cause notice as well. The Department cannot be travel beyond the show cause notice. Even in the grounds of appeals these points have not been taken." (Emphasis Supplied) (d) Similarly, in the case of Reckitt Colman of India Ltd. vs. Chief Commissioner of Excise 1996 (88) E.L.T. 641 (S.C.) it was held by the Hontile Supreme Court that the Revenue authorities could not make an order against an assessee that was based on allegations and grounds that were not raised in the notice of show-cause. The relevant paragraph has been extracted for reference, "3. It will be remembered that the case of the Revenue, which the appellant had been required to meet at every stage from the show cause notice onwards, was that the said product was a preparation based on starch. Having come to the conclusion that the said product was not a preparation based on starch, the Tribunal should have allowed the appeal. It was beyond the competen....
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.... 2 pertaining to the area given to landowner. (c) That the DGAP has taken into consideration the amount of GST collected from the homebuyers which the Respondent No. 1 has duly deposited to the Government and the same has not been retained by the Respondent No. 1 with it. Thus, it was irrational to allege that the Respondent No. 1 has profiteered to that extent. 9. Vide the aforementioned letters and e-mails, the Respondent No.1 submitted the following documents/information: a. Copies of GSTR-1 returns for the period July, 2017 to Nov, 2019. b. Copies of GSTR-3B returns for the period July, 2017 to Nov, 2019. c. Electronic Credit Leger for the period July, 2017 to Nov, 2019. d. Copies of VAT & ST-3 returns for the period April, 2016 to June, 2017. e. Copy of RERA Registration and Project Report submitted to RERA including all periodic progress reports submitted till November, 2019. f. Occupancy Certificate for the towers other than A and L received vide Memo No. ZP-802/SD(BS)12017/6649 dated 07.04.2017 and Memo No. ZP-802/SD(BS)/2017/13753 dated 20.06.2017. g. Status of Tower A and Las on 31.08.2018 and 30.11.2019 along with copy of Occupancy Certificate received o....
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.... 2 submitted the following documents /information to the DGAP; a. Copies of GSTR-1 returns for the period July, 2017 to Nov, 2019. b. Copies of GSTR-3B returns for the period July, 2017 to Nov, 2019. c. Electronic Credit Leger for the period July, 2017 to Nov, 2019. d. Copies of ST-3 returns for the period April, 2016 to June, 2017. e. Details of tower-wise sold and unsold units along with copies of OC for all the project "Godrej Summit". f. List of home buyers for the project "Godrej Summit" along with customer wise details of benefit passed on. g. CENVAT/TTC register for the FY 2016-17, 2017-18, 2018-19 and for the period April 2019 to Nov., 2019 reconciled with ST-3 and GSTR-3B returns. h. Copies of Credit Notes/Payment vouchers by which benefit of input tax credit has been passed on. i. Copy of the Agreement dated 05.09.2016 between the Land Owner and the Respondent No. 1 for the project "Godrej Summit". and he had not classified any of its information/documents as confidential in terms of Rule 130 of the Rules. 14. However, on receipt of above said Interim Order No. 16/2020 from the Authority, the DGAP had examined the various replies of Respondent No. 1 & ....
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.... under the Integrated Goods and Services Tax Act and partly for effecting 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". 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 input tax credit pertaining to the unsold units may not fall within the ambit of this investigation. However, in the present case, the Respondent No. 1 has received OCs for all Units and the Respondent No. 1 has reversed ITC towards unsold units. Therefore, the input tax credit availed post-GST period (after reversal) pertained to sold units only. (v) The approach of comparison of ITCs to turnover ratios for pre-GST and post-GST periods, had direct relation of input tax credit availed with that of output tax to be paid, as the use of input tax credit was only towards making payment of its output li....
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....ommensurate reduction in prices is purely a mathematical exercise which is based upon the above parameters and hence it would vary from product to product and hence no fixed mathematical methodology can be prescribed to determine the amount of benefit which a supplier is required to pass on to a recipient or the profiteered amount. However, to give further clarifications and to elaborate upon the legislative intent behind the law, the Authority has been empowered to determine/expand the Procedure and Methodology in detail. However, one formula which fits all cannot be set while determining such a "Methodology and Procedure" as the facts of each case are different. In one real estate project, date of start and completion of the project, price of the house/commercial unit, mode of payment of price, stage of completion of the project, timing of purchase of inputs, rates of taxes, amount of ITC availed, total saleable area, area sold and the taxable turnover realised before and after the GST implementation would always be different than the other project and hence the amount of benefit of additional ITC to be passed on in respect of one project would not be similar to another project. ....
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.... in price. Price includes both the base price and the tax paid on it. If any supplier has charged more tax from the recipients, the aforesaid statutory provisions would require that such tax amount be refunded to the eligible recipients or alternatively deposited in the Consumer Welfare Fund, regardless of whether such extra tax collected from the recipient has been deposited in the Government account or not. Besides, any extra tax returned to the recipients by the supplier by issuing credit note can be declared in the return filed by such supplier and his tax liability shall stand adjusted to that extent in terms of Section 34 of the CGST Act, 2017. Therefore, the option was always open to the Respondent No. 1 to return the tax amount to the recipients by issuing credit notes and adjusting his tax liability for the subsequent period to that extent. 15. Further on allegation of profiteering, the Respondent No. 1 claimed that subsequent to enactment of GST w.e.f. 01.07.2017, he made his estimated computation of additional benefit which has accrued to him in Tower A and Tower L which was depending upon various factors such as stage of construction etc. and passed on the same to elig....
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....rved that both the invoices i.e. CI0150000911 & CI0150000912 dated 09.01.2019 appear in the statement of account and it is specified in the invoices that GST Credit of Rs. 50,979/- & Rs. 2,899/- is given against the Charged Amount, therefore, it is established from the documentary evidences that the benefit of Rs. 50,979/- & Rs. 2,899/- was duly adjusted in the aforesaid invoices CI0150000911 & CI0150000912 raised on 09.01.2019 and was appearing in statement of account, although the same were not paid by the Applicant No. 1. The detailed computation and reconciliation of invoices with Statement of A/c is furnished as below: Table 'I' (Invoices No. CI0150000911 dated 09.01.2019) S.No. Particular Amount as per Agreement Benefit of 2.25% Net Amount 1. Basic Sale Price (BSP) (A) 20,35,736 45,804 19,89,932 2. Car Parking Charges (B) 2,30,000 5,175 2,24,825 3. Preferential Location Charges (C) 45,400 - 45,400 4. Total Charge Amount (D)=(A+B+C) 23,11,136 50,979 22,60,157 5. CGST+SGST (E) 2,84,708 6. Total Invoice Value (F)=(D+E) 25,44,865 7. As per Statement of Account (G) 25,44,865 8. Difference (H)=(E-....
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.... List of Home Buyers including Landowner (Net of Cancellation) (E) 52,53,96,326 38,70,06,117 6. Total Saleable Area net of unsold on receipt of OC (in SQF)(F) 3,73,153 3,73,153 7. Total Sold Area Including Landowner's Area relevant to Turnover (Net of Cancellation) (G) 1,99,688 1,76,971 8. Relevant CENVAT/ITC [(H)=(D)*(G)/(F)] 1,94,57,522 2,03,00,536 9. Ratio of CENVAT/Input Tax Credit to Turnover [(I)=(H)/(E)] 3.70% 5.25% *Note-1; Since the Respondent No. 1 have availed the entire CENVAT/input Tax Credit for the project (including units pertaining to the Respondent No. 2), therefore CENVAT/ITC availed in the Respondent. No. 1's books considered in above table. However, turnover of the Respondent No. 2 is included at S.No 5 as the Respondent No 2 it also required to pass on the benefit to it's recipients Note-2: The difference in ITC as above and as submitted by the Respondent No.1 in table-'F' above is on account of consideration Total ITC reversed (Including Pre-GST) on account of unsold area at the time of issuance OC. Note-3 The difference in total turnover as above and as submitted by the Respondent No. 1 in table-'F' above is on account of units c....
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....and or Profiteering Amount M=I-L 67,18,426 20. In view of the Table-'L': above, DGAP has deduced that the additional input tax credit of 1.55% 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 such additional input tax credit was required to be passed on by the Respondent No. 1 to the respective recipients accordingly. From the above calculation, it is evident that on the basis of the aforesaid CENVAT/input tax credit availability in the pre and post-GST periods and the details of the amount raised/collected by the Respondent No. 1 from the Applicant No, 1 and other home buyers during the period 01.07.2017 to 30.11.2019, the Respondent No. 1 had benefited by an additional amount of input tax credit, by an amount of Rs. 67,18,426/- which includes GST @12% on the base amount of Rs. 59,98,595/- which was required to be passed on to the eligible home buyers. The buyers and unit no. wise break-up of this amount is given in Annexure-A. The said amount is inclusive of the amount of Rs. 80,722/- (including GST on the base amount of ....
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....put tax credit to all the home buyers therefore Section 171 of the Central Goods and Services Tax Act, 2017 may not be invoked against the Respondent No. 1 in the present case. 23. The DGAP has submitted point wise replies to the issues (mentioned at para 1) raised by the Authority vide it's aforementioned order dated 28.11.2019, are as under: (i) On the issue mentioned at para 1 (i), it is submitted that the Respondent No. 1 has passed on benefit of Rs. 32,17,256/- to the Respondent No. 2 with regard to units in Tower A & L pertaining to him via credit notes dated 28.04.2019 & 30.04.2019 which the Respondent No. 2 has acknowledged to receive and submitted an undertaking of the same on 12.02.2020 to the DGAP. Although the Respondent No. 2 has further passed on an amount of Rs. 97,665/- to 4 recipient to who m demand was raised or payment received during the period 01.07.2017 to 30.11.2019 which have been verified by DGAP from the Credit Notes/Payment Vouchers submitted by the Respondent No. 2, the benefit passed on is less than what he ought to have passed on by an amount of Rs. 3,61,621/, The details of these amounts are given in Table-'N' below: Table-'N' (Amount in Rs.) S.....
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....eriod of Investigation however, the DGAP has extended the period of investigation by another 15 months i.e. till 30.11.2019 to consider the Authority's direction of reversal of input tax credit on receipt of OC and recomputed the revised profiteering amount accordingly. 24. The DGAP has calculated the additional benefit of input tax credit to the tune of 1.55% of the turnover, which has accrued to the Respondent No. 1 in post-GST and the same was required to be passed on by the Respondent No. 1 to the Applicant No. I and other recipients. On this account, the Respondent No. 1 had benefited by an amount to the tune or Rs. 67,18,426/- from the Applicant No. 1 and other recipients who are not Applicants in the present proceedings. However, as mentioned in Table-'M', the Respondent No. 1 has passed on an amount of Rs. 85,20,587/- to 84 home buyers from whom consideration has been received by the Respondent No. 1 during the period 01.07.2017 to 30.11.2019 and Rs. 32,17,256/- to the land owner i.e. the Respondent No. 2. 25. In view of the above findings of the DGAP, he has submitted that Section 171 (1) of the Central Goods and Services Tax Act, 2017, requiring that "any reduction in r....
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.... to the DGAP that he had refunded the amount, whereas he has not received anything. Further he has also submitted that he does not care about last 02 Tax Invoices (Credit) since he has not acknowledged that demand and it was prejudice. The Authority had forwarded the above email to the DGAP for clarification under Rule 133 (2A) of the CGST Rules 2017. 29. The DGAP vide his letters dated 16.10.2020 and 11.11.2020 has submitted his reply to the Authority, wherein he has inter cilia stated that:- (a). The Respondent No. 2 vide his letter dated 25.09.2020 submitted that lie had passed on the benefit of ITC to his customers and enclosed the copies of Credit Notes/Cheque vide which such benefit was passed on, which have been verified by the DGAP and found to be in order as is shown in Table. 'N' of his Report dated 26.08.2020. The DGAP, for confirmation of receipt of ITC benefit had sent emails to said four buyers, in response to which, three buyers had replied and confirmed the receipt of the same and remaining one buyer Sh. Harpreet Singh having flat no. L-706 stated that he had filed a case against the Respondent No. 2 in Haryana RERA in Nov. 2018 for refund of Rs. 38.58 lakhs depo....
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....ove table-'H'. However, the Applicant No. 1 was expecting to receive these benefit in their Bank Account and misunderstood with the Statement of Account enclosed by him vide e-mail dated 30.07.2020. He further stated that the remaining two amounts of Rs. 50,979/- & Rs. 2,899/- adjusted in tax invoices no. C10150000911 & C10150000912 respectively raised on 09.01.2019 but not appearing in statement of account. The DGAP has also submitted that the Applicant No. 1 submitted that he has not paid the Instalments raised on 09.01.2019 and filed a case in the National Consumer Disputes Redressal Commission (NCDRC) for defective possession offer. The Applicant No. 1 has also pointed out certain deficiencies in the facilities promised and provided by the Respondent No. 1. "however on reviewing the statement of account enclosed by the Applicant No, 1 in his mail (also submitted by the Respondent No. 1 in his earlier submission dated 12.02.2020), it is observed that these both invoices i.e. C10150000911 & C10150000912 dated 09.01.2019 appear in the statement of account and it is specified in the invoices that GST Credit of Rs, 50,979/- & Rs. 2,899/- is given against the Charge Amount therefor....
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....be treated as made provided it was received in his hands (bank account) which was not done. When he had paid excess GST whatever was claimed by the builder against his 4th instalment against which this complaint was submitted, why any amount of refund was not given to the credit in his account? Keeping this refund amount in builders' own books tantamounted to no refund and was liable to be refunded with interest. 31. In the interest of natural justice, the Authority has granted hearing to the Respondents and Applicant No.1 through Video conferencing on 28.01.2021, vide which Applicant No.1, had reiterated his previous arguments and also stated that he never received any notification from Respondent No. 1 where any amount of excess GST was refunded to him neither remitted to his bank account. He further stated that he could see some refund as credit to his ledger account maintained by Respondent No. 1 in his own books. He also stated that any refund full or partial should come to his bank account with interest from the date of payment of excess GST i.e. w.e.f. Jan 2018. He submitted that when DGAP found 7% anti profiteering amount in his 1st Report during investigation, how it has ....
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....ITC benefit by the Respondent No. 1. c. The Respondent No. 1 has not passed on any benefit of input credit to him which has burdened him with excess Tax of 7% in the GST Regime. 35. Accordingly, the Respondent No. 1 vide his letter dated 24.02.2021 has submitted his reply to the issues raised by the Applicant No. 1 (mentioned at para 33 & 34 above), stating that:- (a). the allegations of the Applicant No,1 were completely baseless and without any evidence. (b). on the objections raised by the Applicant No. 1 that "No refund has been received by the Applicant No.1 on the account of the ITC benefit from the Respondent No. 1", (i) the Respondent has submitted that Section 171 of the CGST Act, 2017 provides that any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in price. (ii) in the instant case, the reduction in price has been made at the time of milestone billing itself by way of adjustment in the invoice. Further some benefit was passed by way of credit notes. This fact has been verified and confirmed by the DGAP at para 23 and 24 of the Report dated 26.08....
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....y to him and not vice versa. If at all any interest is due, it is the Applicant No. 1 who is liable to pay the interest. (ii) there is no provision under the CGST Act, 2017 which provides for payment of interest along with benefit of input tax credit. (iii) the DGAP in his report has said that Section 171 is not invokable against him. He also submitted that once 171 is not invokable there is no question of payment of interest to the Applicant No. 1. Hence, he submitted that the allegation about non-payment of interest does not hold good. Thus, allegations of the Applicant No. I are liable to be dropped. (d). In respect of the allegation that "the Respondent has not passed on any benefit of input tax credit which has burdened the Applicant with excess tax of 7% in the GST regime", The Respondent No. 1 has stated that (i). the allegation of the Applicant No. 1 is factually incorrect and is relying on the earlier Report of DGAP dated 27.02.2019 which was rejected by the Authority and order for fresh investigation was issued and during fresh investigation DGAP has found that actual benefit to the Respondent is 1.55% which has already been passed to the Applicant No. 1 and other....
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.... (including units pertaining to the Respondent No. 2 and the Respondent No. 2 is also required to pass on the benefit to its recipients. The breakup is as follows: S.No Particulars Period Remarks Pre-GST (01.04.16 to 30.06.17) Post-GST (01.07.17 to 30.11.19) 1. Turnover as per list of home buyers 2. The Respondent No. 1 (A) 39,86,42,312 36,05,49,555 3. The Respondent No. 2 (B) 12,67,57,014 2,64,56,562 4. Total Turnover as per list of home buyers (C)=(A)+(B) 52,53,96,326 38,70,06,117 5. Turnover as per Table 'K' of the Report dated 26.08.2020 (D) 53,53,96,326 38,70,06,117 Para-25 of the Report dated 26.08.2020 6. Difference (E)=(C)-(D) - The DGAP has further stated that from the above Table, it can be observed that there is no difference between the turnover as per list of home buyers and the turnover considered in his Report dated 26.08.2020. (ii). the ITC reversed in the month of March-2018 pertains to 09 towers (other than A & L). Proportionate ITC pertaining to unsold area of tower A&L was reversed in the GSTR-3B for the month of Dec. 2018 Returns only. (iii). in the present case, i....
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....ver is earlier), shall neither be treated as a supply of goods nor a supply of service. Therefore, the sale of unsold units after receipt of Completion/Occupancy Certificate would not fall within the ambit of GST and supplier of service cannot charge GST on such sale of units. Since, no GST is chargeable on these units, no ITC can be availed against such units. Accordingly, the ITC pertaining to the residential units which remained unsold at the time of receipt of Completion / Occupancy Certificate, is provisional ITC which is required to be reversed by the supplier in terms of section 17(2) and 17(3) of the CGST Act 2017 which read as under; Section 17 (2) "Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting 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". Section 17 (3) "The value of exempt supply under sub-section (2) shall be such as may be prescribed and shall incl....
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....n 20.06.2018 and was referred to the Standing Committee on Anti-Profiteering. This complaint was examined by the Standing Committee on Anti-Profiteering and forwarded to the DGAP for investigation, who investigated the matter and furnished his investigation Report dated 27.02.2019 to the Authority stating that the Respondent had obtained additional benefit of ITC to the extent of 7.05% of the taxable turnover which he had not passed on to his buyers and he had thus profiteered an amount of Rs. 1,67,24,158/- (inclusive of GST) in violation of the provisions of Section 171 of the GST Act, 2017. However, due to the objections raised by the Respondent on the above said Report as well as the discrepancies found in the Report, the DGAP was directed to re-investigate the above complaint under Rule 133 (4) of the above Rules vide Interim Order No. 16/2019 dated 28.11.2019. (ii). The DGAP has re-investigated the matter and submitted his Report dated 26.08.2020 wherein it was reported that the ITC as a percentage of the total turnover which was available to the Respondent No. 1 during the pre-GST period was 3.70% and during the post-GST period this ratio was 5.25%, as per the Table-K menti....
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.... of the DGAP as has been reproduced above. The calculations and details in Tables A, B, C, D, E, K and L above when read together and in sequence give a proper narration of the interests of both Respondent No. 1 and 2 on the Project, the details of the number of units, the turnover and ITC in the pre GST and post GST periods, the number of units and area for which profiteered amount needs to be calculated for the purposes of Section 171 of the CGST Act, 2017 and the calculation thereof. (iv). In view of the above facts, it is established that the Respondent No. has benefited from the additional ITC to the extent of L55% of the turnover during the period from 01.07.2017 to 30.11.2019. The Respondent No.1 had not passed on the above benefit to his 84 customers (including Applicant No. 1) and Respondent No. 2. Thus, he had profiteered an amount of Rs. 67,18,426/- inclusive of GST @ 12% as is evident from the aforesaid Report dated 26.08.2020. Such amount inclusive of Rs. 80,722/- from the Applicant No. 1 and Rs. 6637,704/- from 83 other than the Applicant No. 1 and Respondent No. 2. (v). The Authority finds that, the claim of the Respondent No.1 that he had passed on the benefit o....
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....nded that the CGST Act read with the Rules does not provide the procedure and mechanism of determination and calculation of profiteering. In absence of such calculation and methodology the proceedings are arbitrary and are in violation of principle of natural justice. The Authority finds that, the Procedure and Methodology' for passing on the benefits of reduction in the rate of tax and ITC has been outlined in Section 171 (1) of the CGST Act, 2017 itself which provides that "Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices." It is clear from the plain reading of the above provision that it mentions "reduction in the rate of tax or benefit of ITC" which means that if any reduction in the rate of tax is ordered by the Central or the State Governments or a registered supplier avails benefit of additional ITC as a result of coming in to force of the GST the same have to be passed on by him to his recipients since both the above benefits are being given by the above Governments out of their tax revenue. Further the computation of the profiteered amount is....
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.... as he was not a supplier however, during the course of proceedings it was found that M/s. Flipkart had not refunded the extra GST to the buyers which was ordered to be refunded and it was accordingly refunded. Therefore, the above case did not help the cause of the Respondent No. 1. (x). The Respondent has contended that the application filed by the Applicant No. 1 should be compared a Show Cause Notice for tax proceedings and hence the DGAP could not travel beyond the Show Cause Notice. In this regard, it would be relevant to mention that the application filed by the Applicant No.1 cannot be compared to a Show Cause Notice for tax proceedings because claim of benefit of ITC does not amount to payment of tax. The amount which has been profiteered by the Respondent from the Applicant No.1 also does not amount to tax as no tax has been imposed under section 171 of the CGST Act 2017 as such a tax can be imposed under section 9 of the CGST Act 2017. Therefore the law settled in the cases of Toyo Engineering India Limited vs. Chief Commissioner, Mumbai, 2006 (201) E.L.T 513 (S.C) and Reckitt & Colman of India Ltd. vs. Chief Commissioner of Exeise 1996 (88) E.L.T. 641 (S.C.), does not....
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....tely reduce the price of his supply to the recipient as soon as there is a reduction in the rate of tax or availability of ITC. Hence, in the present case too, it was incumbent on the Respondents to have complied with such mandate of the law. In case of non-compliance, there would be contravention of the provisions of Section 171 (1) of the CGST Act, 2017. Hence, The Authority directs that, Respondent No. 1 and Respondent No. 2 shall comply with the said provisions and mandate of law. The Authority directs that Respondent No. 1 and Respondent no. 2 shall pay interest @ 18% per annum on the additional amounts collected from each recipient of supply. from the date such amounts were collected by them upto the actual date of passing on/ return of such amount to each recipient as prescribed by Rule 133(3)(b) of the CGST Rues, 2017. The Authority directs the Respondent No. 1 and Respondent No. 2 to comply with these directions within a period of three months from the date of this Order. If such directions are not complied with, such sums shall be collected as per the provisions of the CGST Act, 2017. 41. The Authority as per Rule 136 of the CGST Rules 2017 directs the Commissioners of ....