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2022 (8) TMI 363
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....passed on the benefit of ITC to him by way of commensurate reduction in the price of a Villa No..1-03 (TOPAZ Module-B) purchased by him from the Respondent in his Project "Eldeco County", situated at Rajghar, Jhansi on introduction of GST w.e.f. 01.07.2017. in terms of Section 171 of the CGST Act, 20 1 7. 2. The DGAP in its Report dated 31.3.2021, inter-alia stated that:- i. The aforesaid application was initially examined by the Uttar Pradesh State Screening Committee and was forwarded to the Standing Committee on Anti-Profiteering for further action. The said application was again examined by Standing Committee on Anti-profiteering, in his meeting, the minutes of which were received by the DGAP on 15.10.2020, whereby it was decided to forward the same to the DGAP to conduct a detailed investigation in the matter. Accordingly, investigation was initiated to collect evidence necessary to determine whether the benefit of ITC had been passed on by the Respondent to his customers in respect of construction service supplied by the Respondent. ii. On receipt of the reference from the Standing Committee on Anti-profiteering. a notice under Rule 129 of the Rules was i....
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....d on. o. Completion Certificate of the project. p. Architect Certificate of specific units completed before GST regime. q. Allotment card for the customers. vi. The important submissions of the Respondent has been summarized below:- a. Comparison of ratio of ITC to Turnover for pre-GST period and post-GST period was not the correct mechanism for calculation of profiteering amount. b. Benefit passed by the Respondent should be added in turnover computation. c. Land value should have to be excluded for calculation of profiteering amount d. The Report could not go beyond the application submitted by the Applicant on 29.04.2019 e. In the absence of prescribed method of calculation of profiteering in the act or the rules or the procedure, the proceedings were arbitrary and liable to be set aside. f. The complaint filed by the Applicant No. 1 was not valid since the Applicant No. 1 was not the active customer of the Respondent at the time of filing the complaint. g. The unit of Applicant No. 1 was cancelled on 15.04.2019 due to non- payment of milestone payment by the Applicant No. 1 even a....
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....ies of the Respondent/Applicant No. 1 and the documents/evidences on record has been carefully examined. The main issues for determination were:- a. Whether there was benefit of reduction in rate of tax or ITC on the supply of construction service by the Respondent after implementation of GST w.e.f. 01.07.2017 and if so, b. Whether the Respondent passed on such benefit to the recipients by way of commensurate reduction in price, in terms of Sect ion 171 of the CGST Act, 2017. ix. Another relevant point in this regard was pare 5 of Schedule-III of the Central (goods and Services Tax Act, 2017 (Activities or Transactions which shall be treated neither as a supply of goods nor a supply of services) which reads as "Sale of land and, subject to clause (h) of paragraph 5 of Schedule II, sale of building". Further, clause (b) of Paragraph 5 of Schedule 11 of the CGST 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 had been received after issuance of completion certificate, where required, by the compe....
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....on 171. xi. The Respondent also contended that the investigation could not go beyond the application submitted by the Applicant. In this regard, reference was made to Section 171 (1) of the CGST Act, 2017 itself which stated that "Any reduction in rate of lax on any supply of goods or services or the benefit of ITC shall be passed an to the recipient by way of commensurate reduction in prices." Thus, the legal requirement was abundantly clear that in the event of a benefit of ITC or reduction in rate of tax, there must be a commensurate reduction in prices of any supply of goods or services. It may be noted that Rule 129 (2) authorized the DGAP to conduct investigation on any supply of goods or services. Similarly, Section 171 (2), empowered the Authority to examine whether the ITC availed or reduction in tax rate had actually resulted in commensurate reduction in the prices of the goods or services or both supplied by him. Hence, the investigation was not limited to complained product/service only and was being done for all the impacted goods/ services. Therefore, law prescribed that benefit of reduction in rate of tax or benefit of increase in ITC should result ....
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....project, timing of purchase of inputs, rates of taxes; amount of ITC availed, total saleable area, area sold and the taxable turnover realized before and after the GST implementation would always be different than the other project and hence the amount of benefit or additional ITC to be passed on in respect of one project would not be similar to another project Issuance of Occupancy Certificate/Completion Certificate would also affect the amount of benefit of ITC. Therefore, no set parameters could be fixed for determining methodology to compute the benefit of additional ITC which would be required to be passed on to the buyers of such units. Further, the facts of the cases relating to the Fast-Moving Consumer Goods (FMCGs), restaurants, construction and cinema houses was completely different and therefore, the mathematical methodology employed in the case of one sector cannot be applied in the other sector otherwise it would result in denial of the benefit to the eligible recipients. Further, applying the same mathematical methodology of FMCG Sector to a supplier of a cinema sector would in fact lead to erosion of justice in the name of uniformity. xiii. As regar....
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....T, the Respondent had benefited from additional ITC to the tune of 1.24% [1.68% (-) 0.44%] of the turnover. Though the investigation period was July, 2017 to September, 2020 the period upto March, 2019 instead of September, 2020 had been considered for computation of the profiteering because the Respondent opted for new scheme issued vide Notification 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 Input Tax Credit. Thus., the Respondent was not eligible to avail the 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 cannot be attributed after 01.04.2019. xv. The Respondent stated that the prices quoted to the two post GST customers were inclusive of the benefit of ITC under GST Laws. The final allotment certificate and agreement mentioned that "Basic cost after input credit discount". In order to examine this aspect, the final allotment certificate and agreement in respect of two buyers who had booked flats in the post GST period were required to be scrutinized. However, ....
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....tion 171 of the CGST Act, 2017, the benefit of such additional ITC was required to be passed on to the recipients. xviii. It was evident from the above calculation explained in Table-'B' 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 Applicants in respect of the flats sold by the Respondent during the period 01.07.2017 to 31.03.2019. the benefit of ITC that needed to be passed on by the Respondent to the buyers of flats came to Rs. 3,48,979/- which included 12% GST on the base-amount of Rs. 3,11,589/, The flat homebuyer and unit no. wise break-up of this amount was given in Annexure-11 of the Report. The allotment of the Applicant No. 1 unit was cancelled due to non-payment of milestone payment. Accordingly, no benefit of ITC had been computed with respect to the Applicant No. 1. There were altogether 117 units in the project "Eldeco County'. Out of 117 units entire consideration of 101 units was received in pre-GST era. Hence. profiteering of 101 units was out of scope of this investigation. Out of remaining 16 units, the Respondent received consideration amount from 01.07.2017 ....
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....ditional ITC to the tune of 1.24% of the turnover, has accrued to the Respondent post-GST and the same was required to be passed on by the Respondent to his recipients. Section 171 of the CGST Act, 2017 appeared to have been contravened by the Respondent, inasmuch as the additional benefit of Input Tax Credit @1.24% of the base price received by the Respondent during the period 01.07.2017 to 31.03.2019, has not been passed on by the Respondent to the 11 recipients. On this account, it appeared that the Respondent had realized an additional amount to the tune of Rs. 3,48,979/-(including GST). it also appeared that the Respondent had passed on the ITC benefit of Rs. 3,04,088/- to 3 homebuyers as mentioned in above Table-C. Further, from the above it was also observed that the Respondent was yet to pass on an additional amount of Rs 2,92.532/- as mentioned at Sr. No.2 of the Table-C which included both the profiteered amount @1.24% of the base price and GST on the said profiteered amount from the 8 Home buyers. These 11 recipients sere identifiable as per the documents provided by the Respondent, giving the names along with unit no. allotted to such recipients. As observed earlier, th....
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....nd 27.04.2022 have been examined. The list of 8 customers showing the details of payment of profiteering amount were verified as given in bank account statement of the Respondent and it was observed that the entry of profiteered amount match with each other in respect of 8 customers. Therefore, it appeared that the Respondent has passed on the profiteering amount in respect of 8 customers of Rs. 2,92.532/- as mentioned in Report dated 31.03.2021. 7. In this matter. the Respondent and the Applicant No, 1 were given opportunity for personal hearing on 16.06.2022. The hearing was held on 16.06.2022 via video conferencing. It was attended by Sh. Shivendu Pandey. Superintendent. on behalf of the Applicant No. 2 and Sh. Gagan Gugnani. CA., appeared for the Respondent. During the hearing, the Respondent has reiterated his earlier submissions dated 17.07.2021 and 30.03.2022. 8. This Authority has carefully considered the Report furnished by the DGAP, all the submissions and the other material placed on record. and the arguments advanced by the Respondent. The Authority has examined the DGAP's Report dated 31.03.2021 and the annexures thereof. 9. Section 171 of the CGST Act, 20....
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....tered supplier avails benefit of additional ITC post GST implementation. 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 scarce and precious tax revenue. Computation of the profiteered amount is a mathematical exercise which can be done by any person who has elementary knowledge of accounts and mathematics as per the Explanation attached to Section 171. However, to further explain the legislative intent behind the above provision, this Authority has been authorised to determine the 'Procedure and Methodology' which has been done by it vide its Notification dated 28.03.2018 under Rule 126 of the CGST Rules, 2017, However, no fixed mathematical formula, in respect of all the Sectors or the products or the services, can be set for passing on the above benefits or for computation of the profiteered amount, as the facts of each ease are different In the case of one real estate project. date of start and completion of the project, price of the flat/shop, mode of payment of price or instalments, stage of completion of the project, rates of taxes pre find post GST implementation., amount of C....
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....the recipients. Thus, Section 171 of the CGST, 2017 has been contravened by the Respondent, in as much as the additional benefit of ITC @1.24 % of the base price received by the Respondent during the period 01.07.2017 to 31.03.2019, was required to be passed on to the recipients. These recipients are identifiable as per the documents provided by the Respondent, giving the names and addresses along with unit no. allotted to such recipients. The Respondent claimed that he had already passed on a substantial amount of GST ITC per the requirements of Section 171 of the CGST Act, 2017 to the homebuyers/customers. The Respondent had submitted that he had passed on the benefit of Rs. 3,48,979/- to 11 homebuyers/customers. The details of such homebuyers/customers and the amount of the benefit to be passed on is enclosed in the Annexure-A to this order. 12. From the above discussions, the Authority determines that the Respondent has profiteered an amount of Rs. 3,48,979/-. Therefore, given the above facts, the Authority under Rule 133 (3)(a) of the CGST Rules orders that the Respondent shall reduce the price to be realized from the buyers of the flats/customers commensurate with the bene....
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....so be informed that the detailed NAA Order is available on Authority's website www.naa.gov.in. Contact details of concerned Jurisdictional Commissioner CGST/SGST for compliance of this Authority's order may also be advertised through the said advertisement. 15. Further, this Authority as per Rule 136 of the CGST Rules 2017 directs the concerned jurisdictional CGST/SGST Commissioner shall also submit a Report regarding the compliance of this order to the Authority and the DGAP within a period 4 months from the date of this order. 16. Further. the Hon`ble Supreme Court, vide its Order dated 23.03.2020, Suo Moto Writ Petition (C) No. 03/2020 while taking suo-moto cognizance of the situation arising on account of the Covid-19 pandemic, has extended the period of limitation prescribed under the general law of limitation or any other special laws (both Central and State) including those prescribed under Rule 133(1) of the CGST Rules, 2017 as is clear from the said Order which states as follows:- "A period of limitation in all such proceedings. irrespective of the limitation prescribed under the general law or special laws whether condonable or not shall stand exten....