TaxTMI 
TaxTMI 
2022 (8) TMI 531
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....1 and 2, alleging profiteering by the Respondent in respect of purchase of Flat Nos. 1002 and 1003 in the Respondent's project "The Elegance" situated at Partap Nagar, Jaipur. Both the Applicants alleged that the Respondent had not passed on the full benefit of ITC to them by way of commensurate reduction in prices and charged GST @ 12% on the amount due to them against payments. 2. On receipt of the aforesaid reference from the Standing Committee on Anti-profiteering, the DGAP had issued Notice under Rule 129 of the CGST Rules 2017, on 10.12.2019 calling upon 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 prices and if so, to suo moto determine the quantum thereof and indicate the same in his reply to the Notice as well as to furnish all documents in support of his reply. 3. The DGAP had afforded an opportunity to the Respondent to inspect the non-confidential evidences/information which formed the basis of the said Notice, during the period 20.12.2019 or 24.12.2019. Similarly an opportunity was also given to both the Applicants to inspect the non-confidential documents/re....
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.... Eligible GST input for the Elegance Project upto 31st March, 2019. (x) CENVAT/ Input Tax Credit register for the period April, 2016 to November, 2019. (xi) Details of VAT, Service Tax and GST turnover, output tax liability payable and input tax credit availed for the project "The Elegance". (xii) Copy of Joint Development Agreement dated 19.05.2014. (xiii) Copy of Completion Certificate no. 2241 dated 31.05.2019. (xiv) Copy of Project Report submitted to RERA. (xv) List of home buyers & commercial shop buyers in the project "The Elegance" along with details of benefit passed on. (xvi) Copies of Confirmation of Accounts, Ledgers and journal entry vide which benefit passed on to the customers. (xvii) Booking Agreements of the Applicants. (xviii) Completion Certificate. (xix) Details of Type of Tax Levied on output Goods and Services. (xx) Demand Letter and Possession Letter of Applicants. (xxi) RERA Reports., and requested to keep confidential the documents mentioned above except (xvii) to (xxi) in terms of Rule 130 of the CGST Rules 2017. 6. Vide the above said documents/information, the Respondent has inter alia stated that:- a. he was a real estate....
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....rking), which was issued to the Applicant No. 1 by him, is tabulated below:- Table-'B' (Amount In Rs.) S.No. Payment Stage (Basic) % Basic Amount Other Charges Total Amount 1. At the time of Registration 15% 4,03,455 - 4,03,455 2. Start of Excavation 10% 2,68,970 - 2,68,970 3. Roof Casting of Lower Basement 7.5% 2,01,728 - 2,01,728 4. Roof Casting of Stilt Floor 7.5% 2,01,728 - 2,01,728 5. Roof Casting of 2nd Floor 7.5% 2,01,728 - 2,01,728 6. Roof Casting of 4th Floor 7.5% 2,01,728 - 2,01,728 7. Roof Casting of 6th Floor 7.5% 2,01,727 - 2,01,727 8. Roof Casting of 7th Floor 7.5% + Gas Chg. 2,01,727 25,000 2,26,727 9. Roof Casting of 8th Floor 7.5% 2,01,727 - 2,01,727 10. Roof Casting of 10th Floor 7.5% + Elec. Chg. 2,01,727 37,280 2,38,927 11. Roof Casting of 12th Floor 5% + Club House Chg. 1,34,485 50,000 1,84,485 12. Completion of External Plaster 5% + Escrow & Corpus 1,34,485 62,100 1,96,585 Final Possession 5% + Main Chg. 1,34,485 37,260 1,71,745 Total 100% 26,89,700 2,11,620 29,01,320 7. The DGAP has scrutinised the above said documents/information submitted by the R....
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....the ambit of the investigation and the Respondent was required to recalibrate the selling prices of such units to be sold to the prospective buyers by considering the net benefit of additional input tax credit available to him post-GST. In the present case, as the Respondent had opted for composition scheme w.e.f. 01.04.2019, hence he was not eligible to avail any input tax credit post 01.04.2019. Accordingly he has charged 5% GST (without benefit of ITC) for the units to be sold to the prospective buyers and also on all the demand letters issued on or after 01.04.2019. Therefore, complete input tax credit availed by him during 01.07.2017 to 31.03.2019 post reversal on account of unsold units pertains to the sold units upto 31.03.2019 only. 9. Regarding allegation of profiteering. DGAP has observed that in pre-GST period i.e, prior to 01.07.2017, the Respondent was eligible to avail CENVAT credit of Service Tax paid on Services and no credit was available for Central Excise Duty and VAT paid on the inputs whereas in post-GST, the Respondent could avail input tax credit of GST paid on all inputs & input services including the sub-contracts. Hence, on the basis of the details of i....
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.... Table-'D' S.No. Particulars Post-GST 1. Period A 01.07.2017 to 31.03.2019 2. Output GST Rate (%) B 12.00 3. Ratio of CENVAT credit/ Input Tax Credit to Total Turnover as per table -'C above (%) C 6.39% 4. Increase in input tax credit availed post-GST (%) D=6.39% less 1.59% 4.80% 5. Analysis of Increase in Input tax credit: 6. Total Base Price raised/collected during July, 2017 to March, 2019 (Rs.) E 3,06,90,046 7. GST @ 12% over Base Price F=E*12% 36,82,805 8. Total amount to be collected/raised G=E+F 3,43,72,851 9. Recalibrated Base Price H=(E)*(1-D) or 95.20% of (E) 2,92,16,923 10. GST @12% I=H*12% 35,06,031 11. Commensurate demand once J=H+I 3,27,22,954 12. Excess Collection of Demand or Profiteering Amount K=G-J 16,49,897 Accordingly to 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 from the Applicant No. 1 and 2 and other home buyers during the period 01.07.2017 to 31.03.2019, the Respondent had benefited by an additional amount of input tax....
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....has not received the benefit of Input Tax Credit. Further, out of 30 home buyers other than the Applicants, 16 have replied and confirmed the receipt of benefit of ITC from the Respondent. Further, it also appears that in some cases, the Respondent had passed on the benefit of input tax credit more than the required commensurate benefit whereas in some cases, the benefit of input tax credit passed on was less than the required commensurate benefit. A summary of category-wise input tax credit benefit required to be passed on and the benefit passed on, is tabulated below:- Table-'E' S.No. Category of Customers No. of Units Area in Sq.ft.) Benefit to be passed on as per Annex-19 Benefit Passed on by the Respondent (Excess)/Shortage of Benefit (profiteering) Remark A B C D E F G=F-E H 1. Applicant No.1 1 970 1,08,480 - 1,08,480 Benefit to be passed on 2. Applicant No. 2 1 993 1,55,904 19,711 1,36,193 Benefit to be passed on 3. Buyers other than Applicants 16 17,655 11,01,944 3,50,452 7,51,492 Benefit to be passed on 4. 21 20,075 2,83,569 4,79,739 (2,14,170) Benefit to be passed on 5. 26 29,276 - 5,81,128 (5,81,128) No considera....
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....investigation computed the profiteering covering the period 01.07.2017 to 31.03.2019. Profiteering, if any for the period post 01.04.2019 has not been examined as the no benefit of input tax credit for construction service will be available to the Respondent in future as he had opted for composition scheme as provided by Notification No. 03/2019-Central Tax (rate) dated 29.03.2019. 16. The above Report was carefully considered by this Authority and a Notice dated 06.01.2020 was issued to the Respondent to explain why the Report dated 31.12.2020 submitted by the DGAP should not be accepted and his liability for profiteering in violation of the provisions of Section 171 of the CGST Act 2017 should not be determined. The Respondent was directed to file his reply to the allegations levelled in the aforesaid DGAP's Report dated 31.12.2020. 17. In response to the above said Notice dated 06.01.2020 and subsequent several orders, the Respondent vide his letter dated 03.05.2022 has furnished his submissions stating that he has passed on the benefit and recovered the excess benefit vide journal entry dated 01.04,2021 and requested to drop the proceedings. 18. This Authority decided to....
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....ed to be passed on to the flat buyers of this Project. The DGAP had also found that since the Respondent has not reduced the basic prices of his flats/units by 4.80% due to the additional benefit of ITC and had charged GST at the increased rate of 12% on the pre-GST basic prices hence he has contravened the provisions of Section 171 of the CGST Act, 2017 and Rules made thereunder. The DGAP had observed that as mentioned above, the benefit of Rs. 16,49,897/- was required to be passed on to 39 flat buyers/customers/recipients including Applicants by the Respondent for the period from 01.07.2017 to 31.03.2019 if not already passed on. 20. The DGAP has computed the ratio of CENVAT as a percentage of the turnover for the pre-GST period and compared it with the ratio of ITC to the turnover for the post-GST period, and then computed the percentage of the benefit of additional ITC which the Respondent was required to pass on to the flat buyers/customers/recipients. The above ratios have been computed by the DGAP on the basis of data/details provided by the Respondent which have been duly verified from his Service Tax, VAT and GST Returns filed by him for the period April 2016 to June 2017....
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....rs of CGST/SGST Jaipur, Rajasthan to monitor compliance of this order under the supervision of the DGAP by ensuring that the amount profiteered by the Respondent as determined by this Authority, is passed on to all the eligible buyers if not already passed on. It may be ensured that the benefit of ITC is passed on to each flat buyer/customer/recipient as per Annexure-A attached with this Order along with interest @18%. In this regard an advertisement of appropriate size to be visible to the public may also be published in minimum of two local Newspapers/vernacular press in Hindi/English/local language with the details i.e. Name of Respondent - M/s SSBC Real Estate Private Limited, for his Project "The Elegance" situated at Partap Nagar, Jaipur and amount of profiteering so that the concerned flat buyers/customers/recipients can claim the benefit of ITC if already not passed on. Flat buyers/customers/recipients may also be informed that the detailed NAA Order is available on Authority's website www.naa.gov.in. 25. This Authority in terms of Rule 133 (5)(a) of the CGST Rules 2017 also directs the DGAP to investigate profiteering in relation to other Projects executed by the Resp....