TaxTMI 
TaxTMI 
2022 (8) TMI 531
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....8 of the CGST Rules, 2017 by the Applicant No. 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 Appl....
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.... (ix) Declaration in Annexure-IV to the Notification No. 3/2019-CT (Rate) dated 29.03.20219 along with Calculation of Eligible GST input for the Elegance Project upto 31^st 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....
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....ill not been paid by the Applicant No. 1. The Applicant No. 1 was not co- operating consequently the registry of his flat was pending due to his non co-operation. f. the payment schedule for Flat no.1002 measuring 970 sq. feet for base price of Rs.26,89,700/- (including one car parking), 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 2^nd Floor 7.5% 2,01,728 - 2,01,728 6. Roof Casting of 4^th 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%....
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....e 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 shall not fall within 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 unso....
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....ost-GST period (July, 2017 to March, 2019) when the effective GST rate was 12% (GST @18% along with 1/3rd abatement for land value) on construction service, vide Notification No.11/2017-Central Tax (Rate), dated 28.06.2017. Therefore, on the basis of the figures contained in table-'C' given in para 09 supra. the comparative figures of the ratios of input tax credits availed/available to the turnover in the pre-GST and post-GST periods as well as the turnovers, the recalibrated base price and the excess realization (profiteering) during the post-GST period, are tabulated below:- 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 col....
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....,67,902/- to 38 Customers from whom the amount was raised/collected by him during the post GST period from 01.07.2017 to 31.03.2019 and to corroborate his such claim he had submitted copies of Credit Notes and journal ledger entries for all the home buyers vide which the benefit of input tax credit was passed on, which were duly verified by the DGAP and found to be correct The DGAP had also sent e-mails to the Applicant No. 1 and 2 and 30 home buyers other than the Applicants selected randomly on 23.12.2020 to whom benefit was passed on, to confirm whether the amount of benefit of ITC was received from the Respondent. The Applicant No. 1 vide E-mail dated 28.12.2020 submitted that he 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 re....
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....n in the Annexure-22 of the present Report of the DGAP. However, the Respondent had to pass on the additional ITC of Rs. 16,49,897/- accrued to him during the period from 01.07.2017 to 31.03.2019, to 39 flat buyers including Applicant No. 1 & 2 by way of commensurate reduction in prices under section 171 of the CGST Act 2017. 14. The Respondent had failed to pass on the ITC benefit of Rs. 16,49,897/- to 39 flat buyers/customers/recipients including Applicant No. 1 & 2 by way of commensurate reduction in price. Accordingly section 171 of the CGST Act 2017 which requires that "any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipients by way of commensurate reduction in prices", had been contravened by the Respondent in the present case. 15. As aforementioned, the present 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-C....
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....ions & M/s GPM Infrastructure Pvt. Ltd. under revenue sharing basis at 50:50 ratio. Construction of project was to carried out by the Respondent on his own account and own expenses. Since the entire cost of all purchases of inputs, capital goods and input services for construction of all units of the impugned project was incurred by the Respondent hence he had availed Input Tax Credit on tax paid on said inputs, capital goods and input services during pre and post GST periods. As the input Tax Credit (ITC) @ 6.39 % and 1.59% of the turnover was available to the Respondent during the post-GST period and the pre-GST period respectively as per the Table- C mentioned at pare 9 supra, therefore, he had benefited from the additional ITC to the tune of 4.80% (6.39% - 1.59%) of the turnover during the period from 01.07.2017 to 31.03.2019, which was required 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....
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....ers that the Respondent shall reduce the prices to be realized from the buyers of the flats/customers/recipients of the above Project commensurate with the benefit of ITC received by him as detailed above. 23. The Authority finds that, vide Section 112 of the Finance Act, 2019 specific penalty provisions have been added for violation of the provisions of Section 171 (1) which have come in to force w.e.f. 01.01.2020, by inserting Section 171 (3A). Since, no penalty provisions were in existence between the period from 01.07.2017 to the period of investigation and to which this Order is passed, when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively for such period. 24. This Authority as per Rule 136 of the CGST Rules 2017 directs the Commissioners 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 bu....
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....e period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event, the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply. (IV). It is further clarified that the period from 15,03.2020 till 28,02.2022 shall stand excluded in computing the period under Section 23(4) and 29A of the Arbitration and Conciliation Act 1996, Section 12A of the Commercial Courts Act 2015 and provisos (b) and (c) of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period (s) of limitation for instituting proceedings over limits (within which the court or tribunal can condone delay) and termination of proceedings. Hence this Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017. 28. A copy each of this order be supplied, free of cost, to the DGAP, the Applicant No 1 and 2, the Respondent, Commissioners CGST/SGST, Jaipur, Rajasthan, Principal Secretary Town Planning Govt. of Rajasthan and Rajasthan RERA for necessary action. File be consigned after completion. Annexed:- Armexure-&#....