TaxTMI 
TaxTMI 
TaxTMI 
2022 (8) TMI 687
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....8.08.2020 of the DGAP. Such computation in Investigation Report dated 28.08.2020 of the DGAP was not contested by the Respondent. The Respondent has also not contested the said Internal Order No. 01/2021 dated 16.03.2021 of this Authority. The total profiteered amount calculated in such Investigation Report dated 28.08.2020 of the DGAP and Interim Order of this Authority was Rs.7,90,95,474/-(i.e. Rs. 7,06,20,959/- + Rs. 84,74,515/- i.e. GST thereon). 3. The brief facts of the case are that the DGAP had submitted an Investigation Report dated 28.08.2020 before this Authority in the case of the Respondent. This Authority, vide Order No. 01/2021 dated 16.03.2021 referred the matter back to the DGAP to reinvestigate the case on the following issues:- a. The Respondent's claim of having passed on the benefit of ITC of Rs. 8,28,91,520/- was required to be verified against third party evidence in the form of written acknowledgment receipts from the home buyers evidencing the receipt of ITC benefit, including the quantum and also evidencing that the said benefit was passed on in terms of Section 171 of the CGST Act, 2017. For this, acknowledgments from the homebuyers along with their co....
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....ate 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". Needles to state that the claim made by the Respondent of having passed on the benefit has to be supported by acknowledgements which the Respondent shall procure from the homebuyers alongwith their contact details i.e. e-mail & Phone/Mobile No., failing which his claim will have to be considered as not established. The Respondent shall submit the homebuyer wise evidence, as detailed above within a period of 30 days of this Order and the same shall then be verified by the DGAP. Accordingly, the matter is sent back to the DGAP for further investigation as per the provisions Section 171(2) of the CGST Act, 2017 read with Rule 133(4) of the CGST Rules 2017. This Authority directs the DGAP to verify the evidence submitted by the Respondent to evidence the passage of ITC benefit from the Respondent to the homebuyers and submit his Report, alongwith all the relied upon documents/evidence. The DGAP is accordingly directed to re-investigate the above issue and furnish his Report under Rule 129 (6) of the CGST Rules, 2017. 40. It ....
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....017 to 30.09.2019. h. As directed by this Authority in I.O. No. 01 of 2021 dated 16.03.2021, all the issues as mentioned above, had ban duly covered in this report within the confines of the data/information supplied by the Respondent and home buyers. i. The time limit to complete the investigation was 21.09.2021 in terms of Rule 129(6) of the Rules However, due to force majeure caused in the light of Covid-19 pandemic, the investigation could not be completed on or before the above date. Further, Hon'ble Supreme Court of India passed an Order dated 08.03.2021 in Suo Motu Writ Petition (Civil) No. 3 of 2020, wherein, it was stated that "in cases where the limitation would had expired during the period between 15.03.2020 till 14.03.2021, notwithstanding the actual balance period of limitation remaining, all persons shall had a limitation period of 90 days from 15.03.2021. In the event the actual balance period of limitation remaining, with effect from 15.03.2021, is greater than 90 days, that longer period shall apply". The above relief had been extended and the period from 14.03.2021 till further orders shall also stand excluded in computing the limitation period as per the Hon....
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....rtered Accountant certifying the total amount of input tax benefit received by the Respondent and passed on to the customers along with applicable interest (iii) E-mail Ids of 174 home buyers. l. As per the directions of this Authority vide I.0. No. 01/2021 dated 16.03.2021, the DGAP initiated re-investigation of the case. At the time of submission of earlier investigation report dated 23.08.2020. the Respondent had submitted the copies of Credit Notes, Ledgers, Customer's communication letter and Customers Master List only which were found insufficient by the Authority to corroborate his claim of having been passed on the benefit of ITC. Accordingly, during the reinvestigation, vide letter dated 31.05.2021, the Respondent was requested to provide the contact details i.e., e-mail and Phone/Mobile Nos. of the home buyers and details of payments of ITC benefit and applicable interest along with documentary evidences as per the directions contained in the aforesaid order of this Authority. Further, reminders were issued on 08.07.2021, 10.08.2021, 23.09.2021, 06.10.2021, 14.10.2021 and 22.10.2021 to the Respondent. A letter was also sent to the jurisdictional Central GST Authoritie....
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....ng acknowledgments/receipts and contact details from the home buyers. However, the Respondent had provided the Chartered Accountant's Certificate as third-party verification certificate, certifying his claim of having been passed on the benefit of ITC (GST) of Rs.8,28,91,520/- along with interest @18%. n. Further, it was observed that out of the 454 home buyers, profiteering of Rs.7,90,95,474/- was computed in respect of 452 home buyers (As reported in Pant 27 of the Investigation Report dated 28.08.2021) only. In respect of remaining two home buyers, no profiteering could be computed as no demands were raised from these two home buyers in post-GST period. However, out of these two, the Respondent had claimed to be passed on an amount of Rs.6,482/ to one home buyer. Further, the Respondent had provided the email ids of 174 (including Applicant No. 1) home buyers only. In order to verify the claim of the Respondent, c-mails were sent to these 173 buyers. In respect of remaining 1 home buyer, e-mail was not sent as no profiteering could be computed in respect of this home buyers as no demands were raised by the Respondent to this home buyer during post-GST period. Out of 173 emails....
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.... 0 43,73,994 Emails were sent but no reply received. Even if, the Respondent passed the benefit, Respondent is still required to pass on the differential amount. Sub Total (Not replied) III=5+6+7 140 1,94,28,604 1,54,04,697 0 43,73,994 Buyers to whom emails were sent but no reply received. Sub Total (Emailed) IV=II+III 173 2,43,41,094 1,92,80,565 36,84,259 54,50,378 All the buyers to whom emails were sent. 8. Other than Applicant 1 0 0 0 0 No profiteering computed Emails id provided but no mail was sent. 9. Other than Applicant 188 3,28,27,071 4,34,39,705 0 -1,06,12,634 Emails ids were not provided. Emails could not be sent. Even if, the Respondent passed the benefit, the excess benefit passed cannot be appropriated with other buyers. 10. Other than Applicant 92 2,19,27,310 2,01,71,250 0 17,56,060 Emails ids were not provided. Emails could not be sent. Even if, the Respondent passed the benefit, Respondent is still required to pass on the differential amount. Sub Total (Not Emailed) V=8+9+10 281 54754381 63610955 0 17,56,060 All the buyers to whom emails could not be sent. Grand Total VI=IV+V 454 7,90,95,475 8,28,91,520 36,84,259 ....
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....having passed on the interest amount also could not be done. p. On the basis of aforesaid discussions and findings it was concluded that in the initial investigation Report dated 28.08.2020, the profiteered amount was computed as Rs.7,90,95,474/- in respect of 452 home buyers. The Respondent claimed to had already passed on the ITC benefit of Rs.8,28,91,520/- to all the home buyers. However, the Authority did not consider the Respondent's claim and vide Interim Order 01/2021 dated 16.03.2021, directed the Respondent to procure the acknowledgement receipts from all the home buyers and also provide the contact details of all the home buyers to the DGAP for further verification along with third party verification certificate validating such claim. It was submitted that the Respondent failed to produce acknowledgements receipts from all the home buyers as directed by this Authority. Further, the Respondent also failed to provide contact details of all the home buyers. However, the Respondent provided the email ids of 174 home buyers (including applicant). Emails were sent to 173 home buyers leaving out 1 home buyer in respect of which no profiteering was computed and the Respondent a....
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....hority was restored from 23.2.2022 and a Notice dated 25.02.2022 was issued to the Respondent to explain why the Report dated 18.11.2021 furnished by the DGAP should not be accepted and his liability for profiteering in violation of the provisions of Section 171 should not be fixed. The Respondent was directed to file written submissions, which had been filed on 05.04.2022 wherein the Respondent had, inter-alia submitted following:- a. He had sent communications as early as October 2017 to the Customers of 'Prestige Lake Ridge' stating that the effective prices had reduced since the implementation of GST in India. The factors on the basis of which the prices would undergo the change were also stipulated and circulated in these communications to the Customers. The Respondent fluffier stated in these communications that the exact impact had to be analyzed in detail and that the Respondent would require time and clarity frown all the suppliers and contractors so that the accurate amount of savings is passed on to the Customers. The Respondent also communicated to the Customers that he had initiated negotiations with the suppliers and contractors analyzing the potential benefits on a....
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....f. He had passed on the benefit of ITC amounting to 1,78,251/-to the Applicant No. 1, Mr. Deepak Naik V as well. Copy of confirmation received from Mr. Deepak Naik V evidencing receipt of benefit of ITC was enclosed. g. Being a part of a large public group of Companies and always being compliant with various Central and State laws, the Respondent had ensured that it had lawfully complied with all the taxation laws as well. h. The Respondent is customer friendly, part of large public Group of Companies in India and the intention had always been to pass on the accurate amount of savings to his customers. The Respondent had adopted a very scientific approach as far as the workings of the accurate savings on ITC and cost reduction is concerned. Experts were engaged to arrive at the final amount of savings on account of GST implementation which had been passed on to the Customers. i. Based on the above submissions, the allegation that he had contravened the provisions of section 171 of the CGST Act, 2017 was not sustainable in view of the fact that the benefit of additional ITC received had already been passed on to all his Customers. j. He had gone through the Report of the DGA....
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....he independent Chartered Accountant was enclosed. This also author evidences the fact that the ITC benefit had been passed on by the Respondent. Also, copies of the Credit Notes and corresponding customer statement of accounts further evidencing this fact were enclosed. m. The methodology and procedure/mechanism of computation of "profiteering amount" adopted by the DGAP is wrong, incorrect, arbitrary, illegal and bad in law. As per Rule 126 of the Rules, this Authority bad been empowered to determine the methodology and procedure for determination as to whether the reduction in the rate of tax or the benefit of ITC had been passed on by the registered person to the recipients by way of commensurate reduction in prices. Till date, no specific methodology and procedure had been framed by this Authority under the powers conferred under Rule 126 of the Rules. Hence, the methodology/mechanism of computation of "profiteering amount" adopted by the DGAP is wrong and intoned. In this regard, the Respondent further submitted that after implementation of GST in India w.e.f. 01.07.2017, the Respondent suo-moto initiated the compliance of Section 171 of the CGST/SGST Act, 2017 and in absenc....
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....pay interest on the benefit actually passed on the customers before handing over the possession of the apartment/flat/unit and actual completion of the project However, the Respondent had already passed on more benefit of ITC as computed by the DGAP in his investigation reports. Therefore, in light of these facts, the Respondent had passed on more benefit of ITC which was actually required to be passed on as per the DGAP's investigation and that had also been passed on well within the time and thus no interest is liable to be passed on further to the customers of this project. p. Further, for imposition of penalty there should be an intention to evade payment of tax and in the present case, the Respondent made all attempt to comply with the law and had even communicated to the DGAP as well as before this Authority that he had passed on the benefit of ITC that had accrued to the Respondent and also submitted the relevant documents in support of the claim of having been passed on the benefit of ITC and acted in a bona fide manner. Hence, in such a situation no penalty might be imposed on the Respondent as the Responder t had not contravened the provisions of Section 171 of the CGST....
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....whether the reduction in the rate of tax or the benefit of ITC had been passed on by the registered person to the recipients by way of commensurate reduction in prices. The Authority in exercise of power delegated to it under Rule 126 of the CGST Rules, 2017, had notified the Methodology & Procedure vide Notification dated 28.03.2018 which is also available on the website. No fixed/uniform mathematical methodology could be determined for all the cases of profiteering as the facts and circumstances of each case as well as the nature of goods or services supplied in each case differ. Therefore, the determination of the profiteered amount had to be computed by taking into account the particular facts of each case. The computation of commensurate 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 from service to service and hence no fixed mathematical methodology could be prescribed to determine the amount of benefit which a supplier is required to pass on to a recipient or the profiteered amount. Furthermore, on the basis of information/data provided by the Respondent, the actual ITC ....
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....eering, if any, had to be determined at a given point of time and such determination cannot be deferred tilt the completion of the project. Hence, the investigation was done up to 30.09.2019 which could not be deferred till the completion of the project. Furthermore, to address the contention of the Respondent that the construction services was entirely based on milestones and taxable turnover and actual receipt of demands differ in general, it is submitted that even the home buyers pay belatedly oven after completion of the milestone, a reasonably long periods of 15 months in pre-GST period and 30 months in post-GST periods bad been considered to compute the profiteering. Moreover, the ITC taken into consideration is proportionate with the area sold in respective periods. Therefore, the periods taken in pre and post-GST was justifiable and was within the confines of the law. 7. The above clarifications furnished by the DGAP were supplied to the Respondent and the Applicant No. 1 to file re-joinder, if any. In response the Respondent had filed his rejoinder dated 12.07.2022, wherein, he, inter alia, stated as under- 7.1 He has actually passed on an amount of Rs. 8,28,91,520/- to....
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....s Authority. Hence, this Authority finds that, the matter relating to availability of benefit of ITC to the Respondent with respect to the impugned Project and calculation thereof recipient wise stand concluded. 10. However, as mentioned in earlier paragraphs, as per the directions of this Authority's I.O. No. 01/2021 dated 16.03.2021, the DGAP has carried out this investigation in the subject matter to establish whether the benefit of ITC had actually been passed on to the recipients as claimed by the Respondent and accepted by the DGAP in his previous Investigation Report dated 28.08.2020 and, secondly, whether the applicable interest on the profiteered amount had been paid by the Respondent to his recipients. 11. In relation to the first issue, it is observed that the Respondent was required to submit the acknowledgment receipts from the home buyers evidencing the receipt of the ITC benefit, including its quantum and also evidencing that the said benefit was in terms of Section 171 (1) of the CGST Act, 2017. For this the Respondent was required to produce the acknowledgments from the home buyers along with their contact details to the DGAP which were then required to be verifi....
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....t had submitted that he bad passed on the benefit of Rs. 8,28,91,520/- to 453 homebuyers. However, the DGAP could only verify the amount of Rs. 36,44,497/- passed on to the 31 home buyers, who had confined the receipt of the benefit of ITC from the Respondent Hence, it is concluded by the DGAP that the Respondent's claim of passing on benefit of Rs. 8,28,91,520/- could not be verified and the Respondent is yet to pass on the benefit of Rs. 7,54,50,978/- to 450 homebuyers. 13. The second issue was to verify whether the applicable interest on the profiteered amount has been paid by the Respondent to the recipients as claimed by the Respondent. In this regard, it is observed that the Respondent had failed to provide the details of payment of interest along with computation in terms of the guidelines for computation of interest on profiteered amount. Hence, this claim made by the Respondent could also not be verified by the DGAP. 14. Further, the Authority finds that the Respondent vide his submissions dated 05.04.2022 had raised few contentions as under:- 14.1 The Respondent has contended that, the methodology and procedure/mechanism of computation of profiteering amount adopted by....
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.... another project. Issuance of Occupancy Certificate/Completion Certificate would also affect the amount of benefit of ITC as no such benefit would be available once the above certificates were issued. 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. 14.2 The Respondent has contended that, the time periods taken by the DGAP for comparison of ITC in pre and post GST period is Incorrect. The Authority finds that, the period of investigation had neither been prescribed in the Central Goods and Service Tax Act, 2017 nor in the corresponding Rules/ Notifications. However, it is clarified that the Input Tax Credits in pre-GST (01.04.2016 to 30.06.2017) and post GST (01.07.2017 to 30.09.2019) periods were not compared alone. In the instant case, the DGAP had compared the percentage (%) of ratio of ITC to the taxable turnover in pre and post-GST periods. In pre-GST period (01.04.2016 to 30.06.2017), to ascertain the percentage of ratio of ITC to the taxable turnover, a considerable period of 15 months had been considered which is reasonable period of time. In....
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....ion 171 of the CGST Act, 2017 to the homebuyers. The Respondent had submitted that he had passed on the benefit of Rs. 8,28,91,520/- to all the homebuyers/customers. The Respondent has also claimed that he has passed on excess ITC benefit to his buyers/customers. The DGAP has responded to such claims as tabulated at Table A above and fund that Respondent has not passed commensurate benefit to all homebuyers/customers. The Authority agrees with such verification report of the DGAP as such verification has been conducted in accordance with the directions of this Authority. 18. The Authority finds that, provisions of law i.e. Section 171 of the CGST Act, 2017 mentioned herein above provide that benefit of the ITC needs to be provided to each and every supply in the commensurate manner. As such, the excess of the ITC benefit provided to some of the homebuyers/customers cannot be offset against others to whom less ITC benefit has been provided or no benefit have been provided at all. The Authority finds that the verification as done by the DGAP in terms of this Authority's Order No. 01/2021 dated 16.03.2021 does not substantiate the submissions and contentions of the Respondent that th....
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.... the above violation. Hence, the said penalty under Section 171 (3A) cannot be imposed on the Respondent retrospectively. 21. However, the Authority finds that the Respondent may also be executing other projects under the same GST Registration No. 29AABCP8096K1ZP and the issue of profiteering may arise in the other projects as well. In view of the observation made in the earlier paragraph, the Authority fords that there exists reason to investigate other projects for the purpose of determination of profiteering. Accordingly, this Authority as per the provisions of Section 171 (2) of the above Act take suo-mute cognizance of the same and in terms of Rule 133(5) of the said Rules, directs the DGAP to conduct investigation in respect of the other projects executed under the said registration and submit Report to this Authority for determination whether the Respondent is liable to pass on the benefit of ITC in respect of the other projects/towers to the buyers or not as per the provisions of Section 171 (1) of the above Act. 22. The concerned jurisdictional CGST/SGST Commissioner is also directed to ensure compliance of this Order. It may be ensured that the benefit of ITC as de....