2022 (9) TMI 313

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....in respect of the purchase of Flat No. 201 in the Respondent's project "Sal Partha Sreekar Residency", Marripalem Vuda layout, Visakhapatnam - 530009 in terms of Section 171 of the Central Goods and Services Tax Act, 2017. 2. The DGAP in his Report dated 27.01.2021 inter-alia has stated that:- i. The Andhra Pradesh Screening Committee on Anti-profiteering examined the said application filed by Applicant No. I and forwarded the said application with his recommendation, to the Standing Committee on Anti-profiteering for further action, in terms of Rule 128 of the Rules. The aforesaid application was examined by the Standing Committee on Anti-profiteering in his meeting, the minutes of which were received in the DGAP on 03.06.2020, 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 Input Tax Credit had been passed on by the Respondent to the Applicant No. I in respect of construction service supplied by the Respondent. ii. Along with the minutes of the meeting the Standing Committee forwarded the foll....

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.... the Respondent to the DGAP have been summed up below wherein, inter-alia, it was stated that :- a) During the subject period FY 2017-18, 2018-19 and 2019-20. he had executed only one development project which was "Sai Partha Sreekar Residency consisting of 10 residential apartments totaling 13,750 square feet. He had constructed this project on development agreement basis wherein 04 residential flat need to be delivered to the landowners in consideration and balance 06 flats were developer's share. c) For the entire project he had availed GST ITC of Rs. 12,43,260/-and made payment through Cash Challan was Rs. 8,05,134/- totaling to the GST collected Rs. 20,48,390/ from the customers. d) He had made a marginal profit margin of 1.34% as per the audited financials for FY 2018-19 and a margin 2.37% for FY 2019-20 as per the provisional financials. As per the Residential Construction Industry average acceptable profit rate was 6%. e) But in their case he had made a total profit margin of 1.73% for the entire project which was much lesser than the average industry acceptable percentage of profit. Even if the remuneration and interest on capital ta....

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....treated neither as a supply of goods nor a supply of services) which reads as "Sale of land and, subject to clause (b) of paragraph 5 of Schedule, sale of building". Further, clause (b) of Paragraph 5 of Schedule II 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 has been received after issuance of completion certificate, where required, by the competent authority or after his first occupation, whichever was earlier". Thus, the ITC pertaining to the residential units which were under construction but not sold was provisional ITC which might be required to be reversed by the Respondent, if such units remained unsold at the time of issue of the Completion Certificate, in terms of Section 17(2) & Section 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 exempte....

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....ined Building Permission from 02.02.2018 which was also the Project Starting Date in respect of the Building Plan No, 1086/0081/13/24/MEM/2018. In the Occupancy Certificate dated 03.06.2019 issued by Greater Visakhapatnam Municipal Corporation, the dates for receipt of Building Permit and submission of Building Commencement Notice by the builder was mentioned as 02.02.2018 and 13.02.2018, respectively. xiv. From the above discussion and observations, it appeared that the date of commencement of the impugned project was after the introduction of GST w.e.f 01.07.2017. There was no unit sold in the pre-GST era which could be compared with the post-GST base price to determine whether there was any profiteering. Neither the Applicant nor the Respondent had given any document to prove that any booking for the project was done in pre -GST period. There was no CENVAT Credit availed in pre-GST to compare with the ITC (GST) which was available to him post implementation of GST while fixing the base price him. Therefore, there was neither reduction in tax rate applicable to construction service, nor there was any addition benefit of "Input Tax Credit to compute profiteering. Hence, i....

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....ide dated 25.08.2022 which are summed up as under :- a) With respect to the contention "The Investigating Authority had not supplied all relevant documents, so the Applicant No.1 was unable to file her proper written submissions" it was submitted that during the course of investigation, the Respondent had claimed the confidentiality of all the information/data/documents submitted by him (Respondent) in terms of Rule 130 of the CGST Rules, 2017, therefore, in terms of Rule 129(5) of CGST Rules, 2017, no opportunity was afforded to the Applicant for inspection of the information/data/documents submitted by the Respondent. b) With respect to the contention "the Authority has consumed more than one year period for very simple and negligible issue" it was submitted that the matter pertains to NAA, however, the investigation report was submitted within stipulated time period prescribed in the law. 6. Personal hearings in the present case was granted through video conferencing on 07.06.2022 at 04:00 PM vide Order dated 19.04.2022 and 14.07.2022 at 04.00 PM vide order dated 07.06.2022. It was attended by Shri Bukari Babu Mohammed, Chartered Accountant, for the Res....