TaxTMI 
TaxTMI 
2022 (10) TMI 408
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....ide above said Report dated 31.08.2021 has inter- alia stated that:- i) On receipt of the reference from the Standing Committee on Anti-profiteering, a Notice for initiation of investigation under Rule 129 of the Rules was issued by the Director General of Anti-profiteering on 20.11.2020, calling upon the Respondent to reply as to whether he admit that the benefit of ITC had not been passed on to the recipients by way of commensurate reduction in price and if so, to suo moto determine the quantum thereof and indicate the same in his reply to the Notice as well as furnish all documents in support of his reply. Further, the Respondent was afforded an opportunity to inspect the non-confidential evidences/information which formed the basis of the said Notice, during the period 03.12.2020 to 04.12.2020. The authorized representative of the Respondent availed of the said opportunity on 04.12.2020. ii) Vide e-mail dated 17.08.2021, the Applicant was also given an opportunity during 19.08.2021 & 23.08.2021 to inspect the non-confidential documents/reply furnished by the Respondent. The Applicant availed of the said opportunity on 19.08.2021. The Applicant vide email dated....
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....itted that the Company was a real estate developer, incorporated on May, 2001 with the Registrar of Companies, NCT, New Delhi with the main object of promoting Real Estate Business through developing Residential cum commercial complexes. The Company was engaged in business of construction of Residential cum commercial properties at Greater Noida. The main project carried by the company was JKG Palm Court, which was being constructed in 02 phases. viii) The Respondent had claimed that he had already passed on the benefit of Rs. 1,86,112/- to the Applicant and Rs. 6,13,37,994/- to the other customers in terms of Section 171 of the CGST Act, 2017. Thus, the Respondent claimed that he had passed on total benefit of Rs. 6,15,24,106/-. ix) Vide the aforementioned letters/e-mails, Respondent submitted the following documents/ information: (a) Copies of GSTR-1 returns for the period July, 2017 to October, 2020. (b) Copies of GSTR-3B returns for the period July, 2017 to October, 2020. (c) Copies of Tran-1 return for transitional credit availed by the Noticee. (d) Copies of VAT & ST-3 returns for the period April, 2016 to June, 2017. ....
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....son 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 exempted supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as was attributable to the said taxable supplies including zero-rated supplies". Section 17 (3) "The value of exempted supply under sub-section (2) shall be such as might be prescribed and shall include supplies on which the recipient was 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 ITC pertaining to the unsold units might not fall within the ambit of this investigation and the Respondent was required to recalibrate the selling price of such units to be sold to the prospective buyers by considering the net benefit of additional ITC available to him post-GST. xii) As regards the allegation of profiteering with regard to Project- JKG Palm Court, it was observed that prior to 01.07.2017, i.e., before the GST was introduced, the Respondent were eligible to avail CE....
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....June, 2017) was 0.80% and during the post- GST period (July, 2017 to October, 2020), it was 7.78%. This clearly confirms that post-GST, the Respondent had benefited from additional ITC to the tune of 6.98% [7.78% (-) 0.80%] of the turnover. Accordingly, the profiteering had been examined by comparing the applicable tax rate and ITC available in the pre-GST period (April, 2016 to June, 2017) when effective Service Tax @4.50% was payable with the post-GST period (July, 2017 to October, 2020) 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. xiv) On the basis of the figures contained in Table-'A' above, the comparative figures of the ratio of ITC availed/available to the turnover in the pre-GST and post- GST periods as well as the turnover, the recalibrated base price and the excess realization (profiteering) from the home buyers who booked flats during the pre-GST period, was tabulated in Table-'B' below:- Table-'B' (Amount in Rs.) S.No. Particulars Post- GST 1. Period A 01.07.2017 to 31.10.2017 2. ....
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....of Rs. 3,10,935/-. However, as per Annex-17 of the Report dated 31.08.2021, it was observed that the Respondent had to pass on benefit of Rs. 2,87,179/-, thus, passed on excess credit of Rs. 23,756/- to this buyer. This credit can't be set off against the benefit which ought to have been passed on to other buyers. Thus, this excess amount was not part of benefit further to be passed on by the Respondent. The emails of home buyers was enclosed as Annex-16 of the Report dated 31.08.2021. Thus, the Respondent claim of extending the benefit to his home buyers, was not acceptable. The summary of category-wise ITC benefit that was required to be passed on and the benefit already passed on by the Respondent was furnished in Table-'C' below. Table-'C' (Amount in Rs.) Sr.No. Category of Customers No. of Units Saleable Area (in Sqf) Demand Raised Post GST Profiteering Amt. as per Annex- 17 of the Report dated 31.08.2021 Benefit claimed to be Passed on by the Respondent Difference Remark A B C D E F G H=F-G I 1. Home buyer (Residential) 1 1,185 36,73,500 2,87,179 3,10,935/- (-) 23,756 Ex....
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....10.2020. Profiteering, if any, for the period post 31.10.2020 had not been examined as the exact quantum of ITC that would be available to the Respondent in future cannot be determined at this stage, when the Respondent was continuing to avail ITC in respect of the present project. 3. The above Report was carefully considered by the Authority and a Notice dated 04.03.2022 was issued to the Respondent to explain why the Report dated 31.08.2021 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. The Respondent did not file his written submissions, therefore, the Respondent was again given the opportunity of filing written submissions, if any, vide order sheet dated 29.03.2022. The Respondent requested vide letter dated 11.04.2022 for three weeks' time to file his written submissions. The request of the Respondent was allowed and was again directed to file his written submissions vide order sheet dated 26.04.2022 and 13.07.2022 but no written submission have been filed by the Respondent. 4. The hearing in the matter was sched....
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....d the profiteered amount as per the facts on record and as per the methodology adopted by it in case of other construction projects/ supply of construction services and such methodology has been approved and accepted by this Authority in those cases. The Authority finds no reason to differ from the above-detailed computation of profiteering in the DGAP's Report. 7. The Authority finds that, to verify the claims of the Respondent of having passed on the benefit of ITC to the recipients of supply, the DGAP had sent emails dated 17.08.2021 to only 324 buyers (whose email addresses were provided by the Respondent). In response to these 324 emails, 23 home buyers had denied the receipt of any benefit. Hence, this Authority finds that, such verification is not comprehensive, complete, definite or conclusive and hence cannot be accepted. 8. The Authority finds that the Respondent has profiteered by an amount of Rs. 5,14,06,920/- during the period of investigation i.e. 01.07.2017 to 31.10.2020. The Authority determines an amount of Rs. 5,14,06,920/- (including 12% GST) under section 133 (1) as the amount profiteered by the Respondent from his home buyers/shop buyers/customers/rec....
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....position of penalty for the period from 01.01.2020 onwards under the provisions of the said Section. Accordingly, a Notice be issued to the Respondent for the said purpose. 14. The concerned jurisdictional CGST/SGST Commissioner is also directed to ensure compliance of this Order. It may be ensured that the benefit of ITC has been passed on to each homebuyer/shop buyer/customer/recipient of supply, as per this Order along with interest @18% as prescribed. In this regard an advertisement of appropriate size to be visible to the public at large may also be published in a minimum of two local newspapers/ vernacular press in Hindi/English/local language with the details i.e., Name of the Builder (Respondent) - M/s JKG Constructions Pvt. Ltd., B-174, 1st Floor, Yojna Vihar, New Delhi-110092, Project- "JKG Palm Court" (Greater Noida) and amount of profiteering: Rs. 5,14,06,920/- so that the concerned home buyers/shop buyers/customers/recipients of supply can claim the benefit of ITC if not passed on. Home buyers/shop buyers/customers/recipients of supply may also be informed that the detailed NAA Order is available on Authority's website wvvw .naa .gov.in Contact details of concer....