TaxTMI 
TaxTMI 
2023 (9) TMI 762
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....1ZF, the Authority directs the DGAP under Rule 133(5) to investigate all the other projects of the Respondent under the same GST registration which have not yet been investigated from the perspective of Section 171 of the CGST Act, 2017 and submit the complete investigation report for all the Projects under this single GST Registration." 2. The brief facts of the case have been mentioned in the NAA's I.O. No. 12/2019 dated 15.10.2019 and the same are reproduced below: i. A Report dated 07.03.2019, was received on 14.03.2019 from the Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP) after a detailed investigation under Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules, 2017. In the present case the Karnataka State Screening Committee on Anti-profiteering, vide the minutes of its meeting held on 31.07.2018 had forwarded an application dated 25.07.2018 filed by the Applicant No. 1 to the Standing Committee on Anti-profiteering under Rule 128 of the CGST Rules, 2017. The Applicant No. 1 stated that the Respondent had resorted to profiteering in respect of supply of Construction Service related to the purchase of Flat No. 11407, Tower-I, in the R....
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....AP had stated that the allegation of profiteering had not been established against the Respondent from the rate of tax angle, by comparing the applicable tax rates in the pre-GST and post-GST periods. In the pre-GST period (April, 2016 to June, 2017), Service Tax@ 6% and VAT@ 10.15% were payable on the construction service and in the post-GST period (July, 2017 to August, 2018), the GST rate was 18% on Construction Service (without 1/3rd abatement on account of land value). Therefore, he had concluded that the applicable tax rate on Construction Services had been increased from 16.15% in the pre-GST period to 18% in the post-GST period. Thus, there was an increase in the rate of tax and there was no additional benefit of ITC with the implementation of GST w.e.f. 01.07.2017, hence the provisions of Section 171 of the CGST Act, 2017 were not attracted. viii. The above Report was considered by the NAA in its meeting held on 19.03.2019 and it was decided to hear the Applicant No. 1 on 04.04.2019, but the Applicant No. 1 was not present during the scheduled hearing. Instead, the Applicant No. 1 vide his email dated 04.04.2019 submitted the demand letters from the Respondent for insta....
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....den the true facts about the project. He further submitted that there were 10 Towers comprising of 2415 flats in the project Nikoo Homes-I. Each Tower comprised of approx. 250 flats and each Tower was like an apartment/project in itself. The Respondent had completed each Tower one by one and gave possession to the buyers accordingly. The Applicant's Flat No. 11407 was in Tower 1 which was completed in the end of the project by the Respondent. The Respondent had received Occupancy Certificates (OC) from Bruhat Bengaluru Mahanagar Palike (BBMP) starting from Tower 9 to Tower 1 in phases. The OC for Tower No. 7, 8, 9 (called Wing G, H, I) was received on 20-03-2017, for Tower No. 5, 6 (called Wing E, F) was received on 04-12-2017, for Tower No. 3, 4, 10 (called Wing C, D, J) was received on 23-04-2018 and for Tower No. 1, 2 (called Wing A, B) was received on 28-07-2018. Post-GST, electrical, plumbing, carpentry, garden work, painting and multiple other works were done by the sub-contractors for the Respondent and the Respondent had availed ITC on these. He should have passed on that ITC to the buyers but he was not willing to pass on ITC benefit availed by him. He had further subm....
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....other material placed on record and found that: 1) As per the submissions filed by the Respondent himself on 28.08.2019 it is observed that the Occupancy Certificates (OCs) for all the Residential Units have been received as per the schedule given in below Table:- Sr. No. No. of Units Wings Date of Issuance 1 837 G, H and I 20-03-2017 2 514 E and F 04-12-2017 3 508 C, D, and J 23-04-2018 4 556 A and B 28-07-2018 TOTAL 2415 As per the above Table, OCs for all the 2415 units had been received till 28.07.2018. Therefore, the final calculation of the ITC benefit which needed to be passed on to the buyers should have been incorporated in the DGAP's Report dated 07.03.2019 as the period covered in the Report was from 1.7.2017 to 31.08.2018. Further, it was observed that the Respondent had obtained all the OCs up to 28.07.2018 and till then, he had sold 2368 flats out of 2415 flats but he had not reversed the proportionate ITC related to the unsold units. 2) Since the OCs had been received in this case, calculation of additional ITC benefit which needed to be passe....
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....,31,96,279 70,42,61,770 2,28,48,41,732 2,98,91,03,502 Input Tax Credit Transitional Credit 21,02,69,946 21,02,69,946 GST 16,44,73,020 17,75,60,674 34,20,33,694 5,23,28,981 15,89,44,691 21,12,73,672 Total Credit Available 37,47,42,966 17,75,60,674 55,23,03,640 5,23,28,981 15,89,44,691 21,12,73,672 Under VAT Law July '17 to Mar '18 April '18 to Aug '18 Particulars Nikoo-1 Others Total Nikoo-I Others Total Land 32,53,633 1,65,76,27,282 1,66,08,80,915 2,78,43,368 59,23,62,104 62,02,05,472 Sinking 16,96,776 16,96,776 3,16,14,574 3,16,14,574 Premium 6,39,83,334 31,247 6,40,14,581 1,90,36,476 1,34,772 1,91,71,248 City Infra 32,09,386 32,09,386 5,07,56,077 5,07,56,077 CAM 19,16,146 19,16,146 4,35,40,192 4,35,40,192 Construction 2,06,97,63,842 1,65,79,336 2,08,63,43,178 50,83,09,019 19,23,37,978 70,06,46,997 Flo....
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....18,51,30,085 18,51,30,085 Club House 49,26,795 49,26,795 7,96,68,899 7,96,68,899 Kitchen 30,32,541 30,32,541 7,20,33,469 7,20,33,469 Cancellation Charges 1,12,08,896 1,12,08,896 15,42,605 15,42,605 Rental Charges 11,36,436 11,36,436 Assignment Charges 38,84,602 38,84,602 11,91,606 11,91,606 Grand Total 2,39,33,35,411 1,69,21,87,350 4,08,55,22,761 1,09,80,04,798 78,70,99,957 1,88,51,04,755 Input Tax Credit Service Tax 11,50,34,747 9,89,46,985 21,39,81,732 3,37,70,757 3,09,59,862 6,47,30,619 Total Credit Available 11,50,34,747 9,89,46,985 21,39,81,732 3,37,70,757 3,09,59,862 6,47,30,619 It was observed from the above submissions filed by the Respondent there were several other projects of the Respondent....
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....roject 1. Nikon Homes - I Residential 2. Nikoo Homes -II Residential 3. Leela Residences Residential and the NAA had already issued its Order No. 49/2019 dated 14.10.2019 in the case of Nikoo Homes-II. b) That he had incurred/received substantial part of material/services before issuance of OC. However, the vendor's invoicing pattern would spilt over a period of 1 year. Hence, the Respondent had received certain invoices (for materials/services procured before issuance of OC) even after issuance of OC. c) That he has following projects which are non-residential in nature and not for sale as on date for which he has not claimed any ITC on procurement of materials/services: i. Leela Hotel & Convention Centre; ii. Retail Mall & Cineplex; iii. School Project. v. The Respondent has submitted the following documents vide aforementioned letters and e-mails:- a. Copies of GSTR-1 Returns for the period Sept., 2018 to Oct., 2019. b. Copies of GSTR-3B Returns for the period Sept., 2018 to Oct., 2019. c. Copy of quarterly project report submitted to RERA upto Oct., 2019. ....
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....the information submitted by the Respondent for the period from April, 2016 to October, 2019, the details of the input tax credits availed by him, his turnovers from the project "Nikon Homes - I" the ratios of input tax credits to turnovers, during the pre-GST (April, 2016 to June, 2017) and post-GST (July, 2017 to October, 2019) periods, were furnished as is given in Table-`B' below:- Table-'B' (Amount in Rs.) S.No. Particular April, 2016 to June, 2017 (Pre-GST) July, 2017 to August, 2018 Sept., 2018 to October, 2019 Total (Post-GST) (1) (2) (3) (4) (5) (6)=(4)+(5) 1. CENVAT of Service Tax Paid on Input Services (A) 15,29,59,685 - - - 2. Credit of VAT Paid on Purchase of Inputs (B) 6,48,43,094 - - - 3. Rebate of VAT (WCT) for the payment made to registered Contractors or Sub-contractors (C) 14,45,39,494 - - - 4. Input Tax Credit of GST Availed (D) - 21,68,02,00 5,23,81,782 26,91,83,783 5. Input Tax Credit of GST reversed on receipt of OC (E) - 55,62,072 27,88,885 83,50,957 6. Total CENVAT/VAT/Input Tax Credit Available before reversal (F....
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....27%. Moreover, the effective rate of tax has also gone up from 16.15% to 18%, post introduction of GST. Section 171 (1) of the Central Goods and Services Tax Act, 2017 dealing with profiteering can be invoked in the event when there was a reduction in the rate of tax or there is an increase in the input tax credit. Since neither of the conditions prescribed under the aforesaid Section 171 (1) has been met, the said statutory provision is not applicable to the present case for the project "Nikoo Homes - l". 9. A copy of the investigation Report dated 30.09.2020 was provided to the Applicant No. 1 as per the Minutes of the Meeting of NAA held on 05.10.2020 vide letter dated 07.10.2020. A letter was also written to Secretary, Real Estate Regulatory Authority, Karnataka requesting him to intimate whether the Respondent had maintained separate bank accounts for his projects Nikko Homes -I, Nikko Homes-II and Leela Residences. Hearing in the matter was held on 29.04.2022 and the same was attended by Sh. Vivek Kumar, Applicant. During the personal hearing the Applicant No. 1 was heard. Further, the Applicant No. 1 also submitted his consolidated written submissions on 04.05.2022 where ....
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....of ITC with the introduction of GST. The Commission observes that, the ITC, as a percentage of the turnover, that was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 9.95%, whereas, during the post-GST period (July-2017 to October, 2019), it was 9.27%. Hence, the Respondent has availed lesser ITC to the extent of 0.68% [9.95% (-) 9.27%] of the turnover as compared to the pre-GST period. This confirms that in the post-GST period, the Respondent has not been benefited from additional ITC as percentage of the turnover that was available to the Respondent during post-GST is lower than during the pre-GST. 14. In the context of this case, we also refer to provisions of Section 4 (2) (I) (d) of the Real Estate (Regulation and Development) Act, 2016 which, inter- alia, provides as below:- "that seventy percent. of the amounts realised for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose:- Provided that the promoter shall withdraw the amounts from the se....