TaxTMI 
TaxTMI 
2022 (9) TMI 1506
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.... said Application was examined by the Standing Committee on Anti-profiteering, in its meeting, the minutes of which were received in the DGAP's office on 15-10-2020, 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 ITC had been passed on by the Respondent to his customers in respect of Construction Service supplied by the Respondent. (b) On receipt of the reference from the Standing Committee on Anti-profiteering, a Notice under rule 129 of the Rules was issued by the DGAP on 5-11-2020. calling upon the Respondent to reply as to whether he admit that the benefit of ITC had not been passed on to his customers by way of commensurate reduction in price and if so, to suo motu determine the quantum thereof and indicate the same in his reply to the Notice as well as furnish all supporting documents. Vide the said Notice, the Respondent was also given an opportunity to inspect the non-confidential evidences/information furnished by the Applicant No. 1 during the period 12-11-2020 to 13-11-2020. However, the R....
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....assed in Cognizance for Extension of Limitation, In re 2021 (48) G.S.T.L. 225 (S.C.) = 2021 (376) E.L.T. 401 (S.C.) = [2021] 127 taxmann.com 72/167 SCL 99. (g) In response to the DGAP's Notice, dated 5-11-2020, the Respondent submitted partial documents/information vide letters and e-mails, dated 23-11-2020, 30-1-2021, 24-2-2021, 1-3-2021, 21-9-2021. 22-9-2021, 27-9-2021 and 29-9-2021. The submissions of the Respondent are given below:- i. The Respondent was incorporated under ''The Uttar Pradesh Urban Planning And Development Act, 1973 " by an Act of the Uttar Pradesh State legislature in order to ensure that there was orderly and planned development within Lucknow. It was imperative to point out that section 7 of the said Act clearly stipulates the Objectives of the Authority which has been reproduced hereunder for reference:- "The objects of the Authority shall be to promote and secure the development of the development area according to plan and for that purpose the Authority shall have the Power to acquire, hold, manage and dispose of land and other property, to carry out building, engineering, mining and other operations, to ....
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....mers in totality which was conveniently not informed by the Applicant No. 1 since his intention was only to arm-twist a Government Authority with ulterior motives. The Applicant No. 1 had squarely failed to state anywhere in his complaint that he was a beneficiary of the benefit of input credit which was moot point of his complaint. iv. It was pertinent to point out the law in this respect had been clearly laid down by the Hon'ble Supreme Court in the matter of S.P. Chengalvaraya Naidu v. Jagannath AIR 1994 SC 853, that the one approaching the courts/qausi-judicial authorities should come with clean hands. The relevant portion of the citation was cited hereunder- "One who comes to the court, must come with clean hands. We are constrained to say that more often than not, process of the court was being abused. Property-grabbers, tax-evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life find the court-process a convenient lever to retain the illegal-gains indefinitely. We have no hesitation to say that a person, who's case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of the l....
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....Profiteering law and rules framed hereunder. The entire project had commenced after 1-7-17. Since the project was commenced after 1-7-17, the procurements would take place after 1-7-17 which would be subject to tax under GST laws and the availment of transition benefit under section 140(3) & (6) would not arise. That even the question of profiteering in these cases would not arise which was also confirmed by the NAA vide his ruling Arjun Kumar Parwani v. Signature Builders Private Limited. x. While it was clear that the rigours of section 171 were not attracted in this case since the very first allotment based on a lottery was made after 1-7-2017. However to further buttress his contentions, the Respondent stated that this issue had been clearly addressed in the NAA case law of matter of Ramesh Kumar Yadav v. Vatika Ltd. [2019] 107 taxmann.com 50. xi. Even though the rigour of the Anti-profiteering law was not attracted, however since the Respondent was a Government Authority, it had passed on the entire credit to the consumers as had been demonstrated in the excel sheet of homebuyers. With regards to the issue of ITC benefit passed on it was ....
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....id not submit any such information or summary. (k) The main issues for determination are:- i. Whether there was benefit of reduction in rate of tax or ITC on the supply of Construction Service by the Respondent after implementation of GST w.e.f. 1-7-2017 and if so, ii. Whether the Respondent passed on such benefit to the recipients by way of commensurate reduction in price, in terms of section 171 of the CGST Act, 2017. (l) From the verification of documents submitted by the Respondent and his submission, it appeared that there was no sale of the flats in the said project in the pre-GST regime. Further, the first allotment made by the Respondent in this project was 4-7-2017 i.e. in post-GST period. On scrutiny of the documents submitted by the Respondent it was observed that the Respondent had invited applications for the allotment of flat in his new housing scheme 2016 named as "LDA Swati Apartment". Besides, this scheme, the Respondent had also offering flats in "Kritika apartment" and both housing schemes was located at Sultanpur road, Lucknow. In the scheme, flats was available in Stilt+Ground+3 floor build....
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.... No. of buyers Area Benefit passed on by the Respondent 1. No, of buyers for Swati Apartment A 421 25242.90 46780041.64/- 2. No. of buyers for Kritika Apartment B 298 13055.74 24201807.18/- 3. Total benefit passed by the Respondent C 7,09,81,848.82/- 4. Total Area of the Project D 46062.77 5. Total ITC received by the Respondent after introduction of GST E 8.98.82,000/- 6. Benefit of ITC to be passed by the Respondent F={(A+ B) *(E)/D} 7,47.31.900.84/- 7. Further Benefit to be passed by the Respondent G= 37,50,052.03/- (o) From the above table it was observed that the Respondent required to passed on the additional benefit of ITC of Rs. 37,50,052.03/- plus 12% GST in respect of the proportionate units sold by the Respondent up to 30-9-2020. Further, in respect of unsold units the Respondent was required to passed on the additional benefit of ITC accordingly. (p) On the basis of the details of outward supply of Construction Services submitted by the Respondent, it was also observed t....
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....efore this Authority is the issue of quantification of this benefit. That as per the report of DGAP the Respondent should have passed on credit of Rs. 7,47.31.900.84/- and therefore there is a shortfall of Rs. 37.50,052.03/-. That even on this point it was pointed out that the report of the DGAP was based on the benefit of hindsight, it was submitted that it was a large construction contract and a 5% variation was permissible in these contracts and hence due to the uncertainty this 5% cushion was taken while passing on ITC benefit since this might or might not have been incurred and there was no method by which the 5% could be anticipated at the time of costing to pass on the benefit of ITC. It was submitted that since the final costing of the project and this 5% variation had been incurred, the Respondent was in the process of passing on this benefit to the end-users. The Respondent submitted that this is not in the nature of profiteering but only in the nature of practicality that a benefit could only be passed on once the certainty of these expenses could be reliably assessed. 4. The Applicant No. 1 vide his email dated 8-4-2022 has submitted that the Respondent allotted the ....
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....'LDA Swati Apartment'. Besides, this scheme, the Respondent had also offered flats in 'Kritika apartment' and both of these housing schemes was located at Sultanpur road, Lucknow. In the scheme, flats were available in Stilt+Ground+3 floor building and total five types of flats were available for registration including LIG-Type-I, LIG-Type-II. LIG-Type-III. LIG-Type-IV and LIG-Type-V, for registration in the scheme from 15-7-2016 to 16-8-2016 which was offered by the Respondent. The Respondent had finally announced that the lottery draw was completed on 15-6-2017 for the project "Kritika & Swati Apartment". From the above discussion it was clear that the base price of the flats was already fixed before the introduction of GST at the time of advertisement only and hence the benefit of additional ITC accrued to the Respondent in post-GST period could not have been factored in base prices determined prior to introduction of GST. Further, the finalization of names of allottee's were also done prior to introduction of GST. As the result of the lottery drawn for the project "Kritika & Swati Apartment" in on 15-6-2017, prior to the introduction of GST and on the prices....
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....stalments and therefore the question of Anti-Profiteering to the specific complaint of the Applicant No. 1 was bogus and patently not maintainable. It was his own case that allotment was not done in the pre-GST era and therefore he could not claim to seek umbrage under the Anti-Profiteering Rules. That furthermore no allotment was made in the pre-GST era and the same had been accepted by the DGAP, however the most crucial point in the instant proceedings was that the allotment letter was issued to the allotee only on 2-11-2017 clearly indicating that the project was not an ongoing project as on 30-6-2017 and therefore the provisions of Anti-Profiteering did not apply. The Respondent had already submitted citations in this regard which had not been distinguished by either the Applicant No. 1 or the DGAP. The DGAP had averred that "rates were fixed in pre-GST period", this averment was untrue since only an estimated cost was fixed at the time of allotment and the actual cost was not determined at the time of such advertisement and therefore estimated cost by his very nomenclature means that this cost was not cast in stone. ii. The DGAP had clearly stated in....
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....at the time of final costing. Therefore even though the law did not apply to this project the credit had still being passed on since the Respondent was a government entity and any benefit being accrued was being passed on to honour the spirit of the GST legislation. 7. The hearing in the matter was held on 3-8-2022 through Video Conferencing. It was attended by Sh. Ajay Kumar Saini, Applicant No. 1 in person and Sh. Ajitesh Johari. Chartered Accountant for the Respondent. The Applicant No. 1 and the Respondent were heard. During the personal hearing, the Respondent has reiterated his arguments based on his written submissions dated 15-3-2022, 7-4-2022, 30-5-2022 and 17-7-2022. The Applicant No. 1 has also reiterated his complaint and his submissions made vide his email dated 8-4-2022. 8. The Authority has carefully considered the Reports filed by the DGAP, all the submissions and the documents placed on record, and the contentions raised by the Respondent vide his written submissions. It is clear from the plain reading of section 171(1) that it deals with two situations: - one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to ....
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....t of addition of ITC to all homebuyers. The Respondent have claimed to calculate and pass on benefit of ITC amounting to Rs. 7,09,81.848.82/- (Rs. 4.67.80.041.64/- for Swati Apartment and Rs. 2,42.01,807.18/- for Kritika Apartment) upto 30-9-2020 by adjusting the final demand of the homebuyers after giving the rebate of ITC and charged the GST @12% on the balance amount. Therefore, the Respondent was required to pass on additional benefit of ITC of Rs. 37.50.052.03/-(Rs. 7,47,31,900.84 - Rs. 7,09,81,848.82) plus 12% GST for the period 1-7-2017 to 30-9-2020. 9. However, the Authority finds that the Annexures attached to the DGAP's report does not contain any details/homebuyers-wise list to whom the remaining profiteering amount of Rs. 37,50,052.03/- plus 12% GST is to be passed on. 10. Since the Respondent has profiteered in the instant project, there is every likelihood that he has profiteered in other projects also under GST No. 09AAALL0016F1ZK. The Authority has reason to believe that the Respondent may have resorted to profiteering in the other projects also and hence, directs the DGAP under rule 133(5) to investigate all the other projects of the Respondent under t....