TaxTMI 
TaxTMI 
2023 (10) TMI 468
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....ore Highway Baner, Pune, Maharashtra-411045 (hereinafter referred to as "the Respondent") in respect of the purchase of flat in the Respondent's project "The Kul Nation". The Applicant No. 1 alleged that the Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in prices after implementation of GST w.e.f. 01.07.2017, in terms of Section 171 of the CGST Act, 2017. 2. The aforesaid application was examined by the Standing Committee on Anti-profiteering in its meeting and forwarded the same to the DGAP for further investigation on 06.05.2020. Accordingly, the investigation was initiated by the DGAP to collect evidence necessary to determine whether the benefit of ITC (hereinafter referred to as "ITC") had been passed on by the Respondent to the Applicant No. 1 in respect of the supply of Construction Services. 3. Sou 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 also afforded an opportunity to inspect the non-confidential evidence/information which formed the basis of the said Notice during the period from 25.06.2020 to....
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....T for the period from July 2017 to April 2020. (k) Copy of the Incorporation certificate with changed name. (I) Minutes of meeting with existing customers. (m) Comparative chart showing changes in the amenities. (n) Sample copy of booking form, agreement and invoices/ demand letters raised to customers who booked flats in post-GST period. (o) Copy of Financial Statements for FY 2016-17, 2017-18 & 2018-19. (p) Copy of project registration certificates with RERA. (q) List of home buyers in the project "VTP Beaumonde, Tower-1". (r) Sample copy of supply of service invoice for Infrastructure construction work and approval services. (s) Detailed working of Transitional credit attributable to Tower-1 of the VTP Beaumonde. (t) Detailed working of the CENVAT & ITC attributable to Tower-1 of the "VTP Beaumonde". (u) Sample copy of demand letters/ Tax Invoices issued to various home buyers. 9. The subject applications, various replies of the Respondent and the documents/evidence on record had been carefully examined by the DGAP. The main issues for investigation by the DGAP were: (i....
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....vices Tax Act and partly for effecting exempt 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 exempt 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 a 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 prices of such units to be sold to the prospective buyers by considering the net benefit of additional ITC available to him post-GST. 12. The DGAP also stated that the Respondent submitted sample copy of the booking form, agreement with 04 home buyers i.e. Sh. Vijay Kaustubh Ushire, Sh. Prashant Janwd, Sh. Amit Kumar and Sh. Ruturaj Sharad Kshirsagar and demand letters raised to them for the post-GST period. In the agreements, the following clause was there: "The ....
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....y paid on the inputs. Further, VAT paid on inputs by the Respondent was also not available in the instant case, as the Respondent was under a composition scheme in Maharashtra. Post-GST, the Respondent was entitled to avail ITC of GST paid on all the inputs and the input services including the sub-contracts. On the basis of the details of the ITC availed by the Respondent and his turnover, the ratios of ITC to turnovers during the pre-GST and post-GST periods were furnished in Table- B' as under : Table-'B' (Amount in Rs.) S.No. Particulars Total (Pre-GST) (March, 2013 to June, 2017) Total (Post-GST) (July, 2017 to April, 2020) 1 2 3 4 1. CENVAT of Service Tax Paid on Input Services as per ST-3 (A) 44,96,290 - 2. Input Tax Credit of VAT Paid on Purchase of Inputs as per VAT Returns (B) - - 3. Total CENVAT/Input Tax Credit Available (as submitted by the Respondent) (C) = (A+B) 44,96,290 - 4. Input Tax Credit of GST Availed (as submitted by the Respondent) (D) - 74,87,940 5. Total Taxable Turnover as per Home Buyers list (E) 5,65,52,304 16,78,78,823 6. Total Saleable was a in the p....
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....urate demand price K=I+J 4,28,73,050 Excess Collection of Demand or Profiteering Amount L=H-K 1,03,143 From Table 'B' and 'C' above, the DGAP deduced that the additional ITC of 0.24% of the turnover should have resulted in the commensurate reduction in the base price as well as cum-tax price. Therefore, in terms of Section 171 of the CGST Act, 2017, the benefit of such additional ITC was required to be passed on by the Respondent to the respective recipients. 18. The DGAP stated that from Table-B and C above, it was clear that the Respondent was required to pass on the additional benefit of ITC to the tune of 0.24% of the turnover. However, the Respondent had submitted that he had already passed on the benefit @4.5% to the home buyers, who had booked flats in the pre-GST period and @7% to the home buyers, who had booked flats in the post-GST period. The Respondent had booked 59 units in the pre-GST period (excluding 08 units cancelled subsequently) and 62 units in the post-GST period. Further, 88 units remained unsold as of 30.04.2020. There were 3 home buyers, who had booked flats in the pre-GST period but no deman....
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....im and he was asked to submit the payment receipt by which the actual payments were made to the Respondent. He had failed to submit the payment receipt and did not deny the receipt of the benefit of ITC. Hence, in the presence of documentary evidence available in the form of Tax Invoices issued by the Respondent and confirmatory emails of 20 home buyers having received the benefit, it appeared that the ITC benefit was passed on to him. 21. The DGAP stated that the Respondent was required to pass on an amount of Rs. 1,03,143/- to his home buyers. However, the Respondent had passed on Rs. 17,26,772/- to the home buyers who had booked flats in the pre-GST period. As the Respondent had passed on more amount than the additional benefit available to the Respondent, the provisions of Section 171 were not contravened by the Respondent. 22. The Respondent had supplied construction services in the State of Maharashtra only. 23. The DGAP concluded that Section 171 (1) of the CGST Act, 2017, requires that "any reduction in the rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices", had not be....