TaxTMI 
TaxTMI 
2022 (5) TMI 1594
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....by the Standing Committee on Anti-profiteering in the meeting held on 13-9-2019 and the minutes of which were received by the DGAP on 9-10-2019, 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. 1 in respect of construction service supplied by him (Respondent). (ii) the Standing Committee has forwarded the following documents along with the minutes of meeting:- (a) Copy of complaint. (b) Copy of Tax Invoice issued in the name of the Applicant No. 1. (c) Applicant No. 1's ledger statement. (d) Demand letter for the booked flat in the name of the Applicant No. 1. (iii) after 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 23-10-2019, calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the Applicant....
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....r Rate of tax, or additional ITC, the benefit should be passed on to the homebuyers. Question of passing on of benefit on introduction of GST in terms of lower rate of tax, or additional ITC for the units booked before GST came into force i.e. 1st July, 2017. The Respondent had duly passed on the benefit of ITC to his customers by way of commensurate reduction in prices. (c) the details of VAT, Service Tax, ITC of VAT, Cenvat Credit for the period April, 2016 to June, 2017 and output GST and ITC of GST for the period July, 2017 to September, 2019 for the project "Samyama City Tower 1-D" are furnished as below: Period Statute Samyama City Tower J-D Other Projects Gross Taxable turnover (Rs.) ITC/CENVAT available (Rs.) Gross Taxable turnover (Rs.) ITC/CENVAT available (Rs.) 2016-17 VAT 0 0 2514640059 0 Service Tax 0 0 1214219097 50423302 April, 2017 to June, 2017 VAT 0 0 1403895427 0 Service Tax 0 0 248412871 15911144 July, 2017 to March, 2018 GST 82356350 15651943 547833494 144070899 April, 2018 to March, 2019 GST 3973098....
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.... of such information/documents was required to be furnished. However, the Respondent did not submit any summary. (ix) Vide e-mail dated 11-11-2020, the Applicant No. 1 was afforded an opportunity to inspect the non-confidential documents/reply furnished by the Respondent on 16-11-2020 or 17-11-2020, which the Applicant No. 1 did not avail of. (x) The subject Application, various replies of the Respondent and the documents/ evidences on record had been carefully examined. The main issues for determination were:- (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. (xi) According to para 5 of Schedule-Ill of the CGST Act, 2017 (Activities or Transactions which shall be 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, sa....
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....quare meters was further reduced to 12% GST (effective rate was 8% in view of 1/3rd abatement on value), vide Notification No. 1/2018-Central Tax (Rate), dated 25-1-2018. Thus, it was observed that in the case of Construction Service the effective rate of tax (@ 4.5%) in the pre-GST era was lower than the effective rate of tax @ 8% or 12% as applicable, in post-GST era. 3. The DGAP in its report, dated 27-11-2020, stated that upon scrutiny of the documents submitted by the Respondent, it was observed that- (i) the Applicant No. 1 had booked the Flat No. ID-2410 on 10-2-2018 after the introduction of GST. (ii) to verify correctness of the statement of the Respondent with respect to RERA Registration claimed by him, the official website of Maharashtra RERA was visited and it was observed that there were 10 registrations in the name and address of the Respondent and the details have been furnished as under: - Sr. No. Project Name Registration No. Project Status 1. Adhiraj Samya Tower 2B P52000003039 Ongoing project 2. Adhiraj Samya Tower 2A P52000007539 Ongoing project 3. Adhiraj Samya Tower 1A P520000....
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....lementation of GST while fixing the base price. It was also observed that the price charged for the said residential flat was for a new project developed and constructed by the Respondent after implementation of GST. Hence, it appeared that the anti-profiteering provisions were not applicable to the impugned project under investigation. (v) Section 171 of the CGST Act, 2017 comes into play in the event when there is a reduction in the rate of tax or there is an increase in the benefit of ITC. In the present case, since the project itself was launched after implementation of GST w.e.f. 1-7-2017, there was no pre-GST tax rate or ITC availability that could be compared with the post-GST tax rate and ITC, to determine whether there was any benefit that was required to be passed on by way of reduced price. (vi) On the basis of the details of outward supply of construction service submitted by the Respondent, it was also observed that the service was supplied in the State of Maharashtra only. 4. The DGAP in its report, dated 27-11-2020 has concluded that section 171 (1) of the CGST Act, 2017, requiring that "any reduction in rate of tax on any suppl....
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....ther, 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. The Maharashtra Real Estate Regulatory Authority (MahaRERA) had given approval of project for a period from 8-1-2018 to 31-1-2023 unless renewed. Allotment of units, receipt of payment, etc. had taken place post-GST. There was no pre-GST tax rate/ details or ITC credit structure/details which could be compared with the post-GST tax rate and ITC. There was no benefit of CENVAT to compare ITC which was available to the Respondent post implementation of GST while fixing the base price in this case. 10. It is observed from the DGAP's report and documents submitted during the investigation that the instant project has received RERA approval for the period 8-1-2018 to 31-3-2023. It is also noted that all bookings have been made after GST was introduced and that all payments have been received after 1-7-2017. 11. However, the Authority also observes that provision of the RERA Act, 2016, make it mandatory for a real estate developer/promoter to maintain separate bank accounts for each of his projects registered separately under the ....