TaxTMI 
TaxTMI 
2022 (8) TMI 1457
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....-10-2020, inter-alia, has stated that:- i. The Standing Committee on Anti-profiteering examined the application filed by Applicant No. 1 in its meeting held on 10-1-2020, the minutes of which were received by DGAP on 24-1-2020, whereby it was decided to forward the same to the DGAP office to conduct a detailed investigation in the matter. Accordingly, the investigation was initiated to collect the evidence necessary to determine whether the benefit of the Input Tax Credit had been passed on by the Respondent to Applicant No. 1 in respect of the construction service supplied by the Respondent. ii. After receipt of the reference from the Standing Committee on Anti-profiteering, a Notice under Rule 129(3) of the Rules was issued by the Director General of Anti-profiteering on 28-1-2020, calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the above Applicant 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. The Respondent was also allowed to inspect the ....
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....lready informed his customers in writing that the GST benefit would be passed upon completion of the project. b. Applicant No. 1 had booked his flat in the year 2012-13 i.e. on 23-5-2012 and the Respondent had received around 40% of the payment in the service tax regime and the Service Tax was duly paid into the government treasury during that period. c. The Respondent had also sent a letter to the above Applicant and informed him that GST benefit shall be passed on to him upon completion of the project. d. Applicant No. 1 had then requested for cancellation of his said booking vide email dated 21-1-2020 and the same had been duly accepted by him. Process of cancellation, at the instance of Applicant No. 1, would be completed in due course. vi. Vide the aforementioned letters, the Respondent had submitted the following documents/information: (a) Copies of GSTR-1 Returns for the period July 2017 to December 2019. (b) Copies of GSTR-3B Returns for the period July 2017 to December 2019. (c) Electronic Credit Ledger for the period July 2017 to December 2017. ....
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.... in this regard was para 5 of Schedule III of the Central Goods and Services Tax 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 II, sale of building". Further, clause (b) of Paragraph 5 of Schedule II of the Central Goods and Services Tax Act, 2017 reads as "(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration had been received after issuance of the completion certificate, where required, by the competent authority or after his first occupation, whichever was earlier". Thus, the ITC on the residential units which were under construction but not sold was provisional ITC which may be required to be reversed by the Respondent, if such units remain unsold at the time of issue of the completion certificate, in terms of section 17(2) & Section 17(3) of the Central Goods and Services Tax Act, 2017, which read as under. Section 17(2) "Where the goods or services or both was used by the registe....
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.... 2.00% 1,38,840/- 7. Paid on the casting of the 4th slab of the building in which the said premises was situated 2.00% 1,38,840/- 8. Paid on the casting of the 5th slab of the building in which the said premises was situated 2.00% 1,38,840/- 9. Paid on the casting of the 6th slab of the building in which the said premises was situated. 2.00% 1,38,840/- 10. Paid on the casting of the 7th slab of the building in which the said premises was situated 2.00% 1,38,840/- 11. Paid on the casting of the 8th slab of the building in which the said premises was situated 2.00% 1,38,840/- 12. Paid on the casting of the 9th slab of the building in which the said premises was situated 2.00% 1,38,840/- 13. Paid on the casting of the 10th slab of the building in which the said premises was situated 1.00% 69,420/- 14. Paid on the casting of the 11th slab of the building in which the said premises was situated 1.00% 69,420/- 15. Paid on the casting of the 12th slab of the building in which the said premises was situated 1.00% 69,420/- 16. Paid on the casting of the 13th slab of the bu....
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....s of your apartment which the said premises was situated 2.50% 1,73,550/- 36. Paid on completion of Electro, Mechanical & Environmental requirements in which the said premises was situated 2.50% 1,73,550/- 37. Balance amount payable against possession of the said premises 5.00% 3,47,100/- Total 100% 69,42,000/ The above table shows that the payments to be made by the Applicant were linked to the phase-wise construction of the project. xii. The Respondent had informed that the above Applicant had requested for cancellation of his allotment but the Applicant refuted the claim of the Respondent. As the name of the above Applicant was figuring in the Homebuyers" list, profiteering in respect of the Applicant No. 1 had to be computed and the claim/information given by the Respondent had no impact on the profiteering calculation. xiii. The Respondent also submitted a copy of the certificate issued by the Real Estate Regulatory Authority (RERA) of Maharashtra. On perusal of the complete details of the declaration made before the RERA, it was observed that the number of flats declared in the ap....
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....', it was clear 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 0.92% and during the post-GST period (July 2017 to December 2019) it was 4.26% in Project "Ruparel Orion". This confirms that post-GST, the Respondent had benefited from additional ITC to the tune of 3.34% [4.26% (-) 0.92%] of the turnover. xvi. It was observed that the Central Government, on the recommendation of the GST Council, had levied 18% GST (effective rate was 12% because of l/3rd abatement for land value) on construction service, vide Notification No. 11/2017-Central Tax (Rate) dated 28-6-2017. The effective GST rate was 12% for flats. Accordingly, based on the figures contained in Table- 'B' above, the comparative figures of the ratios of ITCs availed/available to the turnovers in the pre-GST and post-GST periods as well as the turnovers, the recalibrated base price, and the excess realization (profiteering) during the post-GST period, was tabulated in table-C below. Table-C From the above table-'C', it was observed that the additional ITC of 3.34% of the turnover should have res....
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....ed that the Respondent had supplied construction services in the State of Maharashtra only. xix. The present investigation covers the period from 1-7-2017 to 31-12-2019. Profiteering, if any, for the period post-December, 2019, had not been examined as the exact quantum of 1TC that will be available to the Respondent in the nature cannot be determined at this stage, when the construction of the project was yet to be completed. 3. A copy of the investigation report dated 28-10-2020 was provided to the Respondent and Applicant No. 1 as per the Minutes of the Meeting of Authority held on 3-11-2020 and as conveyed vide notice dated 5-11-2022. The Respondent vide letter dated 19-11-2020 submitted his written submission. However, Applicant No. 1 did not submit any submissions against the DGAP's report. The detailed submissions of the Respondent to the Authority have been summed up below wherein, inter-alia, it was stated that:- i. There seemed to be many mistakes in DGAP's report dated 28-10-2020 of the DGAP. In this report anti-profiteering amount of Rs. 1,45,87,404/-has been arrived which was not correct. This should be Rs. 8,43,443/....
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....f ITC. (e) Hence, the correct calculation might be as shown in the table below:- Sl. No. Particulars As per the DGAP Calculation As per the Respondent's Calculation 1. Period A July 2017 to December 2019 July 2017 to December 2019 2. Output GST Rate (%) B 12 12 3. The ratio of CENVAT Credit/Input Tax Credit to Total Turnover as per the Above Table (%) C 4.26%/0.92% 1.14%/0.95% 4. Increase in Input Tax Credit availed Post-GST (%) D=(4.26-0.92)% or (1.14-0.95)% 3.34% 0.19% 5. Analysis of Increase in Input Tax Credit 6. Base Price Raised from July 2017 to December 2019 E 38,99,54,121 38,99,54,121 7. GST raised over Base Price F=E*B 4,67,94,495 4,67,94,495 8. Total Demand Raised G=E+F 43,67,48,616 43,67,48,616 9. Recalibrated Base Price H=E*(I-D) 37,69,29,653 38,92,01,047 10. GST (5)12% l=H*B 4,52,31,558 4,67,04,126 11. Commensurate Demand Price J=H+I 42,21,61,212 43,59,05,153 12. Excess Collection of demand or Profiteering Amount K=G-J 1,45,87,404 8,43,443 ....
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....5/-. Further, the DGAP also mentioned that the Respondent had not filed Service Tax Return from April 2016 to June 2017. ii. ITC of GST availed from July 2017 to December 2019 was Rs. 5,82,71,633/- as per DGAP's report, however, the Respondent submitted his reworked figure of Rs. 5,82,74,633/-. In this regard the DGAP has submitted that figure mentioned in the DGAP report has been taken from the GST returns filed by the Respondent and found to be correct. iii. Figures of DGAP's report and the Respondent reworked figures have no difference. iv. "The Total sold area (in sq. ft) relevant to turnover" referred to the area in respect to which demands have been raised or advances have been received by the Respondent. It did not mean the area of flats which were ctually sold to buyers during that period. For example, if a flat was sold in the pre-GST period and the demands were raised in both pre-GST and post-GST during the period of the investigation, then it would figure at both places. Due to a wrong understanding of the Respondent on this point, the Respondent has expressed disagreement with the figures of the DGAP. v. ....
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....ived an additional benefit of input tax credit of 3.34% of the turnover, which works out to 1,45,87,404/- (inclusive of GST) for the project "Ruparel Orion". The DGAP has concluded that this benefit of Rs. 1,45,87,404/- was required to be passed on to the recipients. 9. Section 171 of the CGST Act shows that it provides as under:- "Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices. " It is clear from the plain reading of section 171 (1) mentioned above that it deals with two situations:- One relating to the passing on the benefit of reduction in the rate of tax and the second on the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP"s Report that there has been no reduction in the rate of tax in the post-GST period. Hence, the only issue to be examined is whether there was any net benefit of ITC with the introduction of GST. The Authority finds 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 0.92....
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....he demands were raised in both pre-GST and post-GST periods, then it would figure at both places. Therefore, the above contention of the Respondent cannot be accepted and the total relevant area based on which the profiteered amount has been computed by DGAP is hereby accepted as correct. 12. The Respondent has contended that as per DGAP's report, ITC of GST availed from July 2017 to December 2019 was Rs. 5,82,71,633/-, however, the Respondent submitted his reworked figure of Rs. 5,82,74,633/-. The Authority finds that figure mentioned in the DGAP's report has been taken from the GST returns filed by the Respondent and have been ascertained as correct. Therefore, the above contention of the Respondent cannot be accepted. 13. As discussed above, this Authority concurs with the DGAP's report dated 28-10-2020. The Authority determines that the Respondent has profiteered by Rs. 1,45,87,404/- in respect of the project "Ruparel Orion" during the period from 1-7-2017 to 31-12-2019 which includes Rs. 86215/- of the Applicant No. 1 and orders refund/return/passing on of the profiteered amount, if not already done, along with the interest @18% thereon, from the date, when t....
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.... also be informed that the detailed NAA Order is available on Authority's website www.naa.gov.in. Contact details of the concerned Jurisdictional CGST/SGST Commissioner responsible for compliance of the NAA's order may also be advertised through the said advertisement. Such an advertisement will ensure that the mandate of section 171(2) of the CGST Act is fulfilled and that the benefit that is due to every eligible recipient is received along with interest, if not already received. 17. The concerned jurisdictional CGST/SGST Commissioner shall also submit a Report regarding the compliance of this Order to this Authority and the DGAP within a period of 4 months from the date of receipt of this Order. 18. The present investigation has been conducted up to 31-12-2019 only. However, the Respondent has not obtained the Completion Certificate (CC) till that date. Therefore, he is liable to pass on the benefit of ITC which would become available to him till the date of issue of CC. Accordingly, the concerned jurisdictional Commissioner CGST/SGST are directed to ensure that the Respondent passes on the benefit of ITC to the eligible flat buyers as per the methodology approved ....