TaxTMI 
TaxTMI 
2023 (12) TMI 1404
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....ituated at Raj Nagar Extension, Meerut Road, Ghaziabad on the introduction of GST w.e.f. 01.07.2017, in terms of Section 171 of the CGST Act, 2017. 2. The DGAP vide his Report dated 20.04.2023 had inter-alia submitted the following: - i. On receipt of the reference from the NAA on 02.11.2022, a Notice under Rule 129 of the Rules was issued to Respondent calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the recipients 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 to furnish all documents in support of his reply. ii. The period covered by the current investigation was from 01.07.2017 to 31.10.2022. iii. The DGAP issued the Notice dated 10.11.2022 and subsequent reminders to the Respondent. The replies of Respondent to DGAP are summed up as follows: - a) The Respondent, having GSTIN: 09AADCD9607N1Z4, carries on the business of construction of flats and commercial shops as approved by Awas Bandhu, Dept. of Housing & Urban Planning Govt. of U.P Lucknow. The project was named "Diy....
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....e Tax paid on input services but no CENVAT Credit was available/ availed in pre-GST era, as per the VAT returns. The DGAP found that the Respondent had availed ITC of Rs. 1,15,34,080/- on VAT in the F.Y. 2016-17 and 2017-18 i.e. upto June-2017. Post-GST, the Respondent was entitled to avail ITC of GST paid on all the inputs and the input services including the sub-contracts. The Central Government, on the recommendation of the GST Council, had levied 18% GST (effective rate was 12% in view of 1/3rd abatement on value) on construction service, vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. From the information submitted by the Respondent for the period April, 2016 to July, 2022, DGAP had calculated the ratio of ITC to turnover, during the pre-GST (April, 2016 to June, 2017) and post-GST (July, 2017 to October, 2022) periods, as is shown in Table - 'A' below: Table-'A' (Amount in Rs.) S. No. Particulars April, 2016 to June, 2017 (Pre-GST) Total Post GST July, 2017 to October, 2022 (1) (2) (3) (4) 1 CENVAT of Service Tax Paid on Input Services as per ST-3 return (A) - - 2 ITC of VAT Paid on Purchase of....
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....mmensurate reduction in the base price as well as cum-tax price. Therefore, in terms of Section 171 of the Central Goods and Services Tax Act, 2017, the benefit of such additional ITC was required to be passed on by the Respondent to the respective recipients. viii. The Respondent vide his email dated 10.04.2023 sent to DGAP has submitted that he had charged GST from only 650 home buyers at the time of possession of flats and also GST rate charged from the above 650 home buyers was less than the effective rate of GST. Respondent claimed that eventually he had passed on Rs. 3,81,70,416/- of ITC benefits to the home buyers. To verify the claim of the Respondent DGAP sent emails to all 642 home buyers. Replies from only 102 Homebuyers have been received; out of 102 homebuyers, 23 denied that benefit of GST/Input Tax Credit was received by them, 64 have confirmed that GST discount had been received; and 15 were not sure whether the GST discount has been received by them or not. Hence, DGAP did not accept the contention of Respondent that benefit to all the homebuyers had been passed on. A summary of benefit of ITC required to be passed on and the ITC benefit claimed to have be....
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.... These recipients are identifiable as per the documents provided by the Respondent, giving the names and addresses along with Unit No. allotted to such recipients. xii. In view of the aforementioned findings, DGAP concluded that Section 171(1) of the Central Goods and Services Tax Act, 2017, requiring that "any reduction in 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", was contravened by the Respondent. 3. The above report was considered by the Commission and a copy of the investigation report dated 19.04.2023 was provided to the Respondent vide Notice dated 10.08.2023 to file his consolidated written submissions in respect of the above report of the DGAP. The Respondent vide letter dated 11.10.2023 filed his written submissions which are summarized as follows: - i. That the methodology adopted to compute and determine the anti-profiteering by the respected Authority was illegal and was arbitrary as the same was unconstitutional. The Respondent alleged that as per the provisions of Section 171 (3) read with Rule 126 of CGST Rules 2017 the methodology....
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....ects Pvt. Ltd wherein the Hon'ble Delhi High Court had granted an interim stay on an anti-profiteering investigation by DGAP on a complaint filed by home buyers who had booked units on or after 1 July 2017. The key argument advanced by the writ petitioner was that there was no element of passing of benefit under Section 171(1) of the CGST Act/ SGST Act for unit buyers whose agreement had been entered into during the introduction of GST, for the reason that there was neither change in the rate of tax nor there were any benefits of any additional ITC. iii. Submission with respect to complaint filed by the customer Smt. Sudha The Respondent had informed that the Applicant No. 1 Smt. Sudha was reluctant to purchase the flat and wished to get her money back with compensation. The Respondent had informed that he had settled the dispute with complainant and consequently both the parties had mutually agreed to execute a settlement deed dated 24.06.2023 whereby she had agreed to withdraw all the complaints which she had filed with all the Govt. agencies at consideration price of 27,50,000/- (Rupees twenty-seven lakh fifty thousand only). A copy of settlement deed was a....
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....ers, he had already given benefit of ITC to and therefore, the fact of denial as well as of uncertainty of receiving of benefit of ITC by all these 38 customers was not correct. vi. The Respondent argued that no penalty under section 171(3) read with Rule 133(3)(d) might be imposed as the respondent was complying with the provisions of Section 171 of the GST. 4. Copy of the above submissions dated 11.10.2023 filed by the Respondent was supplied to the DGAP for providing clarifications under Rule 133(2A) of the CGST Rules, 2017. DGAP vide his letter dated 16.11.2023 had filed the clarifications as under : - i. (Reply of Para 1) DGAP submitted that the methodology adopted by them in the Report was in line with the legal principles and this methodology of DGAP had been consistent throughout in all reports involving allegation of profiteering. DGAP further submitted that the case of Samsung India Electronics Pvt. Ltd. vs. Union of India & Ors., cited by the Respondent was not relevant in the present matter. ii. (Reply of Para 2) DGAP submitted that the averment made by the Respondent regarding non-applicability of anti-profiteering provisions on the custom....