2019 (3) TMI 369 – NATIONAL ANTI-PROFITEERING AUTHORITY – TMI – Profiteering – Auric City Homes – benefit of input tax credit not passed on – net additional benefit of ITC – contravention of Section 171 of the CGST Act, 2017 – whether there has been any benefit of reduction in the rate of tax or ITC that needs to be passed on to the recipients by way of commensurate reduction in prices – Held that:- In the present case, the Respondent has availed benefit of additional ITC of 6.49% (post GST) as compared to 3.65% (pre-GST). Based on the data and the documents filed by the Respondent, this percentage has been rightly arrived at by the DGAP by taking into account the benefit of credit available during pre GST (April 2016 to June 2017) to the taxable turnover received during the said period. Similarly for the post GST period (01 07.2017 to 31.08.2018) the percentage of ITC has been arrived at by taking into account the credit available as against the taxable turnover received during the s
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res. The Respondent has also stated that to 177 home buyers the profiteered amount has been passed on through the credit notes and letters to this effect have been sent to all these home buyers.
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Thus, the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him under the above Policy in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus realized more price from them than he was entitled to collect and has also compelled them to pay more GST than that they were required to pay by issuing incorrect tax invoices and hence he has committed an offence under section 122 (1) (i) of the CGST Act, 2017 and therefore, he is liable for imposition of penalty – thus, a SCN be issued to him directing him to explain why the penalty prescribed under Section 122 of the above Act read with rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.
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Application disposed off. – Case No. 12/2019 Dated:- 27-2-2019 – S
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way of commensurate reduction in the price after implementation of the GST w.e.f. 01.07.2017 and charged CST on full amount of instalments. This Complaint was further referred to the Standing Committee on Anti-profiteering by the Screening Committee vide minutes of its meeting dated 20.06.2018 under Rule 128 of the above Rules. 2. The above Complaint was examined by the Standing Committee on Anti-profiteering in its meeting held on 07.08.2018 & 08.08.2018 and its minutes were forward to the DGAP for detailed investigation under Rule 129 (1) of the CGST Rules, 2017. 3. The DGAP on receipt of the above minutes had called upon the Respondent to submit reply as to the whether the ITC benefit was passed on by him to his recipients and also asked him to suo-moto determine the quantum of benefit which was not passed on. The Respondent had submitted replies vide letters dated 20.09.2018, 10.10.2018, 16.10.2018, 01.11.2018, 12.11.2018, 13.11.2018, 14.11.2018, 15.11.2018, 19.11.2018, 22.11.2
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ugust, 2017, but he had failed to mention the demand which was raised in the month of March 2018 which included the benefit of ITC which was passed on to the Applicant. He has further submitted that he had given the benefit of ITC to his customers and also assured them that such benefit would be passed on at the time of possession. 4. The DGAP's investigation report has covered the period from 01.07.2017 to 31.08.2018. 5. The Respondent had also submitted the following documents along with their replies: – (a) Copies of GSTR-1 returns for July, 2017 to August, 2018. (b) Copies of GSTR-3B returns for July, 2017 to August, 2018 along with copies of challans for depositing the GST in Cash. (c) Copies of Tran-1 returns for transitional credit availed. (d) Copies of VAT & ST-3 returns for April, 2016 to June, 2017. (e) Copies of all demand letters and sale agreement/contract issued in the name of Shri Ashok Khatri. (f) Tax rates-pre-GST and post-GST. (g) Copy of Balance Sheet for FY
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t and the details of amounts and taxes paid by the Applicant No. 1 to the Respondent were as has been given below in the Table:- Table-'A' (Amount in Rs.) S. No. Payment Stage Due Date Basic % BSP Benefit Passed on Service Tax GST Total 1 Application for allotment (Date of Draw) 27.08.2015 5.00% 1,24,919 4,372 1,29,291 2 On allotment 11.09.2015 20.00% 4,99,674 17,489 5,17,163 3 Date of Draw+6 months 22.03.2016 12.50% 3,12,296 3,12,296 4 Date of Draw+12 months 27.08.2016 12.50% 3,12,296 3,12,296 5 Date of Draw+18 months 27.02.2017 12.50% 3,12,296 3,12,296 6 Date of Draw+24 months 11.09.2017 12.50% 3,12,296 37,476 3,49772 7 Date of Draw+30 months 01.03.2018 12.50% 3,12,296 -12,492 24,984 3,24,788 8 Date of Draw+36 months 27.08.2018 12.50% 3,12,296 24,984 3,37,280 Total 100.00% 24,98,369 -12,492 21,861 87,443 25,95,182 7. The DGAP has also submitted that unlike other cases in which allegation of not passing on the benefit of ITC is generally contested but in the present case the R
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ed that the Respondent was eligible to ITC on VAT paid on inputs but the CENVAT credit of Central Excise Duty paid on inputs was not available and post-GST the Respondent was eligible to avail ITC of GST paid on inputs and input services including the tax paid by his sub-contractors. He has further claimed that from the data submitted by the Respondent duly verified from his returns filed during the pre-GST period (April, 2016 to June, 2017) and the post-GST period (July, 2017 to August, 2018), the details of the ITC availed and the taxable turnover during the above periods were as under:- Table B (Amount in Rs.) S. No. Particulars April, 2016 to March, 2017 April, 2017 to June, 2017 Total (pre-GST) 01.07.2017 to 24.01.2018 25.01.2018 to 31.08.2018 Total (Post-GST) 1 CENVAT of Service Tax Paid on Input Services used for Commercial Shops A 19,06,672 1,49,961 20,56,633 2 Input Tax Credit of VAT Paid on Purchase of Inputs B 1,36,94,480 32,37,996 1,69,32,476 3 Total CENVAT/Input Tax credit
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= (C)*(J)(I) or [(K) = (D)*(J)(I)] 1,59,38,195 3,09,70,006 Ratio of Input Tax Credit Post-GST [(L) = (K)/(I)] 3.65% 6.49% 9. The DGAP has also contented that from the above Table, it was clear that the ITC as a percentage of the total turnover that was available to the Respondent during the pre-GST period from April, 2016 to June, 2017 was 3.65% and during the post-GST period w.e.f. July, 2017 to August, 2018, it was 6.49%. The Report has further claimed that this data duly confirmed that post-GST, the Respondent had benefited from additional ITC to the extent of 2.84% [6.49% (-) 3.65%] of the taxable turnover. The DGAP has also noted that the Central Government, on the recommendation of the GST Council, had levied 18% GST, effective rate of which was 12% in view of 1/3rd abatement on the value of land on construction service vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. He has further noted that the actual GST rate on construction service in respect of affordable
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12.00% 8.00% 3 Ratio of CENVAT/Input Tax Credit to Taxable Turnover asper Table-B above (%) C 3.65% 6.49% 6.49% 6.49% 4 Increase in tax rate post-GST (%) D 6.75% 2.75% 5 Increase in input tax credit availed post-GST(%) E= 6.49% less 3.65% 2.84% 2.84% 2.84% Analysis of Increase in input tax credit: (Amount in Rs.) 6 Base Price collected during July, 2017 to August, 2018 F 20,63,35,174 27,05,32,230 47,68,67,404 7 GST Collected over Basis Price G= F*12% or 8% 2,47,60,221 2,16,42,578 4,64,02,799 8 Total Demand collected H=F+G 23,10,95,395 26,28,49,115 46,33,24,370 9 Recalibrated Basis Price I= F* (1-E) or 97.16% of F 20,04,75,252 26,28,49,115 46,33,24,370 10 GST @12% J=I*12% 240,57,031 210,27,929 450,84,960 11 Commensurate demand price K=I+J 22,45,32,286 28,38,77,044 50,84,09,330 12 Excess Collection of Demand or Profiteering Amount L=H-K 65,63,109 82,97,765 1,48,60,874 10. The DGAP has also intimated that, it was quite clear from the above Table that the additional ITC of 2.84% of the ta
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on the base profiteered amount of ₹ 58,59,919/-. He has further claimed that the amount of benefit of ITC that needed to be passed on by the Respondent to the recipients or in other words, the profiteered amount realised by him during the period between 25.01.2018 to 31.08.2018, come to ₹ 82,97,765/- which included 8% GST on the base profiteered amount of ₹ 78,83,115/- and therefore, the total profiteered amount during the period 01.07.2017 to 31.08.2018 was ₹ 1,48,60,874/- which included GST (@ 12% or 8%) on the base profiteered amount of ₹ 1,35,43,034/-. The home buyer and unit no. wise break-up of this amount was provided in Annex-21 by the DGAP attached with his report, which was inclusive of ₹ 23,772/-(including GST on the base amount of ₹ 21,683/-) which was the profiteered amount in respect of the Applicant No. 1, mentioned at serial No. 65 of Annex-21 of the DGAP's report. 12. The DGAP has also submitted that on the basis of the det
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enefit to be passed on as per Annex-22 3 Other Buyers (Residential) 100 44,966 6,33,27,248 20,00,231 37,76,938 -17,76,707 Excess Benefit passed on. 4 Other Buyers (Residential) 29 13,477 2,72,610 No Consideration Paid Post-GST, However, Respondent passed on benefit. 5 Other Buyers (Residential) 10 4,116 – Cancelled Units 6 Other Buyers (Residential) 26 11,038 – Unsold Units Total Residential (A) 816 3,81,640 46,73,82,690 1,45,59,184 1,11,33,581 34,25,603 7 Commercial Shop Buyers 13 4,438 94,84,715 3,01,690 – 3,01,690 Benefit to be passed on as per Annex-23 8 Commercial Shop Buyers 9 2,901 – No Consideration Paid Post-GST 9 Commercial Shop Buyers 14 7,971 – Unsold Units Total Commercial (B) 36 15,310 94,84,715 3,01,690 – 3,01,690 Grand Total (C)=(A)+ (B) 852 3,96,950 47,68,67,405 1,48,60,874 1,11,33,581 37,27,293 13. The DGAP in his report has noted that as per the table given above the Respondent had passed on lesser benefit than what he should have passed in respect of 651 cases o
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the Respondent during the period w.e.f. 01.07.2017 to 31.08.2018, has not been passed on to the Applicant and other recipients by the Respondent. He has further claimed that on this account, the Respondent had realized an additional amount of ₹ 23,772/- (Sr No. 1 of table- 'D' in para-19) from the above Applicant which included both the profiteered amount @2.84% of the taxable amount (base price) and GST on the said profiteered amount, however, the Respondent had suo-moto passed on ₹ 12,492/- as per the demand letter dated 10.02.2018 issued to the Applicant, and therefore, the Respondent had profiteered by an amount of ₹ 11,280/- (23,772/- (-) 12,492/-). Further, the Report has stated that the Respondent had also realized an additional amount of ₹ 57,65,329/- as mentioned at Sr. No. 2 & 7 of the Table- 'D' above which included both the profiteered amount @2.84% of the taxable amount (base price) and GST on the said profiteered amount from 663
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cant No. 1 did not appear but the DGAP was represented by Shri Manoranjan, Assistant Commissioner while Mr. Ankur Agarwal, Authorised representative and Ms Alka Gupta, CA appeared on behalf of the Respondent. Further hearings were held on 13.02.2019 and 18.02.2019. The Respondent during the hearing submitted that the total turnover of his project was 175 Crores and the project was an affordable housing project. He also submitted that the project had started in August, 2015 and the possession of the flats would be given by July, 2019. The Respondent accepted the Report submitted by the DGAP and said that he was in the process of passing on the ITC benefits as had been mentioned in the DGAP's report to all the recipients/buyers. 16 The Respondent further admitted that the amount of profiteering as calculated by the DGAP would be passed on to all the buyers for both the residential and the commercial units. He also reiterated that the major amount as calculated by the DGAP had already
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een submitted that he had instructed his bank to take necessary action and cheques will be released as and when the bank NOC is issued to the buyers or to the Respondent. 17. On 18.02.2019 the Respondent further submitted that in respect of 188 home buyers of residential units out of the total profiteered amount of ₹ 42,30,691 an amount of ₹ 18,19,582 was passed on and the balance amount of ₹ 24,11,109 along with interest of ₹ 2,03,716 (total ₹ 26,14,825) had been paid through cheques which were filed by him as evidence. He also promised to pay all the 13 buyers of commercial units the entire profiteered amount of ₹ 3,01,690. In respect of 177 home buyers the Respondent stated that since the balance instalments were pending from these buyers the profiteered amount for each one of them will be adjusted against their pending instalments. In this regard he also produced letters to the effect that the amount will be adjusted against the payments due whic
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any supply of goods or services or the benefit of input tax credit has been passed on to the recipient by way of commensurate reduction in prices; (ii) to identify the registered person who has not passed on the benefit of reduction in the rate of tax on supply of goods or services or the benefit of input tax credit to the recipient by way of commensurate reduction in prices; (iii) to order; (a) reduction in prices; (b) return to the recipient, an amount equivalent to the amount not passed on by way of commensurate reduction in prices along with interest at the rate of eighteen percent. from the date of collection of the higher amount till the date of the return of such amount or recovery of the amount not returned, as the case may be, in case the eligible person does not claim return of the amount or is not identifiable, and depositing the same in the Fund referred to in section 57; (c) imposition of penalty as specified in the Act; and (d) cancellation of registration under the Act.
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present case as has been noted by the DGAP the Respondent has availed benefit of additional ITC of 6.49% (post GST) as compared to 3.65% (pre-GST) as can be seen from the table given below. Based on the data and the documents filed by the Respondent, this percentage has been rightly arrived at by the DGAP by taking into account the benefit of credit available during pre GST (April 2016 to June 2017) to the taxable turnover received during the said period. Similarly for the post GST period (01 07.2017 to 31.08.2018) the percentage of ITC has been arrived at by taking into account the credit available as against the taxable turnover received during the same period. Based on the above analysis it is clear that the Respondent had benefit of ITC of ₹ 1,59,38,195 (3.6%) in pre GST when compared to ₹ 3,09,70,006 (6.49%) in the post GST period thus providing him the net benefit of ITC of 2.84%:- 22. It is also evident that the Central Government had levied 18% GST (effective rate w
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iod w.e.f. 01.07.2017 to 24.01.2018 and an amount of ₹ 82,97,765 for the period between 25.01.2018 to 31.08.2018 taking into account the GST effective rate of 8% and net benefit of ITC of 2.84%. Thus the Respondent has profiteered total amount of ₹ 1,48,60,875 for the period from 01.07.2017 to 31.08.2018 in respect of all the 651 residential units and 13 commercial units. The above calculations of the profiteered amount has been duly admitted to be correct by the Respondent and he has willingly accepted to pass on the benefit of additional ITC which had become due to him after coming into force of the ITC. 23. From the documents placed on record and the DGAP's report it is evident that the Respondent has sold 780 units out of 816 residential units, out of which for 29 units there was no consideration paid after introduction of GST, hence the profiteered amount has to be calculated only for 751 units which have been sold and consideration received. Out of these 751 home
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total profiteered amount of ₹ 1,48,60,874 an amount of ₹ 90,84,264 has already been passed on as is evident from Annexure 17 of the DGAP's Report where intimations have been filed by the Respondent stating the details of the payments regarding ITC benefit paid to their buyers. The balance amount of ₹ 57,76,610 is to be passed on to the identified buyers as per the following table:- 24. In view of the above facts this Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the price to be realized from the buyers of the flats commensurate with the benefit of ITC received by him as has been detailed above. Since the present investigation is only up to 31.08.2018 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondent as and when the remaining residential/commercial units are sold. The Respondent's Annexures dated 19.02.2019 and 25.02.2019 which comprise of the details of payme
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through Ledger Entries 177 11,60,562/- Total 651 54,74,920/- Commercial Units 13 3,01,690/- Grand Total 57,76,610/- 25. It is evident from the above that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him under the above Policy in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus realized more price from them than he was entitled to collect and has also compelled them to pay more GST than that they were required to pay by issuing incorrect tax invoices and hence he has committed an offence under section 122 (1) (i) of the CGST Act, 2017 and therefore, he is liable for imposition of penalty. Accordingly, a Show Cause Notice be issued to him directing him to explain why the penalty prescribed under Section 122 of the above Act read with rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him. 26. Further the Authority as per Rule 136 of the COST Rules 2017 directs the Commissioners of CGST/SGST Ha
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