Shri Ashok Khatri, Director General of Anti-Profiteering, Central Board of Indirect Taxes & Customs Versus M\/s S3 Infra Reality Pvt Ltd.
GST
2019 (3) TMI 369 – NATIONAL ANTI-PROFITEERING AUTHORITY – TMI
NATIONAL ANTI-PROFITEERING AUTHORITY – NAPA
Dated:- 27-2-2019
Case No. 12\/2019
GST
Sh. B.N. Sharma, Chairman, Sh. J.C, Chauhan, Technical Member And Ms. R. Bhagyadevi, Technical Member
\nNone for the Applicant No. 1., Shri Manoranjan, Assistant Commissioner, DGAP for the Applicant No. 2.
\nShri Ankur Agarwal, Authorised Representative and Ms. Alka Gupta, CA for the Respondent.
\nORDER
\n1. This Report dated 28.11.2018, has been received from the Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP), under Rule 129 (6) of the Central Goods & Services Tax (CGST) Rules, 2017. The brief facts of the present case are that a complaint dated 04.04.2018 was filed before the Haryana State Screening Committee on Anti-Profiteering by the Applicant No. 1 allegin<\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n 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, 22.11.2018 and 26.11.2018 stating that he was in the business of construction of flats under the Affordable Housing Scheme sanctioned under the Haryana Affordable Housing Policy, 2013 in Sector-82, Faridabad. The Respondent had also stated that after implementation of the GST w.e.f. 01.07.2017, the ITC on purchase of materials during July, 2017 and August, 2017 was negligible and he had raised the first demand without giving the benefit of ITC by changing GST @ 12% on 14.08.2017. He had further stated that he had raised the next demand on 14.02.2018 by levying GST @ 8% due to change in the rate of tax as per the Notification issued on 25.01.2018 and had given the benefit of ITC provisionally and in<\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n sh. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n 96 = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n o August, 2018), the details of the ITC availed and the taxable turnover during the above periods were as under:- = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ove 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 and low-cost housing was further reduced from 12% to 8%, vide Notification No. 1\/2018-Central Tax (Rate) dated 25.01.2018. In view of the change in the GST rate after 01<\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ax rate post-GST (%) = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n on the base profiteered amount of Rs. 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 Rs. 82,97,765\/- which included 8% GST on the base profiteered amount of Rs. 78,83,115\/- and therefore, the total profiteered amount during the period 01.07.2017 to 31.08.2018 was Rs. 1,48,60,874\/- which included GST (@ 12% or 8%) on the base profiteered amount of Rs. 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 Rs. 23,772\/-(including GST on the base amount of Rs. 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. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n r Benefit to be passed on as per Annex-22 = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n of Section 171 of the CGST Act, 2017 had been contravened by the Respondent in as much as the additional benefit of ITC @2.84% of the base price received by 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 Rs. 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 Rs. 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 Rs. 11,280\/- (23,772\/- (-) 12,492\/-). Further, the Report has stated that the Respondent had also realized an additional amount of Rs. 57,65,329\/- as mentioned at Sr. No. 2 & 7 of the Table- 'D' a<\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n plicants and the Respondent on 19.12.2018, which was postponed to 07.01.2019 on the request of the Respondent. On 07.01.2019 the Applicant 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. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n hat if any further benefit of ITC would be available to him it would be passed on at the time of possession of the flats. It has also been 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. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n s under:- = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n units thus a total amount of Rs. 47,68,67,405\/ after introduction of GST has been collected by him = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n as also correctly calculated the profiteered amount as Rs. 65,63,109 from all the buyers for the period w.e.f. 01.07.2017 to 24.01.2018 and an amount of Rs. 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 Rs. 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. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n the buyers of these commercial units. Accordingly out of total profiteered amount of Rs. 1,48,60,874 an amount of Rs. 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 Rs. 57,76,610 is to be passed on to the identified buyers as per the following table:- = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n d through Cheque = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" Shri Ashok Khatri, Director General of Anti-Profiteering, Central Board of Indirect Taxes & Customs Versus M\/s S3 Infra Reality Pvt Ltd.GST2019 (3) TMI 369 – NATIONAL ANTI-PROFITEERING AUTHORITY – TMINATIONAL ANTI-PROFITEERING AUTHORITY – NAPADated:- 27-2-2019Case No. 12\/2019 GSTSh. B.N. Sharma, Chairman, Sh. J.C, Chauhan, Technical Member And Ms. R. Bhagyadevi, Technical Member None for the … Continue reading “Shri Ashok Khatri, Director General of Anti-Profiteering, Central Board of Indirect Taxes & Customs Versus M\/s S3 Infra Reality Pvt Ltd.”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-17163","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/17163","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=17163"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/17163\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17163"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17163"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17163"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n(c) Copies of Tran-1 returns for transitional credit availed.
\n(d) Copies of VAT & ST-3 returns for April, 2016 to June, 2017.
\n(e) Copies of all demand letters and sale agreement\/contract issued in the name of Shri Ashok Khatri.
\n(f) Tax rates-pre-GST and post-GST.
\n(g) Copy of Balance Sheet for FY 2016-17 & FY 2017-18.
\n(h) Copy of Electronic Credit Ledger for 01.07.2017 to 31.08.2018.
\n(i) CENVAT\/Input Tax Credit register for April, 2016 to August, 2018.
\n(j) Details of taxable turnover and input tax credit for the project “Auric City Homes”.
\n(k) List of home buyers in the project “Auric city Homes” along with buyers of commercial shops.
\n(l) Copy of Project Report of RERA.
\n(m) Reconciliation of turnover reported in GSTR-3B with list of home buyers.
\n(n) Details of unsold flats and unsold commercial shops.
\n(o) Copies of contract and demand letters for new bookings made during the period August, 2018 to October, 2018 reflecting passing of 2% benefit of GST input credit to new<\/p>\n
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\n6
\nDate of Draw+24 months
\n11.09.2017
\n12.50%
\n3,12,296
\n
\n
\n37,476
\n3,49772
\n7
\nDate of Draw+30 months
\n01.03.2018
\n12.50%
\n3,12,296
\n-12,492
\n
\n24,984
\n3,24,788
\n8
\nDate of Draw+36 months
\n27.08.2018
\n12.50%
\n3,12,296
\n
\n
\n24,984
\n3,37,280
\n
\nTotal
\n
\n100.00%
\n24,98,369
\n-12,492
\n21,861
\n87,443
\n25,95,182
\n7. 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 Respondent had suo-moto admitted that there has been benefit of ITC post GST and he had passed on such benefit to the above Applicant by reducing the demand raised in the month of February, 2018 by Rs. 12,492\/- which was 1.23% of the amount collected post-GST. The Respondent had also assured that the final input tax credit benefit would be provided at the time of possession.
\n8. The DGAP in his Report has further submitted that prior to 01.07.2017, i.e., in the pre-GST era, th<\/p>\n
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\nTable B
\n(Amount in Rs.)
\nS. No.
\nParticulars
\nApril, 2016 to March, 2017
\nApril, 2017 to June, 2017
\nTotal (pre-GST)
\n01.07.2017 to 24.01.2018
\n25.01.2018 to 31.08.2018
\nTotal (Post-GST)
\n1
\nCENVAT of Service Tax Paid on Input Services used for Commercial Shops A
\n19,06,672
\n1,49,961
\n20,56,633
\n
\n
\n
\n2
\nInput Tax Credit of VAT Paid on Purchase of Inputs B
\n1,36,94,480
\n32,37,996
\n1,69,32,476
\n
\n
\n
\n3
\nTotal CENVAT\/Input Tax credit Available (C) = (A+B)
\n1,56,01,152
\n33,87,957
\n1,89,89,109
\n
\n
\n
\n4
\nInput Tax Credit of GST Availed (D)
\n
\n
\n
\n2,03,84,595
\n1,40,08,003
\n3,43,92,598
\n5
\nGross Taxable Turnover for VAT as per Annex-18 (E)
\n33,58,48,922
\n7,79,19,542
\n41,37,68,464
\n
\n
\n
\n6
\nAbated Taxable Turnover reported in VAT Return (F)
\n18,74,58,580
\n4,34,91,837
\n23,09,50,417
\n
\n&<\/p>\n
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\nD
\n
\n6.75%
\n2.75%
\n
\n5
\nIncrease in input tax credit availed post-GST(%)
\nE= 6.49% less 3.65%
\n
\n2.84%
\n2.84%
\n2.84%
\n
\nAnalysis of Increase in input tax credit: (Amount in Rs.)
\n6
\nBase Price collected during July, 2017 to August, 2018
\nF
\n
\n20,63,35,174
\n27,05,32,230
\n47,68,67,404
\n7
\nGST Collected over Basis Price
\nG= F*12% or 8%
\n
\n2,47,60,221
\n2,16,42,578
\n4,64,02,799
\n8
\nTotal Demand collected
\nH=F+G
\n
\n23,10,95,395
\n26,28,49,115
\n46,33,24,370
\n9
\nRecalibrated Basis Price
\nI= F* (1-E) or 97.16% of F
\n
\n20,04,75,252
\n26,28,49,115
\n46,33,24,370
\n10
\nGST @12%
\nJ=I*12%
\n
\n240,57,031
\n210,27,929
\n450,84,960
\n11
\nCommensurate demand price
\nK=I+J
\n
\n22,45,32,286
\n28,38,77,044
\n50,84,09,330
\n12
\nExcess Collection of Demand or Profiteering Amount
\nL=H-K
\n
\n65,63,109
\n82,97,765
\n1,48,60,874
\n10. The DGAP has also intimated that, it was quite clear from the above Table that the additional ITC of 2.84% of<\/p>\n
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\n12. The DGAP has also submitted that on the basis of the details of the outward supplie<\/p>\n
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\n3
\nOther Buyers (Residential)
\n100
\n44,966
\n6,33,27,248
\n20,00,231
\n37,76,938
\n-17,76,707
\nExcess Benefit passed on.
\n4
\nOther Buyers (Residential)
\n29
\n13,477
\n–
\n–
\n
\n-2,72,610
\nNo Consideration Paid Post-GST, However, Respondent passed on benefit.
\n5
\nOther Buyers (Residential)
\n10
\n4,116
\n–
\n–
\n–
\n–
\nCancelled Units
\n6
\nOther Buyers (Residential)
\n26
\n11,038
\n–
\n–
\n–
\n–
\nUnsold Units
\n
\nTotal Residential (A)
\n816
\n3,81,640
\n46,73,82,690
\n1,45,59,184
\n1,11,33,581
\n34,25,603
\n
\n7
\nCommercial Shop Buyers
\n13
\n4,438
\n94,84,715
\n3,01,690
\n–
\n3,01,690
\nBenefit to be passed on as per Annex-23
\n8
\nCommercial Shop Buyers
\n9
\n2,901
\n–
\n–
\n–
\n–
\nNo Consideration Paid Post-GST
\n9
\nCommercial Shop Buyers
\n14
\n7,971
\n–
\n–
\n–
\n–
\nUnsold Units
\n
\nTotal Commercial (B)
\n
\n36
\n15,310
\n94,84,715
\n3,01,690
\n–
\n3,01,690
\n
\n
\nGrand Total (C)=(A)+ (B)
\n852
\n3,96,950
\n47,68,67,405
\n1,48,60,874
\n1,11,33,581
\n37,27,293
\n&nbs<\/p>\n
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\n16 The Respondent further admitted that the amount of profiteering as calculated by the DGAP would be passed on to all the b<\/p>\n
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\n17. 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 Rs. 42,30,691 an amount of Rs. 18,19,582 was passed on and the balance amount of Rs. 24,11,109 along with interest of Rs. 2,03,716 (total Rs. 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 Rs. 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 t<\/p>\n
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\n“It shall be the duty of the Authority –
\n(i) to determine whether any reduction in the rate of tax on 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;
\n(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;
\n(iii) to order;
\n(a) reduction in prices;
\n(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 <\/p>\n
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\n21. In the 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 Rs. 1,59,38,195 (3.6%) in pre GST when compared to Rs. 3,09,70,006 (6.49%) in the post GST period thus providing him the net benefit of<\/p>\n
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\n23. 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 calculat<\/p>\n
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\n24. 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.<\/p>\n
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\n474
\n43,14,358\/-
\nCredited through Ledger Entries
\n177
\n11,60,562\/-
\nTotal
\n651
\n54,74,920\/-
\nCommercial Units
\n13
\n3,01,690\/-
\nGrand Total
\n
\n57,76,610\/-
\n25. 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.
\n26. Further the Authority as per Rule 136<\/p>\n
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