Sh. Paval Antony Vs M/s Shree Mahalakshmi Enterprises (National Anti-Profiteering Authority)
During the pre-GST period from April. 2016 to June, 2017 the Respondent was paying tax @ 6% which was increased to 18% during the post-GST period and hence there was increase in the rate of tax and therefore, the Respondent is not liable to pay the benefit of tax reduction to his customers. However, the Respondent has availed CENVAT credit on the Service Tax during the pre-GST period from April, 2016 to June, 2017 amounting to Rs. 4,42,61,283/-, collected an amount of Rs. 43,37,60,103/- from his customers as turnover, has sold an area of 1,55,036 Sq. Ft. relevant to the above turnover during the above period, has availed relevant amount of ITC of Rs. 46,95,134/- and accordingly, the ratio of CENVAT to the ITC was 1.08% during the pre-GST period. It is also clear as per the above Table that the ITC available to the Respondent in the post-GST period from July, 2017 to August, 2018 was Rs. 8,50,34,930/- and his turnover was Rs. 16,04,88,715/-. He had also sold an area of 1,77,512 Sq. Ft., relevant to the above turnover during the above period. The proportionate ITC availed by the Respondent was Rs. 1,03,28,012/- on the basis of which ratio of ITC to turnover comes to 6.44%. Therefore, it is abundantly clear that the Respondent has benefited from the additional benefit of ITC to the tune of 5.36% (6.44%-1.08%) of the turnover which he is required to pass on to his customers as per the provisions of Section 171 of the above Act. Since the above figures of ITC and turnover have been taken form the Returns filed by the Respondent himself and the figures of sold area have been supplied by the Respondent himself, the same cannot be disputed by the Respondent and can be relied upon and accordingly, the above computations are held to be correct. Therefore, the profiteered amount is determined as Rs. 1,01,50,590/- which includes GST @12% on the base profiteered amount of Rs. 86,02,195 as per Annexure-17 of the Report dated 18.12.2019 for the period w.e.f. 01.07.2017 to 31.08.2018 in terms of Rule 133 (1) of the CGST Rules, 2017. It is also revealed that the Respondent has profiteered an amount of Rs. 41,434/- from the Applicant No. 1 including the GST.
It is established from the perusal of the above facts of the case that the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondents as he has failed to pass on the benefit of additional ITC to his customers. Accordingly, he is directed to pass on an amount of Rs, 41,434/- to the above applicant and an amount of Rs. 1,01,09,156/- (Rs. 1,01,50,590-Rs. 41,434/-) to the other flat buyers who are not Applicants in the present proceedings. The above amounts shall be paid within a period of 3 months from the date of issue of this Order to the Applicant No. 1 and the other eligible house buyers by the Respondent along with interest @18% from the date from which these amounts were realised by the Respondent from them, till they are paid as per the provisions of Rule 133 (3) (b) of the CGST Rules, 2017, failing which the above amounts shall be recovered by the concerned Commissioner CGST / SGST and paid to the eligible house buyers.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. The Present Report dated 18.02.2019 has been furnished by 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 30.01.2018 was filed before the Tamil Nadu State Screening Committee on Anti-Profiteering by the Applicant No. 1 alleging profiteering by the Respondent in respect of purchase of a flat in his project “Risington OMR, Karapakkam”. The above Applicant had alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in the price. This complaint was examined and forwarded by the above Committee with its recommendation to the Standing Committee on Anti-profiteering on 29.06.2018 for further action, in terms of Rule 128 (2) of the CGST Rules, 2017.
2. The above complaint was considered by the Standing Committee on Anti-profiteering in its meetings held on 07.08.2018 & 08.08.2018 and www.taxguru.in was forward to the DGAP for detailed investigation under Rule 129 (1) of the CGST Rules, 2017.
3. The above Applicant had also submitted the following documents along with his application:-
(a) Form APAF-1.
(b) Copy of the Demand letter.
(c) Copy of e-mail.
4. The DGAP on receipt of the above minutes from the Standing Committee on Anti-profiteering had called upon the Respondent vide his notice dated 12.09.2019 to submit his reply as to whether the ITC benefit was passed on by him to his recipients and also asked him to suo-moto determine the quantum of benefit to be passed on and intimate the same to the DGAP with supporting evidence. The Respondent as well as the above Applicant were afforded opportunity to inspect the non-confidential evidence/information submitted by the other party and the Respondent had availed it on 20.09.2018, however, the above Applicant had not inspected the evidence/information. The Respondent vide his letters dated 19.09.2018, 25.09.2018, 04.10.2018, 15.10.2018, 17.10.2018, 21.12.2018, 27.12.2018, 09.01.2019, 24.01.2019 and 04.02.2019 had furnished his replies. The written submissions of the Respondent are summed up by the DGAP as under:-
a) That the Applicant No. 1 had booked the flat on 24.08.2016.
b) That the Respondent was registered under the works contract service under the erstwhile Service Tax regime wherein Service Tax was not applicable on the consideration payable under the agreement for sale of undivided share of land but the consideration payable under the construction agreement attracted Service Tax.
c) That the advances received from the above Applicant in the pre-GST period were appropriated against the consideration for sale of undivided share of land by the Respondent and after the said consideration was fully paid, Service Tax was duly charged and paid on the advances pertaining to the construction agreement.
d) That the total consideration payable for the sale of undivided share of land was Rs. 33,97,500/- as per the agreement for sale of undivided share of land dated 28.09.2016, registered as Document No. 8818/2016 before the Sub-Registrar, Neelankarai, Chennai.
e) That the total consideration for the construction of the flat was Rs. 55,06,092/- as per the agreement dated 28.09.2016, registered as Document No. 8819/2016 before the Sub-Registrar, Neelankarai, Chennai.
f) That 87.5% of the total consideration was received in the pre-GST period from the above Applicant and after appropriating the advances towards the consideration for undivided share of land, the balance payments were accounted for towards advances under the construction agreement by the Respondent and the Service Tax liability thereon was duly discharged. The amount of consideration received during the pre-GST period was Rs. 43,90,499/- on which Service Tax (@ 6%) liability of Rs. 2,63,429/- had been discharged.
An amount of Rs. 6,100/- was received towards registration fee during the pre-GST period.
g) That the amount receivable under the construction agreement in the post-GST period was Rs. 10,88,988/- after factoring in a discount of Rs. 20,555/-. GST @ 18% on Rs. 10,88,988/- (Rs. 1,96,017/-) was payable by the above Applicant.
h) That the above Applicant was of the view that the amount of Rs. 10,88,988/- should be broken into two towards land and construction. This was also the basis of his complaint. The Respondent had explained to the above Applicant that the advance paid in the pre-GST period had gone towards the full consideration of the land and the balance advance paid in the pre-GST period was subjected to Service Tax. Since the amount due after GST was only under the construction agreement, GST @ 18% was discharged, as and when the instalments were received. The GST rate was 18% for works contract service which was fixed vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017.
i) That so far as the ITC was concerned, nearly 87.5% of the consideration was received in the pre-GST period and very little construction work was done in the post-GST period. Hence, there was not much ITC available post-GST. After considering all the information provided, the above Applicant was fully satisfied and had accepted the price discount and also stated that he would withdraw the complaint which was submitted by him.
j) That the Respondent, vide his letter dated 24.01.2019 had informed that so far as the project under investigation was concerned it was yet to be completed and he had not obtained the Completion Certificate (CC)/Occupation Certificate (00) of the same.
k) That the Respondent had also submitted that even though there was no necessity for him to reverse any ITC, he had by mistake treated the unsold/yet to be completed constructed area as “unsold stock” and had reversed proportionate ITC amounting to Rs. 52,30,085/-(CGST Rs. 31,67,157/- & SGST Rs. 20,62,928/-)
l) That the Respondent had also submitted that the issues raised by the Applicant had been fully resolved. The Applicant had withdrawn the complaint and therefore, further proceedings against the Respondent should be dropped
5. The DGAP’s present investigation Report has covered the period from 01.07.2017 to 31.08.2018 and the period for completing the same was extended by this Authority till 28.02.2019 vide its orders dated 20.11.2018 and 22.01.2019 as per the provisions of Rule 129 (6) of the above Rules. The Respondent had also submitted the following documents along with his replies:-
(a) Copies of GSTR-1 and GSTR-3B Returns for the period from July, 2017 to August, 2018.
(b) Copies of Tran-1 Returns for the period from July, 2017 to December, 2017.
(c) Copies of VAT & ST-3 Returns for the period from April, 2016 to 2017.
(d) Electronic Credit Ledger for the period from July, 2017 to August, 2018.
(e) Copies of all the demand letters, receipts and sale agreement/contract and construction agreement in the name of the Applicant Shri Paval Antony.
(f) Tax rates- pre-GST and post-GST.
(g) Balance Sheet and Cost Audit Report for F. Y. 2016-17 & 20172018.
(h) Details of taxable turnover and ITC for the project “Risington, OMR, Karapakkam”.
(i) List of home buyers in the project “Risington, OMR Karapakkam”.
6. The DGAP in his above Report has stated that as per the documents submitted by the Respondent, it was revealed that he had executed two separate agreements for the flats booked in both the pre-GST and the post-GST periods, one for the land value and the other for the construction value and was charging GST @ 18% on the consideration received post-GST under the construction agreements. The Respondent had also submitted the demand letters and the payment schedule in respect of the flat booked by the Applicant No. 1. The details of the amount and taxes paid by the Applicant No. 1 to the Respondent are furnished in the Table-A’ below.
Table ‘A’
(Amount in Rs.)
