Case Law Details

Case Name : Rahul Gautam Vs Himalya Real Estate Pvt. Ltd. (NAA)
Appeal Number : Case No. 40/2022
Date of Judgement/Order : 18/07/2022
Related Assessment Year :

Rahul Gautam Vs Himalya Real Estate Pvt. Ltd. (NAA)

The Authority finds that, the DGAP has given a categorical report based on its verification that, the benefit of ITC has been passed on by the Respondent to all 189 homebuyers/customers who have booked their units on or after 1.07.2017 by way of giving deduction in the demand note itselfas per the example reproduced above. The findings at para 10 and 11 of the DGAP’s Report dated 30.11.2020 are reproduced at paragraphs 5(i), 5(j) and 5(k) above and the DGAP states that it has scrutinized the demand notes and allotment letters issued to these 189 homebuyers/customers by the Respondent.

Hence, the Authority determines the profiteered amount for the period from 01.07.2017 to 31.12.2018, in the instant case, as 2,26,76,700/- with  respect to the other 500 homebuyers/customers i.e. those who have booked their units prior to 1.07.2017 (excluding those from whom no demand was raised/ consideration received from 1.07.2017 to 31.12.2018) for the Project “Himalaya Pride”.

The Authority finds that, in order to verify the claim of the Respondent that the benefit of ITC had already been passed on to 500 homebuyers/customers who had booked Units in the pre-GST period, the DGAP has sent e-mails to 300 homebuyers/customers picked up randomly to confirm whether the Respondent has passed on the benefit of ITC to them or not. Out of these 300 homebuyers/customers, only 51 confirmed that they had received the benefit of ITC from the Respondent. Hence, we hold that, with respect to such category of homebuyers/customers i.e. those who have booked their units prior to 01.07.2017 (excluding those from whom no demand was raised/ consideration received from 1.07.2017 to 31.12.2018), the DGAP’s verification is inconclusive and it cannot be concluded that all such homebuyers/customers have got the benefit of ITC that was required to be passed on by the Respondent.

In view of the above discussions, the Authority finds that the Respondent has profiteered by an amount of Rs. 2,26,76,700/- during the period of investigation i.e. 01.07.2017 to 31.12.2018. The above amount that has been profiteered by the Respondent from his home buyers shall be refunded by him, along with interest @18% thereon, from the date when the above amount was profiteered by him till the date of such payment, in line with the provisions of Rule 133 (3) (b) of the GCST Rules 2017.

This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the Units commensurate with the benefit of ITC received by him as has been detailed above.

The Respondent is also liable to pay interest as applicable on \ the entire amount profiteered, i.e. Rs. 2,26,76,700/-. Hence the Respondent is directed to also pass on interest @18% to the homebuyers/customers on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ payment, as per provisions of Rule 133 (3) (b) of the CGST Rules 2017.

The Authority also order that the profiteered amount of Rs. 2,26,76,700/- along with the interest @ 18%, from the date of receiving such amounts from the homebuyers/customers till the date of passing on/return of such amount, shall be paid/passed on by the Respondent within a period of 3 months from the date receipt of this order failing which it shall be recovered as per the provisions of the CGST Act, 2017.

FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY

1. A Report dated 30.12.2020 has been received from the Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP) after detailed re-investigation under Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules, 2017 pursuant to Interim Order No 06/2020 dated 03.01.2020 passed by National Anti-Profiteering Authority (NAA or Authority) in respect of the investigation report of DGAP dated 01.07.2019. The Authority had ordered reinvestigation under the rule 133 (4) on the following grounds:-

a. Whether the Respondent’s claim of passing on of Rs. 9,45,78,855/- benefit of GST ITC to his homebuyers/customers by way of reduction in GST rate was correct or not?

b. Whether the Respondent’s claim that for the customers who had made the bookings prior to implementation of GST, i.e. 01.072017, he had charged only 4.5% GST (i.e., equal to the rate of erstwhile Service Tax) from them and borne the remaining 7.5% GST himself and he had given 100% reduction in GST rate for new bookings of the flat to attract new customer was correct or not?

c. Whether the Respondent had passed on the benefit of ITC of GST of Rs. 2,94,078/- to the Applicant No. .1?

d. Whether the Respondent had given an amount of Rs. 3,41,963/- as the discount in addition to reduction in GST rate of 7.5% to the Applicant No. 1?

e. Whether the above amounts claimed to have been passed on by the Respondent are in line with the provisions of Section 171 of the CGST Act?

f. After carefully considering above issues, exact amount of profiteering which is to be passed on by the Respondent to every homebuyers/customers?

2. The brief facts of the case are that the Applicant No. 1 had filed an application dated 16.10.2018 before the Haryana State Screening Committee on Anti-profiteering, under Rule 128 of the CGST Rules, 2017 in respect of purchase of a Flat in the Respondent’s project “Himalaya Pride” situated at Plot No. 10-B,Techzone-IV, Greater Noida (West), UP-201306 and had alleged that the Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in price, in terms of Section 171 of the CGST Act, 2017. The Haryana State Screening Committee on Anti-profiteering on being prima facie satisfied that the Respondent had not passed on the benefit of ITC had forwarded the said application with its recommendation to the Standing Committee on Anti-profiteering for further action, in terms of Rule 128 of the above Rules. The above reference was examined by the Standing Committee on Anti-profiteering and vide its minutes of the meeting dated 13.12.2018 it had forwarded the same to the DGAP for detailed investigation. The DGAP has carried out the investigation and submitted the report dated 01.07.2019 to the Authority, stating therein that:-

a. On receipt of the application he had issued notice dated 18.01.2019 to the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the Applicant No. 1 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 the supporting documents.

b. The period of the investigation was from 01.07.2017 to 31.12.2018.

c. In response to the DGAP’s Notice dated 18.01.2019, reminders dated 28.01.2019, 01.02.2019 and 13.02.2019, followed by Summons dated 12.03.2019, issued to Shri Vishal Sharma, Director of the Respondent to appear on 19.03.2019, the Respondent submitted his reply vide letters/e-mails dated 14.02.2019, 19.03.2019, 20.05.2019, 28.05.2019, 10.06.2019, 20.06.2019 and 25.06.2019 vide which he furnished the following documents to the DGAP:-

i. Copies of GSTR-1 returns for the period July, 2017 to December, 2018.

ii. Copies of GSTR-3B returns for the period July, 2017 to December, 2018.

iii. Copy of TRAN-1.

iv. Copies of VAT & ST-3 returns for the period April, 2016 to June, 2017.

v. Copies of all demand letters, sale agreement/contract issued to the Applicant No. 1.

vi. Copy of Balance Sheet for FY 2016-17 & 2017-18.

vii. Copy of Electronic Credit Ledger for the period 01.07.2017 to 31.12.2018.

viii. CENVAT/Input Tax Credit register for the period April, 2016 to December, 2018.

ix. Copy of Project report submitted to the RERA.

x. List of home buyers in the project “Himalaya Pride”.

d. The Respondent, vide his letter dated 14.02.2019 submitted that he had passed on the benefit of ITC to his customers including the Applicant No 1. He also submitted a copy of the allotment letter dated 26.09.2018, issued in favour of the Applicant No. 1, executed on a non-judicial stamp paper, wherein it was explicitly mentioned that the Applicant No. 1 had to pay only the basic consideration for the flat which was Rs. 40,96,800/- and the applicable GST would be borne by the Respondent. The Respondent did not claim confidentiality of any details/ information furnished by him, in terms of Rule 130 of the CGST Rules, 2017.

e. The DGAP further stated that though the Respondent had mentioned that he had passed on the benefit of ITC to the home-buyers, he failed to provide any documentary evidence of such discounts offered to the individual home-buyers except the allotment letter dated 26.09.2018 issued to the Applicant No. 1, wherein it was mentioned that all GST liability would be borne by the Respondent as discount and the Applicant No. 1 would have to pay only the basic consideration of Rs. 40,96,800/-.

f. The DGAP further observed that prior to 01.07.2017, i.e., before GST was introduced, the Respondent was eligible to avail CENVAT credit of Service Tax paid on the input services.

However, CENVAT credit of Central Excise Duty paid on the inputs was not admissible as per the CENVAT Credit Rules, 2004, which were in force at the material time. The Respondent had submitted that he was neither availing any ITC of VAT, nor was he charging VAT from his customers, as would be evident from the demand letters. However, he was discharging his output VAT liability on deemed 20% value addition to the purchase value of the inputs. Hence, there was no direct relation between the turnover reported in the Respondent’s VAT returns for the period April, 2016 to June, 2017and the actual consideration received from the home buyers. Therefore, the ITC of VAT and the VAT turnover had not been considered for computation of the ratio of ITC to the turnover for the pre-GST period. Further, post-GST, the Respondent could avail ITC of GST paid on all the inputs and the input services. From the information submitted by the Respondent for the period April, 2016 to December, 2018, the DGAP has furnished the details of the ITC availed by him, his turnovers from the present project, the ratio of ITCs to turnovers, during the pre-GST (April, 2016 to June, 2017) and post-GST (July, 2017 to December, 2018) in the table given below:-

Table ‘A’

(Amount in Rs.)

S. No. Particulars April, 2016 to March, 2017 April, 2017 Total Total
to June, 2017 (Pre-GST) (Post-GST)
1 2 3 4 (5)=(3)+(4) (6)
1 CENVAT Credit of Service Tax Paid on Input Services (A) 22,102,675 7,487,735 29,590,410
2 Credit of VAT Paid on Inputs (B)
4 Total CENVAT/VAT/ Credit Availed (C)= (A)+(8) 22,102,675 7,487,735 29,590,410
Input Tax Credit of GST Availed (0) 142,732,568
6 Total Turnover as per Home Buyers List (Flats sold upto 31.12.2018) (E) 802,322,679 893,185,597
Total Saleable Area (in sq. ft.) (F) 1,473,354 1,473,354
8 Area Sold relevant to Turnover (G) 401,307 877,525
9 ITC relevant to area sold (H)= (C) or (D)*G/F 8,059,732 85,011,068
10 Ratio of CENVAT/ Input Tax Credit to Turnover (I)= 0-1/E’100) 1.00% 9.52%

g. The DGAP thus stated 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 (April, 2016 to June, 2017) was 1.00% and during the post-GST period (July, 2017 to December, 2018), it was 9.52% which indicated that post-GST, the Respondent had apparently benefited from additional ITC to the tune of 8.52% [9.52% (-) 1.00%] of the turnover.

h. The DGAP also observed that the Central Government, on the recommendation of the GST Council, had levied 18% GST on construction service (after one third abatement towards value of land, effective GST rate was 12% on the gross value), vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. Accordingly, the DGAP had examined the profiteering by comparing the applicable tax rate and ITC available to the Respondent for the pre-GST period (April, 2016 to June, 2017) when Service Tax @ 4.5% and VAT on deemed 20% value addition was payable with the post-GST period (July, 2017 to December, 2018) when the effective GST rate was 12% on the gross value and accordingly, on the basis of the figures contained in Table-‘A’ above, the comparative figures of the ratios of ITCs availed/available to the turnover in the pre-GST and post-GST periods as well as the turnovers and the recalibrated base price as well as the excess collection (Profiteering) during the post-GST period, was tabulated in Table-‘B’ below:-

Table ‘B’

(Amount in Rs.)

S.
No.
Particulars Pre-GST Post- GST
1 Period A April, 2016 to June, 2017 July, 2017 to Dec. 2018
2 Output tax rate (%) B 4.50% 12.00%
3 Ratio of CENVAT/ Input Tax Credit to Turnover as per Table – A above (%) C 1.00% 9.52%
4 Increase in input tax credit availed post-GST (%) D 8.52%
5 Analysts of Increase in input tax credit:
6 Total Base Demand raised during July, 2017 to December, 2018 E 893,185,597
7 GST @12% F= E*12% 107,182,272
8 Total demand G=E+F 1,000,367,869
9 Recalibrated Base Price H=E*(1-D) or 91.48% of E 817,086,184
10 GST @12% I=H*12% 98,050,342
11 Commensurate demand price J=H + I 915,136,526
12 Excess Collection of Demand or Profiteered Amount K=G – J 85,231,342

i. Thus, from the Table-‘B’ above, it was clear that the additional ITC of 8.52% of the turnover should have resulted in commensurate reduction in the base price as well as cum-tax price. Therefore, in terms of Section 171 of the CGST Act, 2017, the benefit of the additional ITC should have been passed on by the Respondent to the recipients and thus, by not reducing the pre-GST base price by 8.52% on account of additional benefit of ITC and charging GST @12% on the pre- GST base price, the Respondent had contravened the provisions of Section 171 of the of the CGST Act, 2017.

j. On the basis of the aforesaid CENVAT/input tax credit availability in the pre-GST and post-GST periods and the demands raised by the Respondent on the Applicant No. 1 and other home buyers on which GST liability @ 12% was discharged by the Respondent during the period 01.07.2017 to 31.12.2018, the amount of benefit of ITC not passed on to the recipients i.e. the profiteered amount came out to Rs. 8,52,31,342/- which included GST © 12% on the base profiteered amount of Rs. 7,60,99,413/-. This amount was inclusive of Rs. 2,73,653/- (including GST on the base profiteered amount of Rs. 2,44,333/-) which was the profiteered amounts in respect of the Applicant No. 1. The DGAP has further clarified that the Respondent had supplied construction services in the State of Uttar Pradesh only. The DGAP further stated that the profiteered amount was with respect to 739 home buyers. Whereas the Respondent had booked 778 units till 31.12.2018, 39 buyers had not paid any consideration during the post-GST period from 01.07.2017 to 31.12.2018 (period covered by the investigation). Therefore, if the ITC in respect of these 39 units was considered for calculation of profiteering in respect of 739 units where payments had been received in the post-GST period, the ITC as a percentage of turnover would be distorted and erroneous.

Therefore, the benefit of ITC in respect of these 39 units should be calculated when the consideration was received from such units by taking into account the proportionate ITC in respect of such units.

K. The DGAP also clarified that since the present investigation covered the period from 01.07.2017 to 31.12.2018, thus, profiteering, if any, for the period post December, 2018, had not been examined as the exact quantum of ITC that would be available to the Respondent in future could not be determined at the present stage, when the construction of the project was yet to be completed.

3. The above Report of the DGAP was considered by this Authority in its sitting and it was decided to accord an opportunity of hearing to Respondent and the Applicants. Notice was also issued to Respondent directing him to explain why the Report dated 01.07.2019 furnished by the DGAP should not be accepted and his liability for violation of the provisions of Section 171 of the CGST Act, 2017 should not be fixed. The Respondent and the Applicant No. 1 appeared for the hearing and filed their written submissions against the report of the DGAP.

4. This Authority, after carefully considering the Reports filed by the DGAP, the submissions of the above Applicant and the Respondent and other material placed on record had observed certain discrepancies in the DGAP’s Report dated 01.07.2019 and accordingly ordered reinvestigation in the matter in terms of Rule 133(4) of CGST Rules, 2017 vide its I.O. No. 06/2020 dated 03.01.2020 mentioned in paragraph 1 above.

5. As per the directions of this Authority passed vide I.O. No. 06/2020 dated 03.01.2020 under Rule 133 (4), the DGAP furnished his Report dated 30.12.2020 in accordance with Rule 129 (6) of the CGST Rules, 2017, stating therein, as under:-

a. On receipt of the aforesaid I.O. from this Authority on 07.01.2020, the Respondent was issued letter dated 26.08.2020 for submitting the details/documents in accordance with the issues raised by Authority vide the above 1.0. Further, the information/documents submitted by the Respondent were re-examined and cross-verified with the Report dated 01.07.2019 submitted by DGAP to this Authority.

b. Period covered by the current investigation was from 01.07.2017 to 31.12.2018.

c. Time limit to complete the investigation was upto 06.07.2020. However, in terms of Notification 35/2020-Central Tax dated 03.04.2020 which was further amended vide Notification 55/2020-Central Tax dated 27.06.2020 , Notification No.65/2020- Central Tax dated 01.09.2020 and Notification No.91/2020- Central Tax dated 14.12.2020 the time limit for compliance was extended up to 31.03.2021.

d. In response to the DGAP letter dated 26.08.2020the Respondent submitted his reply vide letters/e-mails dated 07.10.2020, 15.10.2020, 26.10.2020, 03.11.2020, 04.11.2020, 09,11.2020, 18.11.2020, 19.11.2020, 20.11.2020, 21.11.2020, 24.11.2020, 01.12.2020, 07.12.2020 and 28.12.2020. The reply of the Respondent submitted during the re-investigation was reproduced below by the DGAP:-

i. That the allotment letters in respect of the bookings made in the post GST regime had clearly mentioned that the applicable GST @12% would be borne by the Respondent as a GST discount to the customers and the same could be verified from the demand notes issued to the buyers. Therefore, the Respondent had passed on the ITC benefit of 12% to the buyers by not collecting the GST from them.

ii. The Respondent also stated that he had given benefit of ITC of 7.5.% to the buyers who had booked flats in the pre GST regime and only 4.5 % GST was collected from them.

iii. The Respondent informed that he had got the Completion Certificate for three towers on 19.06.2018 and he had reversed the GST ITC of Rs.39,42,012/- for an unsold inventory and the reversal was reflected in the GSTR Returns for the month of June, 2019 and July, 2019.

iv. The Respondent also submitted that in the earlier report the DGAP had calculated profiteering on the units which were booked after getting Completion Certificate but at the same time the turnover of the respective units was not considered. In view of facts stated, the Respondent requested to re-calculate the profiteering.

v. The Respondent submitted that the total saleable area of the project “Himalaya Pride” was 14,87,766 Sq. ft., in which there were 1208 units, out of which 766 units were booked as on 31.12.2018.

vi. The Respondent also submitted that the turnover reported in the home buyers list submitted during the earlier investigation for the period 01.04.2016 to 30.06.2017 was Rs. 40,44,91,168/- and for the period 01.07.2017 to 31.12.2018 was Rs. 91,99,49,382/-,

however during the present investigation the books of accounts of the Respondent had got audited and all reconciliation had been made, therefore the Respondent submitted the revised list of home-buyers in which the turnover reported for the period 01.04.2016 to 30.06.2017 was Rs. 41,87,42,269/- and for the period 01.07.2017 to 31.12.2018 was Rs. 93,92,50,976/-.

vii. The Respondent also stated that in the report dated 01.07.2019 submitted by the DGAP, the turnover as per home buyers list reported in the Table—A as Rs. 80,23,22,679/- in the pre GST period and Rs. 89,31,85,597/- in the post GST period was not in accordance with the home buyers list submitted by DGAP through annexure 17 along with the report. Thus, in view of facts, the he requested to re-check the calculations of profiteering.

e. Vide the aforementioned letters/e-mails; the Respondent submitted the following documents/information:

i. List of home buyers for the project “Himalaya Pride” from 01.04.2016 to 31.12.2018.

ii. Confirmation/undertaking from the buyers to whom the benefit of ITC was already passed on by the Respondent.

iii. Allotment letters and demand notes in respect of all the buyers including the Applicant.

iv. Details of VAT, Service Tax, ITC of VAT, Cenvat credit for the period April, 2016 to June,2017 and output GST and ITC of GST for the period July, 2017 to December,2018 for the project “Himalaya Pride”.

v. copy of O.C. dated 19.06.2018

vi. CENVAT/Input Tax Credit Register for the period 01.04.2016 to 30.06.2017 and 01.07.2017 to 31.12.2018.

vii. Status of the project “Himalaya Pride” in terms of sold and unsold units as on 31.12.2018.

f. As per the directions of I.0, the DGAP initiated re-investigation of the case. Accordingly, during the re-investigation the Respondent was asked to submit the information required for investigation. Hence the case had been re-investigated again on the basis of fresh data submitted by the Respondent. The main issues to be looked into were:-

I. Whether there was benefit of reduction in rate of tax or ITC on the supply of construction service by the Respondent after implementation of GST w.e.f. 01.07.2017 and if so,

II. Whether the Respondent passed on such benefit to the recipients by way of commensurate reduction in price, in terms of Section 171 of the Central Goods and Services Tax Act, 2017.

III. Investigate the points raised in I.O.

g. The DGAP has further stated that another relevant point in this regard was pars 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 CGST 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 completion certificate, where required, by the competent authority or after its first occupation, whichever was earlier”. Thus, the ITC pertaining to the residential units which was under construction but not sold was provisional ITC which might 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 registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempted supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as was attributable to the said taxable supplies including zero-rated supplies’:

Section 17 (3) The value of exempted supply under sub-section (2) shall be such as might be prescribed and shall include supplies on which the recipient was liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of

Therefore, the ITC pertaining to the unsold units might not fall within the ambit of this investigation and the Respondent was required to recalibrate the selling price of such units to be sold to the prospective buyers by considering the proportionate benefit of additional ITC available to him post-GST.

h. The Respondent’s concern to re-visit the calculation of profiteering made during the earlier investigation had been examined by the DGAP and all the submissions of the Respondent in relation to the computations of profiteering had been considered and verified while arriving at profiteering in the present investigation.

i. The contention of the Respondent was that he had given benefit of 12% GST to the buyers who had booked flats in the post GST period and the applicable GST was borne by the Respondent and same could be verified from the allotment letters and demand notes.

j. As per the home-buyers list submitted by the Respondent the DGAP observed that 189 numbers of buyers (Pre 0.C.) had purchased the flats from the Respondent in the post GST period till 31.12.2018. As such, all the allotment letters and demand notes submitted by the Respondent were required to be scrutinized. Scrutiny of these allotment letters and demand notes, in respect of 189 numbers of buyers revealed that these documents clearly mentioned that the GST would be borne by the builder and the same was not collected from the buyers. The demand notes of the said buyers clearly showed the deduction of 12% GST as ITC benefit from the demands raised from the buyers.

k. Therefore, it was observed that the Respondent’s contention that GST had not been charged from the buyers in the post GST period, was correct in respect of 189 numbers of buyers whose allotment letters and demand notes were submitted by the Respondent and In which it was clearly indicated.

Accordingly, while computing the profiteering amount, the turnover in respect of those 189 buyers who had booked flats in the post GST period and whose allotment letters and demand notes clearly mentioned that the GST would be borne by the Respondent and not charged to the buyers, was excluded. Further, in order to verify the claim of the Respondent that the benefit of ITC had already been passed on to such buyers by waiving entire GST of 12%, e-mails were sent to the 75 buyers. Out of these, 23 buyers had replied and confirmed that whole GST was borne by the Respondent in which the benefit of ITC was included, which was about 12% in respect of the 189 buyers to whom the Respondent passed on the ITC benefit during the booking of flats in the post GST period. The copies of e-mail confirmations were enclosed.

L. It has also been reported by the DGAP that as regards the allegation of profiteering, it was observed that prior to 01.07.2017, i.e., before the GST was introduced, the Respondent was eligible to avail credit of Service Tax paid on the input services (CENVAT credit of Central Excise duty was not available) in respect of the flats for the project “Himalaya Pride” sold by them. The Respondent was not eligible to avail ITC of VAT paid on the inputs, as he was not collecting the VAT from the customers and discharging his output tax liability on deemed 10% value addition on purchase value in cash and there was no direct relation of turnover reported in VAT returns with the amount collected from the home buyers. Further, post-GST, the Respondent could avail ITC of GST paid on all the inputs and input services. From the data submitted by the Respondent covering the period from April, 2016 to 31.12.2018, the details of the ITCs availed by them, his turnover from the project “Himalaya Pride” the ratios of ITC to turnovers, during the pre-GST (April, 2016 to June, 2017) and post-GST (July, 2017 to 31.12.2018) periods, have been furnished by the DGAP in Table-C below:-

Table-C

(Amount in Rs.)

Sr. No Particulars Total (Pre-GST) April, 2016 to June, 2017 Turnover (July, 2017 to December, 2018)
1 CENVAT of Service Tax Paid on Input Services used for flats(A) 2,95,90,410
2 Input tax credit of GST Availed (8) 14,27,32,568
3 Total CENVAT/Input Tax Credit Available (C ) 2,95,90,410 14,27,32,568
4 Turnover for Flats as per Home Buyers List (D) 41,87,42,269 93,92,50,976
5 Total Saleable Area (in SQF) (E) 14,87,766 14,87,766
6 Total Sold Area (In SQF) relevant to turnover (F) 4,07,917 8,13,150
7 Relevant ITC f(G).- (C)4(F)/(E)] 81,13,125 7,80,11,588
Ratio of ITC Post-GST [(H)=(G)/(D)] 1.94% 8.31%

m. From the above Table-‘C’, 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 1.94 % and during the post-GST period (July, 2017 to 31.12.2018), it was 8.31% in the project “Himalaya Pride”. This clearly confirmed that post-GST, the Respondent had benefited from additional ITC to the tune of 6.37% [8.31% (-) 1.94%] of the turnover.

n. It was observed that the Central Government, on the recommendation of the GST Council, had levied 18% GST (effective rate was 12% in view of 1/3rd abatement for land value) on construction service, vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The effective GST rate was 12% for flats. Accordingly, on the basis of the figures contained in table- ‘A’ above, the comparative figures of the ratios of ITCs availed/available to the turnover in the pre-GST and post-GST periods as well as the turnover, the recalibrated base price and the excess realization (profiteering) during the post-GST period, was tabulated by the DGAP in Table-D below:-

Table-D

(Amount in Rs.)

Sr. No. Particulars
1 Period A July, 2017 to
December,2018
2 Output GST rate (%) B 12
3 Ratio of CENVAT credit/ ITC to Total Turnover as per table – ‘B’ above (%) C 831%/1.94%
4 Increase in ITC availed post-GST (%) D. 8.31% less 1.94% 6.37%
5 Analysis of Increase In Input tax credit:
6 Base Price raised during July, 2017 to December, 2018 (Rs.)# E 93,92,50,976
7 Less: Base Price raised during July,2017 to December, 2018 (Hats sold after 01.07.2017 where GST was borne by the Respondent) F 62,14,00,839
8 Base Price raised during July, 2017 to December, 2018 (Rs.) (Flats sold upto 30.06.2017) G=E-F 31,78,50,137
9 GST raised over Base Price (Rs.) II= G*E1 3,81,42,016
10 Total Demand raised I=G+H 35,59,92,153
11 Recalibrated Base Price J= G*(1-
D) or
93.63% of G
29,76,03,083
12 GST ©12% K = 3* B 3,57,12,370
13 Commensurate demand price L = J + K 33,33,15,453
14 Excess Collection of Demand or Profiteering Amount M= I—I. 2,26,76,700

#Base price raised during the period 01.07.2017 to 31.12.2018 was net of cancelled units as well as post OC sales turnover.

o. The DGAP has further reported that as per Table- ‘D’ above, it was clear that the additional ITC of 6.37% of the turnover should had resulted in the commensurate reduction in the base price as well as cum-tax price. Therefore, in terms of Section 171 of the CGST Act, 2017, the benefit of such additional ITC was required to be passed on to the recipients. It was also evident from the above calculation explained in Table-C and D, on the basis of the aforesaid CENVAT/input tax credit availability pre and post-GST and the details of the amount collected by the Respondent in respect of the flats sold by the Respondent during the period 01.07.2017 to 31.12.2018, the benefit of ITC that needed to be passed on by the Respondent to the buyers of flats comes to Rs. 2,26,76,700/- which included 12% GST on the base amount of Rs. 2,02,47,054/-. The flat Homebuyer and unit no. wise break-up of this amount was given in Annexure-21 of the report.

p. The DGAP has submitted that as regards the verification of ITC benefit claimed to had been passed on to his homebuyers who booked the flats in the pre-GST period, by the Respondent, it was observed that the Respondent had provided the details of benefit of ITC passed on to individual homebuyers. This list was matched with the soft copies of demand notes (issued to homebuyers) submitted by the Respondent. On verification of soft copies of demand notes (issued to homebuyers),it appeared that out of 529 buyers (Pre GST bookings), the Respondent had not given any GST ITC benefit to 51 buyers as in respect of 29 buyers, no demand was raised in the post GST period i.e. till 31.12.2018 and for the remaining 22 buyers the Respondent had not given any ITC benefit even though the Respondent had raised demand and received payments from them in the post GST period. Therefore, it was a matter of fact that the Respondent had passed on the ITC benefit of Rs 2,26,26,126/- to 478 (529-(22+29) homebuyers in the pre GST period. However, in order to cross check the claim of the Respondent, e-mails were sent to 300 home buyers picked up randomly. Out of these 51 buyers apart from the Applicants had confirmed the receipt of ITC benefit given by the Respondent which was about 11% of the homebuyers list (pre GST bookings) submitted by the Respondent. The details of confirmation of the receipt of payment received through e-mails wereenclosed. A summary of benefit of ITC required to be passed on and the ITC benefit claimed to had been passed on to the Applicant No. 1 and other home buyers, has been furnished by the DGAP in Table-‘E’ below:-

Table-‘E’ (Amount in Rs.)

Sr No
Category of Customers
No. of Units
Area (in
Sqft)
Amount
Received
Post GST
profiteering Amt. as per Annex-25
Benefit Passed on by the Respondent
e
Difference
Remark
A
B
C
0
I
r
G
H=F-G
I
1
Other
Buyers
354
410519
245390697
17507154
19242584
-1735430
Excess Benefit Passed on as per Annex-21
2
Other
Buyers
124
138507
61312746
4374297
3383542
9,90,755
Further benefit required to be pass on as per Annex-21
3.
Other
Buyers
189
241684
621400839
Flats sold after 01.07.20/7 where the benefit of 12 % or GST borne by the Respondent
4,
Other
Buyers
22
22440
1.11,46,694
7,95,249
0
7,95,249
No Benefit poised on. Benefit required to be pass on as per Annex-21
5.
Other buyers.
29
30541
No consideration received in post GST period
6 .
Other buyers.
48
60904
Post O.C. sale as on 31.12.2018
7.
Other
buyers
442
583171
Unsold Flats a on 31.12.2018
total
1203
14,87,766
93,92,50,976
2,26,76,700
2,26,26,126

q. It has also been mentioned by the DGAP that the Respondent had booked 766 flats till 31.12.2018 including 48 units of Post O.C. sales. Thus 718 (766-48) units were sold before O.C. Out of these 718, 189 buyers (Sr No. 3 of Table-E) were excluded while computing profiteering amount as the benefit of ITC was passed on to these buyers by way of waiving entire GST (12%) to these 189 buyers as per his allotment letters and demand notes. Since no GST had been charged from the 189 buyers, it implied that the Respondent had passed on the entire GST (12%) to them whereas as per Table-‘A’ above, the Respondent was required to pass on only 6.37% to them. Hence, these 189 buyers were out of the purview of computation of profiteering. In respect of 29 buyers (Sr No. 5 of Table- E) no consideration was received during the period of investigation. Hence, the said 29 buyers had also been kept out of the computation of profiteering. The details were given in Annex-21. From the above Table “E”,it was also observed that the benefit claimed to have been passed on by the Respondent was less than what he ought to have passed on in case of 124 buyers (Sr. No.2 of Table-E), by an amount of Rs. 9,90,755/- and the benefit claimed to have been passed on by the Respondent was slightly higher than the commensurate benefit, in respect of 354 Home buyers (Sr. 1 of Table-E) by an amount of Rs.-17,35,430/-. In case of 22 buyers (Sr no. 4 of Table-E) the Respondent had to pass on Rs. 7,95,249/- as in respect of these 22 buyers no benefit had been passed on by the Respondent. Therefore, the Respondent had to pass on the additional amount of Rs. 17,86,004/- (9,90,755+,795,249) to the 146 buyers (124+22).

r. The DGAP has further stated that as per the directions of this Authority given vide I.O. No 06/2020 dated 03.01.2020, the DGAP did re-investigation of the case on the basis of data submitted by the Respondent. The main issues to be examined were:

I. Whether the Respondent’s claim of passing on of Rs. 9,45,78,855/- as benefit of GST ITC to his homebuyers/customers by way of reduction in GST rate was correct?

Reply: – The Respondent submitted that during the earlier investigation, he claimed that ITC benefit of Rs. 9,45,78,855/- was already passed on to the buyers, however the same was derived on when Rs. 2,67,63,785/-received or due from homebuyers but not able to allocateitunit wise while submitting the data with the DGAP. Now, the books of accounts had been audited by the auditor of the company and all the entries related to F.Y 2018-19 had been corrected. Thus, after incorporating the effect of all these entries, in the present investigation the Respondent submitted that he had passed on the ITC benefit of Rs. 9,71,44,586/- through demand notes and the same was shown in the homebuyers list. Further, the Respondent also submitted the acknowledgment from the buyers on sample basis to support the claim that the ITC benefit was already passed on.

The claim of the Respondent that he had already passed on the ITC benefit of Rs. 9,71,44,586/- had been verified from the home buyers list as well as the demand notes submitted by the Respondent and found to be correct. It was to submit that the Respondent had passed on the ITC benefit of Rs. 2,26,26,126/- to the buyers who had booked the flats in the pre-GST period and Rs. 7,45,18,460/- to the buyers who had booked flats in the post GST period by not collecting the GST from them. Further, the claim of the Respondent was also confirmed from the buyers on sample basis.

II. Whether the Respondent’s claim that for the customers who had made the booking prior to implementation of GST, i.e. 01.07.2017, he had charged only 4.5% GST (i.e. equal to the rate of erstwhile Service Tax) from them and borne the remaining 7.5% GST himself and he had given 100% reduction in GST rate for new booking of the flats was correct?

Reply:- Based on the Respondent submission, it was observed that out or 529 buyers who had booked flats prior to implementation of GST, the Respondent had passed on the ITC benefit of Rs. 2,26,26,126/- to 478 buyers and in case of 22 buyers no benefit had been passed on by the Respondent. Further, in respect of 29 buyers, no consideration was received in the post GST period till 31.12.2018. From the above Table “E”, it was also observed that the benefit claimed to have been passed on by the Respondent was less than what he ought to have passed on in case of 124 buyers (Sr. No.2 of Table-E), by an amount of Rs. 9,90,755/- and the benefit claimed to had been passed on by the Respondent was slightly higher than the commensurate benefit, in respect of 354 Home buyers (Sr. 1 of Table-E) by an amount of Rs. (-17,35,430/-). Therefore, it appeared that the claim made by the Respondent that he had passed on GST ITC benefit of 7.5% to all the buyers who had booked flats in the pre GST period was not fully correct, however, it was a matter of fact that the Respondent in total had passed on ITC benefit of Rs. 2,26,26,126/- in respect of 478 buyers. Further, in respect of the buyers, who had booked flats in the post GST period, it was observed that the claim of the Respondent that he had given 100% reduction in GST in terms of ITC benefit had merit and the same was verified from the allotment letters as well as demand notes of post GST buyers and further it was confirmed by the buyers on e-mails.

III. Whether the Respondent had passed on the benefit of ITC of GST of Rs 2,94,078/- to the Applicant No. 1?

Reply:-The Respondent submitted that he had signed a legitimate agreement/allotment letter dated 26.09.2018 with the Applicant No. 1 (post GST buyer) for buying a Flat no. C-4/6 in the project “Himalaya Pride”. The cost of the flat shown in the allotment letter was Rs. 40,96,800/- plus GST applicable and the applicable GST would be borne by the Respondent, which would be passed on to the Applicant No. 1 as an ITC discount. The Respondent submitted that he had passed on Rs. 3,44,130/- till 31.12.2018 and the same was also reflecting in the demand letter of the Applicant No. 1.

The claim of the Respondent that he had passed on ITC benefit of Rs. 3,44,130/- to the Applicant No. 1 as the applicable GST was borne by the Respondent had been verified from the allotment letter and demand note of the Applicant No. 1 and found to be correct. It was the Applicant No. 1 who had claimed before this Authority that the Respondent had passed on Rs. 2,94,078/- to him, which seemed to be based on rough calculations as during the present investigation the Applicant No. 1 gave confirmation on e-mail dated 14.12.2020 that the whole GST/applicable GST was borne by the Respondent, in which the benefit of ITC was included. In view of facts stated above it was clear that the Respondent had not passed on benefit of Rs. 2,94,078/- to the Applicant No. 1. However as verified from the submissions of the Respondent, the ITC benefit of Rs. 3,44,130/- was passed on to the Applicant till 31.12.2018 instead of Rs. 2,94,078/- and the same was reflected in the demand note of the Applicant No. 1 and confirmed by him.

IV. Whether the Respondent had given an amount of Rs 3,41,963/- as discount in addition to reduction in GST rate of 7.5% to the Applicant No. 1?

Reply:- Based on the Respondent submission, it was observed that the Applicant No. 1 had booked the flat no. C-4/6 in the post GST period, wherein the Respondent had given ITC benefit @12% GST by not collecting the same from the Applicant No. 1. It was to submit that the Respondent had not given any discount of Rs. 3,41,963/-in addition to reduction in GST rate of 7.5% to the Applicant No. 1. However, the matter of fact was that, the Respondent had given GST ITC benefit of Rs. 3,44,130/- to the Applicant No. 1 till 31.12.2018, by giving 100% reduction in the applicable GST rate.

V. Whether the above amounts claimed to have been passed on by the Respondent were in line with the Provision of Section 171 of the CGST Act, 2017?

Reply:- It had been verified from the documentary evidences submitted by the Respondent that the benefit of ITC claimed to be already passed on by the Respondent was correct and was in line with the provisions of Section 171 of the CGST Act,2017.

VI. After carefully considering above issues, exact amount of profiteering which was to be passed on by the Respondent to every homebuyer/customers?

Reply:- The Respondent had to pass on the additional amount of Rs. 17,86,004/- (9,90,755+,795,249) to the 146 (124+22) buyers and the same was explained in Table-E above.

s. The DGAP has also submitted that the benefit of additional ITC to the tune of 6.37% of the turnover, has accrued to the Respondent post-GST and the same was required to be passed on by the Respondent to his recipients. Section 171 of the CGST Act, 2017 appeared to had been contravened by the Respondent, in as much as the additional benefit of ITC @6.37% of the base price received by the Respondent during the period 01.07.2017 to 31.12.2018, had not been passed on to 146 recipients. On this account, it appeared that the Respondent had realized an additional amount to the tune of Rs. 2,26,76,700/- (including GST). It also appeared that out of 529 buyers (pre GST bookings), the Respondent had passed on the ITC benefit of Rs 2,26,26,126/- to 478 homebuyers as mentioned in above Table-E, which had been verified from all the demand notes submitted by the Respondent and confirmation received on sample basis from the buyers. Therefore, in view of facts stated above, it was also observed that the Respondent was required to return an additional amount of Rs. 17,86,004/-(including GST) as mentioned at Sr. No. 2 & 4 of the Table-E to the 146 recipients/home buyers. The recipients was identifiable as per the documents provided by the Respondent, giving the names and address along with unit no. allotted to such recipients.

t. The DGAP has also stated that the present investigation was for the period from 01.07.2017 to 31.12.2018. Profiteering, if any, for the period post December, 2018 had not been examined as the exact quantum of ITC that would be available to the Respondent in future could not be determined at this stage, when the construction of the project was yet to be completed.

u. The DGAP has concluded that in view of the aforementioned findings, it appeared that Section 171(1) of the CGST 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”, had been contravened in the present case.

6. The above report of the DGAP dated 30.12.2020 was considered by this Authority in its sitting held on 05.01.2021 and it was decided to allow the Respondent and the Applicant No. 1 to file their consolidated written submissions in respect of the above report of the DGAP by 20.01.2021. Notice was also issued to Respondent directing him to explain why the Report dated 30.12.2020 furnished by the DGAP should not be accepted and his liability for violation of the provisions of Section 171 of the CGST Act, 2017 should not be fixed.

7. The Respondent filed his submissions dated 20.01.2021 vide which he stated that he had made his final submissions before this Authority wherein he had requested to consider the following submissions:-

a. Material and Services taken for providing services other than real estate business has? also considered as input on the said material and services for real estate business.

b. He has passed on the benefit of ITC more than the total profiteered amount calculated by the DGAP and he has no other liability required to be passed on.

c. He requested this Authority to pass a suitable order after considering his above request.

8. The Applicant No. 1 filed his submissions vide e-mail dated 10.02.2021 and stated that the Respondent was not offering him possession of his Flat even after receipt of Occupancy Certificate. That the Respondent has not passed on any ITC benefit of Rs. 3,44,130/- to him as has been claimed by the DGAP in its report dated 30.12.2020.

9. Since, the quorum of the Authority of minimum three Members, as provided under Rule 134 was not available till 23.02.2022, the matter was not decided. With the joining of two new Technical Members in February 2022, the quorum of the Authority was restored from 23.2.2022. The Respondent and the Applicant No. 1 were also granted hearing through video conferencing on 29.03.2022. Sh. Himanshu Gautam, Sh. Manoj Singh, Assistant Commissioner and Sh. Balram Sinha appeared on behalf of the Applicant No. 1, the DGAP and the Respondent respectively. During the course of hearing, the Applicant No. 1 has reiterated his submissions made through e-mail dated 10.02.2021. The Respondent has also made his arguments based on his written submissions. Further, the Applicant No. 1 was also directed to file his final consolidated written submissions.

10. The Applicant No. 1 has filed his submissions vide e-mail dated 30.03.2022 vide which he reiterated his earlier submissions filed vide e-mail dated 10.02.2021 and has inter-alia stated that the Respondent should be asked for the transaction details vide which he has passed on the benefit of ITC to the 529 homebuyers/customers.

11. This Authority has carefully considered the Reports furnished by the DGAP, the submissions made by Respondent and the Applicant No. 1 and the other material placed on record. The Authority observed that vide Interim Order No. 6/2020 dated 3.1.2020 which was issued after due deliberations taking into consideration submissions made by the Respondent, including those made during the course of personal hearing, had directed DGAP to reinvestigate the matter on six specific issues. The said Interim Order has not been challenged and as such order has attained finality on methodology adopted by DGAP in the Report dated 01.07.2019. On examining this various submissions, the Authority finds that beside six issues framed by it vide Interim Order No. 6/2020 dated 3.1.2020; the Authority also . finds that the following issues need to be addressed:-

a. Whether there was any violation of the provisions of Section 171 of the CGST Act, 2017 committed by Respondent?

b. Whether Respondent No. 1 has passed on the commensurate benefit of reduction in the rate of tax to his customers?

12. A perusal of Section 171 of the CGST Act shows that it provides as under:-

(1). 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.”

(2). The Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether Input Tax Credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.

13. The Reports dated 01.07.2019 and 30.12.2020 submitted by the DGAP have been carefully examined by this Authority and it is found that:-

a. The Applicant No. 1, vide his complaint dated 16.10.2018 had alleged that the Respondent was not passing on the benefit of ITC to him in respect of purchase of Units in the Respondent’s project “Himalaya Pride” being executed by him in Greater Noida, UP, by way of commensurate reduction in the prices.

b. The DGAP filed his Report dated 01.07.2019 stating that the Respondent has obtained additional ITC to the extent of 8.52% of the taxable turnover which he had not passed on to his homebuyers/customers and he had thus profiteered an amount of Rs. 8,52,31,342/- in violation of the provisions of Section 171 of the CGST Act, 2017. However, due to the objections raised by the Respondent on the above Report of the DGAP as well as the discrepancies found in the Report, the DGAP was directed to re-investigate the above complaint under Rule 133 (4) of the above Rules vide Internal Order No. 06/2020 dated 03.01.2020.

c. The DGAP has re-investigated the matter as per the directions given and vide his Report dated 30.12.2020 and as per calculations made in Tables ‘C’, ‘D ‘and `E’ above found that:-

i. The Respondent has booked a total of 766 units in both the pre GST period and the post GST period uptill 31.12.2018 in his project.

ii. Out of the total units booked, 718 were sold before receipt of Occupancy Certificate (OC) and 48 were sold after receipt of OC.

iii. Out of these 718 homebuyers/customers, 189 homebuyers/customers were excluded from purview of profiteering as the benefit of ITC was passed on to these 189 homebuyers/customers by way of waiving the entire GST @12%.

iv. The Respondent has booked 529 Units in the pre-GST period. Of such 529 homebuyers/customers, no demands were raised/consideration received from 29 homebuyers/customers.

v. Accordingly, for the purpose of determination of the ratio of ITC to the turnover, in the post-GST (July, 2017 to December, 2018) period, turnover (without deduction of the GST discounts given to 189 homebuyers/customers) from all such 689 homebuyers/customers on whom demands have been raised during the period covered by this investigation/Order i.e. from 01.07.2017 to 31.12.2018 has been taken in the Table ‘C’ above. (i.e. 189 homebuyers/customers who have booked their Units on or after 1.07.2017 and 500 homebuyers/customers homebuyers/customers who have booked their Units before 1.07.2017 on whom demands have been raised during the period covered by this investigation/Order i.e. from 01.07.2017 to 31.12.2018).

vi. The ITC as a percentage of the total turnover which was available to the Respondent during the pre-GST period was 1.94% and during the post-GST period this ratio was 8.31%, as per the Table-C mentioned above and therefore, the Respondent has benefited from the additional ITC to the tune of 6.37% (8.31% – 1.94%).

vii. However, for the purpose of calculation of profiteered amount, the turnover amounting to Rs. 62,14,00,839/-(in       respect  of  these 189 homebuyers/customers who had booked Units in the post-GST regime and whose allotment letters and demand notes clearly mentioned that the Respondent has borne all the GST and not charged from the homebuyers/customers) have been excluded from the Total Turnover amounting to Rs. 93,92,50,976/-raised by the Respondent during July-2017 to December-2018. Hence, the Turnover considered for the calculation of the profiteered amount during the investigation period was Rs. 31,78,50,137/-.

viii. The Demand Note dated 03.11.2020 issued to the Applicant no.1 has been examined and copy of the same is reproduced below. It is seen from the said Demand Note that, the Respondent has reduced the demand made from the homebuyers/customers as under: [Charge Amount (i.e. Instalment Amount) plus CGST plus SGST] minus [deduction on account of ITC] = Receivable amount. Similar such Demand Notes have been submitted on record.

Hence, the benefit of ITC, which the Respondent claims to have passed on by way of bearing the incidence of GST himself, is as per such records passed on by way of, calculating the sum total of the taxable value plus GST @12% ad valorem on the taxable value, and then decreasing the demand from the homebuyers/customers by an amount equal to the GST calculated, so as to pass on the benefit of ITC.

Copy of Allotment Letter dated 26.09.2018 and Demand Letter dated 03.11.2020 to Shri Rahul Gautam & Mrs. Prabha Singh are as hereunder:

Allotment letter

Demand letter

ix. For the purpose of calculation of amount profiteered, demands raised from the home buyers who have booked their units post-GST has not been considered. This is because, the benefit of ITC was appropriately passed on by the Respondent, as verified by the DGAP, to such 189 homebuyers/customers by deduction of amounts raised in demand notices. Thus, the profiteered amount came to Rs. 2,26,76,700/- with respect to 500 homebuyers/customers i.e. those who have booked their units prior to 1.07.2017 (excluding those from whom no demand was raised/ consideration received from 1.07.2017 to 31.12.2018).

x. The Applicant No. 1 has booked his flat in the post-GST period. It has been verified by the DGAP, that benefit on account of additional ITC has been passed on to all 189 homebuyers/customers who have booked their units between the period from 1.07.2017 upto the date of Occupancy Certificate. Hence, the Applicant no.1 belongs to this category of customers. The DGAP in his Report has further verified the above claim of the Respondent and has reported that the Respondent has passed on the benefit of ITC amounting to Rs. 3,44,130/- to the Applicant No. 1 till 31.12.2018 and the same can also be verified from the demand note issued by the Respondent to the Applicant No. 1. The DGAP vide e-mail dated 13.12.2020 requested the Applicant No. 1 to confirm whether all the applicable GST was borne by the Respondent or not. The Applicant No. 1 vide e-mail dated 14.12.2020 has confirmed that the Respondent has borne all the GST part and the same was not collected from him and hence, the benefit of ITC was included. Hence, the claim of the Applicant No. 1 that the Respondent has not passed on the benefit of ITC to him appears to be incorrect as the Applicant No. 1 has confirmed the receipt of benefit of ITC himself through e-mail dated 14.12.2020.

14.In view of the above said discussion and observations, the Authority finds no reason to differ from the above-detailed computation of profiteering in the DGAP’s Report or the methodology adopted.

15.The Authority finds that, the DGAP has given a categorical report based on its verification that, the benefit of ITC has been passed on by the Respondent to all 189 homebuyers/customers who have booked their units on or after 1.07.2017 by way of giving deduction in the demand note itselfas per the example reproduced above. The findings at para 10 and 11 of the DGAP’s Report dated 30.11.2020 are reproduced at paragraphs 5(i), 5(j) and 5(k) above and the DGAP states that it has scrutinized the demand notes and allotment letters issued to these 189 homebuyers/customers by the Respondent.

16. Hence, the Authority determines the profiteered amount for the period from 01.07.2017 to 31.12.2018, in the instant case, as 2,26,76,700/- with  respect to the other 500 homebuyers/customers i.e. those who have booked their units prior to 1.07.2017 (excluding those from whom no demand was raised/ consideration received from 1.07.2017 to 31.12.2018) for the Project “Himalaya Pride”.

17.The Authority finds that, in order to verify the claim of the Respondent that the benefit of ITC had already been passed on to 500 homebuyers/customers who had booked Units in the pre-GST period, the DGAP has sent e-mails to 300 homebuyers/customers picked up randomly to confirm whether the Respondent has passed on the benefit of ITC to them or not. Out of these 300 homebuyers/customers, only 51 confirmed that they had received the benefit of ITC from the Respondent. Hence, we hold that, with respect to such category of homebuyers/customers i.e. those who have booked their units prior to 01.07.2017 (excluding those from whom no demand was raised/ consideration received from 1.07.2017 to 31.12.2018), the DGAP’s verification is inconclusive and it cannot be concluded that all such homebuyers/customers have got the benefit of ITC that was required to be passed on by the Respondent.

18.In view of the above discussions, the Authority finds that the Respondent has profiteered by an amount of Rs. 2,26,76,700/- during the period of investigation i.e. 01.07.2017 to 31.12.2018. The above amount that has been profiteered by the Respondent from his home buyers shall be refunded by him, along with interest @18% thereon, from the date when the above amount was profiteered by him till the date of such payment, in line with the provisions of Rule 133 (3) (b) of the GCST Rules 2017.

19.This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the Units commensurate with the benefit of ITC received by him as has been detailed above.

20.The Respondent is also liable to pay interest as applicable on \ the entire amount profiteered, i.e. Rs. 2,26,76,700/-. Hence the Respondent is directed to also pass on interest @18% to the homebuyers/customers on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ payment, as per provisions of Rule 133 (3) (b) of the CGST Rules 2017.

21.The Authority also order that the profiteered amount of Rs. 2,26,76,700/- along with the interest @ 18%, from the date of receiving such amounts from the homebuyers/customers till the date of passing on/return of such amount, shall be paid/passed on by the Respondent within a period of 3 months from the date receipt of this order failing which it shall be recovered as per the provisions of the CGST Act, 2017.

22.The complete list of eligible homebuyers/customers has been attached with this Order, with the details of amount of benefit of ITC to be passed along with interest © 18% as in the Annexure-1 to this order.

23.The concerned jurisdictional CGST/SGST Commissioner is directed to ensure compliance of this Order. It may be ensured that the benefit of ITC is passed on to each homebuyer as per Annexure- 1 attached with this Order along with interest @18%, if not paid already. In this regard an advertisement of appropriate size to be visible to the public may also be published in minimum of two local Newspapers/vernacular press in Hindi/English/local language with the details i.e. Name of builder (Respondent) — M/s Himalaya Real Estate Pvt. Ltd., Project- ‘Himalaya Pride’, Location-Greater Noida (West), Uttar Pradesh and amount of profiteering so that the concerned homebuyers/customers can claim the benefit of ITC if not passed on. Homebuyers may also be informed that the detailed NAA Order is available on Authority’s website www.naa.gov.in. Contact details of concerned Jurisdictional CGST/SGST Commissioner may also be advertised through the said advertisement.

24. It is also evident from the above narration of facts that the Respondent has denied benefit of ITC to the homebuyers/customers of the Units being constructed by him in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act. Section 171 (3A) of the CGST Act, 2017 has been inserted in the CGST Act, 2017 vide Section 112 of the Finance Act, 2019, w.e.f. 01.01.202 and hence, was not in force during the period of investigation i.e. from 01.07.2017 to 31.12.2018, when the Respondent had committed the above violation and hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively.

25. The concerned jurisdictional CGST/SGST Commissioner shall also submit a Report regarding compliance of this Order to this Authority and the DGAP within a period of 4 months from the date of receipt of this order.

26. Further, the Hon’ble Supreme Court, vide its Order dated 23.03.2020 in Suo Moto Writ Petition (C) no. 3/2020, while taking suo-moto cognizance of the situation arising on account of Covid-19 pandemic, has extended the period of limitation prescribed under general law of limitation or any other special laws (both Central and State) including those prescribed under Rule 133(1) of the CGST Rules, 2017, as is clear from the said Order which states as follows:-

“A period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further order/s to be passed by this Court in present proceedings.”

Further, the Hon’ble Supreme Court, vide its subsequent Order dated 10.01.2022 has extended the period(s) of limitation till 28.02.2022 and the relevant portion of the said Order is as follows:-

“The Order dated 23.03.2020 is restored and in continuation of the subsequent Orders dated 08.03.2021, 2704.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general of special laws in respect of al/ judicial or quasi-judicial proceedings.”

Accordingly this Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017.

27. A copy of this order be sent, free of cost to the Applicant No. 1, the DGAP, the Respondent, Commissioners CGST/SGST Uttar Pradesh, the Principal Secretary (Town and Country Planning), Government of Uttar Pradesh as well as Uttar Pradesh RERA for necessary action. File to be consigned on completion.

Annexed: Annexure 1 in Pages 1 to 10.

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