Case Law Details
Sh. Arun Kumar Raina Vs M3M India Pvt. Ltd. (NAA)
Respondent has gained benefit of ITC on the supply of Construction services after the implementation of GST w.e.f. 01.07.2017 and the Respondent was required to pass on such benefit to the homebuyers by way of commensurate reduction in prices in terms of Section 171 of the CGST Act, 2017 during the period 01.07.2017 to 31.06.2019. The DGAP has calculated that an amount of benefit of ITC not passed on to the recipients or in other words, the profiteered amount comes to Rs. 74,60,399/- which includes 12% GST on the base profiteered amount of Rs. 66,61,071/- Further, it is submitted by the DGAP that the Respondent had already passed on substantial amount of GST ITC to the homebuyers in accordance with the requirements of Section 171 of the CGST Act, 2017 at the time of offer of possession to the homebuyers and the Respondent had submitted the Tax Invoices cum Demand letters/ Credit Notes issued to the homebuyers and Acknowledgment letters (on sample basis) from the Flomebuyers as supporting documents against his claim Further the DGAP has submitted that to cross check the claim of the Respondent. e-mails were sent to 35 homebuyers, out of which. 16 buyers apart from the Applicant No. 1 confirmed the receipt of the payment made by the Respondent. The Applicant No. 1 has also confirmed receiving an amount of Rs. 72,858/- from the Respondent. The Respondent had submitted that he had passed on the benefit of Rs. 87,75,787/- to 110 homebuyers who had already booked their flats up to 30.11.2019. The period of investigation covers the period from 01.07.2017 to 30.11.2019. however, the Respondent had received Occupancy Certificate (OC) in October, 2018, and therefore, investigation with respect to unsold units did not form the part of profiteering as calculated by the DGAP.
In view of the above facts, the Authority finds that the benefit of additional Input Tax Credit of 1.16% of the turnover has accrued to the Respondent for the project “M3M Escala”. This benefit was required to be passed on to the recipients. Thus, Section 171 of the CGST. 2017 has been contravened by the Respondent, inasmuch as the additional benefit of ITC @1.16% of the base price received by the Respondent during the period 01.07.2017 to 30.11.2019, was required to be passed on by the Respondent to 114 recipients including the Applicant no. 1. These recipients are identifiable as per the documents provided by the Respondent, giving the names and addresses along with Unit no. allotted to such recipients.
Authority finds that the Respondent has gained the benefit of ITC on the supply of Construction Services after the implementation of GST w.e.f. 01.07.2017 and the Respondent was required to pass on such benefit of ITC to the homebuyers/customers by way of commensurate reduction in pnces in terms of Section 171 of the CGST Act, 2017. However, it is observed that the benefit was not commensurately passed on by the Respondent to his recipients, taking into account the aforesaid Input Tax Credit availability post GST and the details of the amount collected from the home buyers during the period 01.07.2017 to 30.11.2019. the amount of benefit of ITC not passed on to the recipients or in other words, the profiteered amount comes to Rs. 74,60,399/- which includes GST (including Rs. 74,713/-of the Applicant No. 1). The Respondent has claimed that he had already passed on a substantial amount of GST ITC per the requirements of Section 171 of the CGST Act, 2017 to the homebuyers. The Respondent had submitted that he had passed on the benefit of Rs. 87,75.787/- to 114 homebuyers/customers. The Respondent has also claimed that he has passed on excess ITC benefit of Rs. 17,25,108/- to 83 buyers/customers. The DGAP has responded to such claims as tabulated at Table D above and found that Respondent has not passed commensurate benefit to all homebuyers/customers. The provision of law mentioned herein above provide that benefit of the ITC needs to be provided to each and every supply in the commensurate manner. As such, the excess of the ITC benefit provided to some of the homebuyers/customers cannot be offset against others to whom less ITC benefit has been provided or no benefit have been provided at all The details of all eligible homebuyers/customers and the amount of the benefit to be passed on to each of them is enclosed as the Annexure-A to this Order.
From the above discussions. the Authority determines that the Respondent has profiteered an amount of Rs. 74,60,399/-. Therefore, given the above facts, the Authority under Rule 133(3)(a) of the CGST Rules orders that the Respondent shall reduce the prices to be realized from the buyers of the flats/customers commensurate with the benefit of ITC received by him. The details of the recipients and benefit which is required to be passed on to each recipient/homebuyer (including Applicant No. 1) along with the details of the unit are contained in the Annexure’ A’ to this order. The Authority directs that the profiteered amount as determined shall be passed on/returned by the Respondent to the recipients of supply along with interest ©18%, as prescribed under Rule 133(3)(b) of the CGST Rules, 2017, from the date such amount was profiteered by the Respondent up till the date such amount is passed on/returned to the respective recipient of supply (if not already passed on) within a period of three months from the date of this order.
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