Case Law Details
Sh. Nitin Kumar Joshi Vs GK ARPL Ventures (NAA)
In the instant case, there is no reduction of rate of tax during the relevant period and the only issue which is required to be decided by the Authority as to whether Respondent is required to pass on the benefit of Input Tax Credit. As mentioned in earlier paragraphs, DGAP has carried out investigation in the subject matter and collected relevant information/evidences from the Respondent and after the analysis of the same the DGAP has come to a conclusion that the 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 31.03.2019. 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. 2,22,57,242/- which includes 12% GST on the base profiteered amount of Rs. 1,98,72,538/- in respect of the Applicant No. 1 and 158 other homebuyers. Further, it is submitted by the Respondent that he 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 by collecting GST @9% instead of @12% from the homebuyers and the Respondent had submitted his declaration that he had collected GST @9% instead of 12% and Mobile No. & Email IDs of the homebuyers. Further, the DGAP has submitted that to cross check the claim of the Respondent, e-mails were sent to 112 homebuyers (whose Email IDs were provided by the Respondent) out of the total of 159 homebuyers, out of which, 15 buyers had replied. 11 homebuyers had confirmed to have paid GST @9%, 3 homebuyers were unclear, 1 homebuyer had confirmed paying GST @9% but also submitted that the benefit of ITC was not passed on to him and 1 homebuyer had denied the Respondent’s claim. The period of investigation covers the period from 01.07.2017 to 31.03.2019. The Respondent opted for new scheme as per Notification no. 03/2019-Central Tax (rate) dated 29.03.2019, vide which he was required to pay GST @5% without taking/availing the Input Tax Credit, and therefore, Section 171 of the CGST Act, 2017 is not attracted w.e.f. 01.04.2019.
In view of the above facts, the Authority finds that the benefit of additional Input Tax Credit of 3.03% of the turnover has accrued to the Respondent for the project “G K Pride Phase-II”. 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 @3.03% of the base price received by the Respondent during the period 01.07.2017 to 31.03.2019, was required to be passed on by the Respondent to 159 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.
It is pertinent to mention here that the Respondent has contested the calculation done by the DGAP for quantification of the amount of profiteering. The Respondent has submitted that the amount of total base price raised during July, 2017 to March, 2019 has been taken as Rs. 65,58,59,338/- excluding GST. However, the amount of Rs. 65,58,59,338/- is his total amount raised during the said period including GST. To verify his claim, we have gone through the calculation sheet submitted by the DGAP in this case, wherein, it is observed that the amount received from July, 2017 to march, 2019 has been taken as 65,58,59,338/-, however, the GST has been taken as Rs. 5,41,53,523.31/- @9%. Hence, the amount of Rs. 7,87,03,121/- taken as GST raised over base price in the table B, could not be found anywhere in the DGAP’s calculations.
In view of the above facts, the Authority finds that the DGAP’s calculation of amount of profiteering might be erroneous and require recalculation. Hence, the DGAP is directed to recalculate the base prices and the amount of profiteering thereof under Rule 133(4) of the CGST Rules, 2017 strictly in respect of the findings made in para 10 above.
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