9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (8) TMI 364 - NAPA - GSTProfiteering - purchase of a Flat - allegation is that the Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in price - contravention of section 171 of CGST Act - penalty - HELD THAT - The Authority finds no reason to differ from the computation of profiteering in the DGAP's Report or the methodology adopted. The DGAPs Report concludes that the ITC as a percentage of the turnover that was available to the Respondent for the project 'Swati Florence' during the pre-GST period (April-2016 to June-2017) was 2.31% and during the post-GST period (July-2017 to July-2020), it was 8.64%. This confirms that, post-GST, the Respondent has been benefited from additional ITC to the tune of 6.33% (8.64% - 2.31%) of his turnover and the same was required to be passed on to the customers/home buyers/recipients. Hence, as tabulated in Table 'C' above, the Authority determines the profiteered amount for the period from July-2017 to July-2020, in the instant case, as Rs.4,52,79,754/- and the same was required to be passed on by the Respondent to their customers/home buyers/recipients. It is also evident from the Report of the DGAP that during the investigation, the Respondent has claimed that he has passed on benefit of ITC amounting to Rs.1,78,71,200/- to the customers/home buyers/recipients. To verify the claim of the Respondent, the DGAP sent e-mails to 177 customers/home buyers/recipients asking them to confirm whether they have received the benefit of ITC as claimed by the Respondent. Out of 177 customers/home buyers/recipients. only 36 customers/home buyers/recipients replied. Out of these 36 customers/home buyers/recipients, only 32 customers/home buyers/recipients confirmed the receipt of benefit of ITC from the Respondent. Hence, the verification of passing on the benefit of additional ITC done by the DGAP is not conclusive and it cannot be confirmed that the Respondent has passed on an amount of Rs.1,78,71,200/- to his customers/home buyers/recipients. Therefore. the profiteered amount required to be passed on to the customers/home buyers/recipients by the Respondent is determined to be Rs.4,52,79,754/-. Penalty - HELD THAT - The Respondent has denied benefit of ITC to his customers/home buyers/recipients in contravention of the provisions of Section 171 (I) Of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act. That Section 171 (3A) of the CGST Act, 2017 has been inserted in the CGST Act, 2017 vide Section 112 of the Finance Act, 2019, and the same became operational w.e.f. 01.01.2020. As the period of investigation was July-2017 to July-2020, therefore, he is liable for imposition of penalty under the provisions of the above Section tor the amount profiteered from 01.01.2020 onwards, Accordingly, notice be issued to him. This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017.
Issues Involved:
1. Whether there was a benefit of reduction in the rate of tax or input tax credit (ITC) on the supply of construction service by the Respondent after the introduction of GST w.e.f. 01.07.2017. 2. Whether such benefit was passed on to the recipients in terms of Section 171 of the Central Goods and Services Tax Act, 2017. 3. Calculation and quantification of the profiteered amount. 4. Compliance and enforcement of the order, including interest and penalties. Issue-Wise Detailed Analysis: 1. Benefit of Reduction in Tax Rate or ITC: The DGAP's investigation established that post-GST, the Respondent benefited from additional ITC to the tune of 6.33% of the taxable turnover. The ITC as a percentage of the total turnover available during the pre-GST period was 2.31%, while during the post-GST period, it was 8.64%. This confirmed that the Respondent gained an additional ITC benefit of 6.33%. 2. Passing on the Benefit: The Respondent was required to pass on the benefit of this additional ITC to the recipients. The Respondent claimed to have passed on a 2.80% benefit to the homebuyers, which was contested by the Applicant No. 1. The DGAP found that the Respondent had not passed on the full benefit of the additional ITC to the homebuyers, as mandated by Section 171 of the CGST Act, 2017. 3. Calculation of Profiteered Amount: The DGAP's report calculated the profiteered amount as Rs. 4,52,79,754/-, which included both the base profiteered amount and GST on the profiteered amount. This calculation was based on the difference in ITC ratios pre and post-GST and the taxable turnover during the investigation period (July 2017 to July 2020). The Respondent's contention regarding the inclusion of VAT credit and the use of built-up area instead of carpet area for calculation was rejected by the Authority. The Authority upheld the DGAP's methodology and findings. 4. Compliance and Enforcement: The Authority ordered the Respondent to refund the profiteered amount of Rs. 4,52,79,754/- along with interest at 18% from the date of profiteering until the date of refund. The Respondent was also directed to reduce the prices commensurate with the benefit of ITC received. The CGST/SGST Commissioner was tasked with ensuring compliance and publicizing the order to inform the affected homebuyers. The Respondent was found liable for penalty under Section 171 (3A) for the period from 01.01.2020 onwards, and a notice for the same was issued. Conclusion: The judgment found the Respondent guilty of profiteering by not passing on the benefit of additional ITC to the homebuyers as required under Section 171 of the CGST Act, 2017. The Respondent was ordered to refund the profiteered amount with interest and reduce prices accordingly. The compliance and enforcement of the order were entrusted to the CGST/SGST Commissioner, with provisions for public notification to ensure affected homebuyers could claim their benefits.
|
