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2019 (3) TMI 1470 - NAPA - GSTProfiteering - purchase of Flat No. A701, constructed by the Respondent in his “Vrindavan Yojna Project”, Rae Bareli Road, Lucknow - increase in the price of the flat after implementation of the Goods & Service Tax (GST) w.e.f. 01.07.2017 - benefit of Input Tax Credit (ITC) by way of commensurate reduction in the price of the flat purchased by them not passed on - contravention of the provisions of Section 171 of the CGST Act, 2017. Held that:- It is clear from the plain reading of Section 171 (1) mentioned above that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax hence, this issue is not relevant in this case. On the issue of passing on the benefit of ITC in the post-GST era, it has been revealed by the DGAP's Report that the benefit of additional ITC of 3.04% of the taxable turnover during the period w.e.f. 01.07.2017 to 31.08.2018 and the amount outstanding as on 31.08.2018, has accrued to the Respondent and the same was required to be passed on to the Applicants and the other flat buyers. The DGAP has calculated the amount of ITC as ₹ 37,24,923/- which was availed by the Respondent vide Table-D supra on the basis of the information supplied by the Respondent and hence the calculation done by him can be relied upon. The DGAP has also computed the amount of profiteering as ₹ 38,29,753/- vide Table-F on the basis of the details supplied by the Respondent himself which he has not challenged and hence the amount of profiteering assessed by the DGAP can be deemed to be correct. The DGAP has also computed the details of the benefit of ITC which is required to be passed on by the Respondent to each flat buyer as per Annexure-14 which has been accepted by the Respondent. The Respondent at no stage has objected to the calculation of the additional ITC availed by him or the profiteered amount made by the DGAP and has rather admitted the computation of both as correct and agreed to pay the above benefit as per the details prepared by the DGAP vide Annexure-14. The amount of profiteering in terms of Rule 133 (1) of the CGST Rules, 2017 is determined as ₹ 38,29,753/- including the GST @12% on the base profiteered amount of ₹ 34,19,422/- as per the details furnished by the DGAP. Accordingly, under Rule 133 (3) (a) of the CGST Rules, 2017 it is ordered that the Respondent shall reduce the price to be realized from the buyers of the flats commensurate with the benefit of ITC availed by him. Penalty - Held that:- Although notice for imposition of penalty has already been issued to the Respondent on 06.12.2018 however, no formal oral or written submissions have been filed by the Respondent on the quantum of penalty. Therefore, keeping in view the principles of natural justice it would be appropriate to issue fresh notice asking him to explain why penalty should not be imposed on him for the above offence.
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