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2019 (11) TMI 1311 - NAPA - GSTProfiteering - supply of construction services related to purchase of an apartment in the project al “Navkar Darshan” of a Flat - benefit of Input Tax Credit (ITC) by way of commensurate reduction in the price of the apartment purchased by him, on implementation of GST w.e.f. 01. 07.2017 not passed on - contravention of section 171 of CGST Act - penalty - 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 in the post GST period hence the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. It has been revealed from the DGAP's Report 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 0.14% and during the post-GST period (July-2017 to December-2018), it was 4.08% This confirms that, post-GST. the Respondent has been benefited from additional ITC to the tune of 3 94% (4.08%-0.14%) of his turnover and the same was required to be passed on to the Applicant and the other flat buyers. The DGAP has calculated the amount of ITC benefit to be passed on to all the flat buyers as ₹ 5,83,593/- which was availed by the Respondent vide Table- C Supra on the basis of the information supplied by the Respondent, which the Respondent has not challenged and hence the amount of profiteering computed by the DGAP is hereby accepted as correct - Therefore, we take the view that the provisions of Section 171 (1) of the CGST Act, 2017 have been contravened in the present case as the Respondent had been benefited from additional IT in the post-GST regime. Further, it has been revealed from the record that the Respondent has profiteered an amount of ₹ 5,83,593/- for the period of investigation. Therefore, in view of the above facts this Authority under Rule 133(3)(a) of the CGST Rules, 2017 orders that the Respondent shall reduce the price to be realized from the buyers of the flats commensurate with the benefit of ITC received by him - The profiteered amount alongwith applicable interest shall be paid by the Respondent within a period of 3 months from the date of this order, failing which the same shall be recovered by the concerned Commissioner CGST/SGST as per the provisions of the CGST/SGST Act, 2017, under the supervision of the DGAP. A Report confirming the action taken on the directions passed vide this order shall be submitted by the concerned Commissioner CGST/SGST within a period of 4 months from the date of this order. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the buyers of the fiats being constructed by him in his Project 'Navkar Darshan' 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 and therefore, he is liable for imposition of penalty under the provisions of the above Section - a SCN be issued to him directing him to explain as to why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) d) of the CGST Rules, 2017 should not be imposed on him. Application disposed off.
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