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2022 (8) TMI 272 - GST
Profiteering - construction service - Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in the price - contravention of Section 171 of the CGST Act, 2017 - penalty - HELD THAT:- The 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 prices 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 74,80,399/- 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 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 at this order.
Penalty - HELD THAT:- The Authority hold that the Respondent has committed an offence by violating the provisions of Section 171 (1) during the period from 01.07,2017 to 30.11.2019, and therefore, he is liable for imposition of penalty under the provisions of Section 171 (3A) of the above Ad However, perusal of the provisions of the said Section 171 (3A) shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.07.2017 to 30.11.2019 when the Respondent had committed the above violation. Hence, the said penalty under Section 171 (3A) cannot be imposed on the Respondent retrospectively.
This Order having been passed today fails within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017.