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2022 (10) TMI 243 - NAPA - GSTProfiteering - Construction Services - benefit of ITC has not been passed on by way of commensurate reduction in the price - contravention of Section 171 of the Central Goods and Service Tax Act, 2017 - Penalty - HELD THAT:- Upon perusal of Para 17 of the Report of the DGAP and the documents placed on record it is apparent that the computation of profiteering was with respect to 85 home buyers front whom construction value had been received by the Respondent during the period 01.07.2017 to 31.10.2019 (excluding the flats sold post 01.07.2017). This was on account of the fact that. the Respondent had booked 121 flats till 31.10.2019, but, the Respondent had claimed that he had sold 36 flats after 01.07.2017 at the rates agreed by the customers as all inclusive price after considering the market condition, escalations, demand - supply balance, GST benefit/ concession, development in the locality, location of the land, proximity to education institutions/hospitals/airport etc. 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 UST period., hence the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. On this issue 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 3.36% and during the post-GST period (July-2017 to October-2019), it was 4.27%. The Authority finds that the Respondent has profiteered by an amount of Rs. 50,09,158/- during the period of investigation i.e. 01.07.2017 to 31.10.2019. The above amount of Rs. 50,09,158/-(including 18% GST) that has been profiteered by the Respondent from his home buyers/shop buyers/recipients of supply, shall be refunded by him, along with interest @18% thereon, from the date when the above amount was profiteered by him till the date of such payment, in accordance with the provisions of Rule 133 (3) (b) of the GCST Rules 2017. Penalty - HELD THAT:- Respondent has denied the benefit of tax reduction to the customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus committed an offence under Section 171 (3A) of the Act and therefore. he is liable for imposition of penalty under the provisions of the Section - Show Cause Notice directing him to explain 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 is not required to be issued.
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