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2020 (1) TMI 1578 - NAPA - GSTProfiteering - purchase of Flats - allegation is that Respondent had not passed on the benefit of Input Tax Credit (ITC) availed by him by way of commensurate reduction in the price - contravention of section 171 of CGST Act - Penalty - HELD THAT - The Respondent has indeed benefited on account of ITC to the extent of 2.67% of his turnover during the post-GST period, i.e. from July, 2017 to December, 2018 and hence the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent since he has not passed on the above benefit to his home buyers. Further he has profiteered to the extent of Rs. 1,95,86,429/-, inclusive of GST @ as applicable, on the base profiteered amount of Rs. 1,78,84,716/-. Further, it is clear to us that the Respondent has realized additional amounts of Rs. 25,282/- each from the Applicant No. 1 and 2, inclusive of GST. The Respondent has also realized an additional amount of Rs. 1,95,35,865/- (inclusive of GST as applicable) from all the home buyers other than the Applicant No. 1 and 2. The total amount of profiteering on part of the Respondent works out to be Rs. 1,95,86,429/- ( Rs. 1,95,35,865 Rs. 25,282/- Rs. 25,282/- ) and the same is tabulated in Annexure- 17, 18 and 19 of the Report of the DGAP dated 19.06.2019. On perusal of Table-D of the DGAP Report dated 19.06.2019 suggests an amount of Rs. 81,82,783/- has been claimed to have been passed on by the Respondent to his home buyers on account of ITC benefit. However, it is also clear from Table-D of the DGAP Report and claim of the Respondent of having passed on the benefit of Rs. 81,82,783/-, has not been verified at any stage by the DGAP. Further, the claim made by the Respondent during the hearings held before this Authority of having passed on another tranche of benefit of ITC to his home buyers, taking the total ITC benefit passed on to Rs. 2,18,87,807/-, also needs to be verified by the DGAP. Accordingly the DGAP is directed to further verify the total amount of ITC benefit claimed to have been passed on to his home buyers by the Respondent till date, as per the provisions of Rule 133 (4) of the above Rules and submit his Report clearly mentioning the verified amount of benefit passed on by the Respondent to his home buyers and the balance amount still to be passed on to each of the home buyers within a period of two months of this Order. Keeping in view the self-admission of the Respondent in which he has stated that he is liable to pass on the benefit of additional ITC as per the provisions of Section 171 of the Act, there is reasonable ground to believe that the Respondent is required to pass on the benefit of additional ITC to the eligible house buyers in respect of the above projects. Accordingly, the DGAP is also directed to investigate the issue of passing on the benefit of additional ITC in respect of the above three projects i.e. projects undertaken by the Respondent, in terms of Section 171 (2) of the CGST Act, 2018 read with Rule 133 (5) of the CGST Rules, 2017 and submit his Report. Application disposed off.
Issues Involved:
1. Alleged profiteering by the Respondent in respect of purchase of flats. 2. Non-passing of the benefit of Input Tax Credit (ITC) to the home buyers. 3. Investigation and findings by the Director General of Anti-Profiteering (DGAP). 4. Compliance with Section 171 of the Central Goods and Services Tax (CGST) Act, 2017. 5. Verification of the benefit passed on by the Respondent to the home buyers. Issue-wise Detailed Analysis: 1. Alleged Profiteering by the Respondent: The Applicants alleged that the Respondent did not pass on the benefit of ITC availed by him through a commensurate reduction in the price of the flats in his "Paradise" project. The applications were forwarded to the DGAP for a detailed investigation. 2. Non-passing of the Benefit of ITC: The DGAP's investigation covered the period from 01.07.2017 to 31.12.2018. The Respondent submitted that he had informed the Applicants about the ITC benefit and assured them of passing it on. However, the DGAP found that the Respondent had not reduced the basic prices of his flats by 2.67% despite benefiting from additional ITC post-GST implementation. 3. Investigation and Findings by the DGAP: The DGAP examined various documents and found that the ITC as a percentage of the total turnover was 0.43% during the pre-GST period and 3.10% during the post-GST period, resulting in an additional ITC benefit of 2.67%. The DGAP quantified the profiteered amount as Rs. 1,95,86,429/-, which included GST on the base profiteered amount of Rs. 1,78,84,716/-. The DGAP's report included a detailed analysis of the amounts and taxes paid by the Applicants and other home buyers. 4. Compliance with Section 171 of the CGST Act, 2017: The DGAP concluded that the Respondent contravened the provisions of Section 171 of the CGST Act, 2017, by not passing on the benefit of additional ITC to the home buyers. The Respondent was found to have realized additional amounts from the Applicants and other home buyers, which needed to be returned. 5. Verification of the Benefit Passed on by the Respondent: The Respondent claimed to have passed on the ITC benefit to the home buyers through credit notes. However, the DGAP's report indicated that the benefit passed on was less than what was required. The Authority directed the DGAP to verify the total amount of ITC benefit claimed to have been passed on by the Respondent and submit a report within two months. Conclusion: The Authority found that the Respondent had indeed benefited from additional ITC and had not passed on the benefit to the home buyers as required under Section 171 of the CGST Act, 2017. The total profiteered amount was determined to be Rs. 1,95,86,429/-. The DGAP was directed to verify the ITC benefit passed on by the Respondent and investigate the benefit of additional ITC in respect of the Respondent's other projects.
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