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2020 (3) TMI 1409 - NAPA - GSTProfiteering - purchase of Flat - it is alleged that the Respondent had not passed on the benefit of ITC (ITC) availed by him by way of commensurate reduction in the price - contravention of section 171 of CGST Act - HELD THAT - A careful perusal of Table- B submitted by the DGAP shows that the Respondent has been given credit of Rs. 43,75,985/- on account of the ITC earned by him on the Value Added Tax (VAT) which he has paid on the purchase of the goods during the period from April, 2016 to June, 2017 while executing the above Affordable Housing Project . However, it has not been mentioned in the Report that the said credit of VAT was in accordance with the provisions of Section 42 (1) and (2) of the Haryana Value Added Tax Act, 2003 and whether the above credit has been allowed to him by the appropriate Assessing Authority as specified under the Act. No reasons have been given by the DGAP in his Report why the Respondent was eligible to claim the above ITC. It has also not been explained whether the Respondent was discharging his VAT liability as a regular registered dealer or was as a composition dealer. It has also not been stated in the Report whether the Respondent was eligible to charge VAT from the buyers under the Haryana Affordable Policy-2013 and whether he had collected VAT from his buyers or not? Perusal of the supplementary Report dated 19.02.2020 furnished by the DGAP and Table- D of his first Report dated 16.09.2019 shows that the Respondent has passed on the benefit of Rs. 1,21,08,722/- to the flat and shop buyers. In this connection it would be pertinent to mention that the DGAP has not verified even a single acknowledgement submitted by the Respondent from the flat or the shop buyers to establish that they have actually received the benefit of GST as has been claimed by the Respondent. The DGAP has also not produced even a single acknowledgement/statement of the buyers obtained/recorded by him to confirm whether the benefit of ITC has been passed on to the buyers or not. In the absence of such acknowledgement/statement the claim of the Respondent that he has passed on the benefit of ITC to his buyers cannot be accepted.
Issues Involved:
1. Whether the Respondent was eligible to claim ITC on VAT paid during April 2016 to June 2017. 2. Whether the Respondent was availing the benefit of the Composition Scheme under the Haryana VAT Act, 2003. 3. Whether the Respondent was eligible to charge VAT from flat and shop buyers under the Haryana Affordable Housing Policy-2013. 4. Whether the Respondent collected VAT from the buyers. 5. Whether the credit of VAT claimed by the Respondent is in accordance with Section 42 of the Haryana VAT Act, 2003. 6. Whether the ITC claimed by the Respondent during the pre-GST period was allowed by the appropriate Assessing Authority. 7. Whether the Respondent has actually passed on the benefit of ITC to the buyers. Issue-wise Detailed Analysis: 1. Eligibility to Claim ITC on VAT: The DGAP's investigation revealed that the Respondent claimed ITC on VAT paid during the period from April 2016 to June 2017. However, it was not mentioned in the report if this credit was in accordance with Section 42 of the Haryana VAT Act, 2003, and whether it was allowed by the appropriate Assessing Authority. The Authority directed the DGAP to investigate this further to ascertain the eligibility of the Respondent to claim such ITC. 2. Availing Composition Scheme: The report did not clarify whether the Respondent was availing the benefit of the Composition Scheme under the Haryana VAT Act, 2003. The Authority required an investigation to determine if the Respondent was a regular registered dealer or a composition dealer, which would impact the eligibility to claim ITC. 3. Eligibility to Charge VAT under Haryana Affordable Housing Policy-2013: The DGAP's report lacked information on whether the Respondent was eligible to charge VAT from buyers under the Haryana Affordable Housing Policy-2013. The Authority directed further investigation into this matter to determine if the VAT charged was legitimate. 4. Collection of VAT from Buyers: It was not clear from the report whether the Respondent collected VAT from the buyers. The Authority required verification of whether VAT was collected and if it was in line with the applicable laws. 5. Credit of VAT in Accordance with Section 42 of Haryana VAT Act, 2003: The DGAP's report did not mention if the credit of VAT claimed by the Respondent was in accordance with Section 42 of the Haryana VAT Act, 2003. The Authority directed further investigation to ensure compliance with the statutory provisions. 6. Allowance of ITC by Assessing Authority: The report did not clarify whether the ITC claimed by the Respondent during the pre-GST period was allowed by the appropriate Assessing Authority. The Authority required verification of the assessment orders to confirm the legitimacy of the claimed ITC. 7. Passing on the Benefit of ITC to Buyers: The Respondent claimed to have passed on the benefit of Rs. 1,21,08,722/- to the buyers. However, the DGAP did not verify acknowledgments from buyers to confirm receipt of the benefit. The Authority directed the DGAP to obtain written acknowledgments from at least 20% of the buyers to verify the claim. The DGAP was also instructed to investigate whether the benefit of ITC was actually passed on by the Respondent. Conclusion and Directions: The Authority concluded that the DGAP's reports dated 16.09.2019 and 19.02.2020 could not be accepted due to the lack of verification on several critical points. The DGAP was directed to conduct a further investigation on the specified issues and submit a detailed report within three months. The investigation should include verification of written acknowledgments from buyers and copies of assessment orders related to VAT and Service Tax liabilities of the Respondent. The Respondent was also directed to cooperate fully with the DGAP during the investigation.
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