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2022 (9) TMI 1511 - NAPA - GSTProfiteering - construction service supplied by the Respondent - Respondent had not passed on the benefit of Input Tax Credit to him by way of commensurate reduction in the price - contravention of section 171 of CGST Act - Time Limitation - HELD THAT - The Authority, without going into the merits of the case, directs the DGAP to re-examine/re-investigate and recalculate the amount of profiteering under rule 133(4) of the CGST Rules, 2017 strictly in respect of the findings made in para 7(i) to 7(iii) above and submit its Report within 3 months of this order. Further, the Hon'ble High Court of Delhi in the case of Nestle India Ltd. v. Union of India 2020 (2) TMI 671 - DELHI HIGH COURT has held that it appears to us that the limitation of period of six months provided in rule 133 of the CGST Rules, 2017 within which the authority should make its order from the date of receipt of the report of the Directorate General of Anti-Profiteering, appears to be directory inasmuch as no consequence of non-adherence of the said period of six months is prescribed either in the CGST Act or the rules framed thereunder.
Issues Involved:
1. Whether the Respondent passed on the benefit of reduction in tax rate or input tax credit to the recipients. 2. Whether the methodology adopted by the DGAP to calculate the profiteered amount was appropriate. 3. Whether the Respondent is liable for penalty for failing to pass on the commensurate benefit to the recipients. Issue-Wise Analysis: 1. Passing on the Benefit of Reduction in Tax Rate or Input Tax Credit: The main issue was whether the Respondent had passed on the benefit of input tax credit (ITC) to the recipients post-GST implementation, as required under Section 171 of the CGST Act, 2017. The DGAP's investigation revealed that the Respondent had benefitted from additional ITC post-GST, which was not passed on to the recipients. The DGAP's report indicated that the ITC as a percentage of turnover increased from 2.89% pre-GST to 9.56% post-GST, resulting in an additional benefit of 6.67% of turnover. The Respondent was required to pass this benefit to the buyers by reducing the prices of the flats. However, the Respondent failed to provide documentary evidence to support the claim that the benefit was passed on, leading to a conclusion that the Respondent had profiteered to the tune of Rs. 13,74,29,635, including Rs. 4,97,806 in respect of Applicant No. 1. 2. Methodology Adopted by DGAP: The Respondent raised several objections regarding the methodology used by the DGAP, including the total area considered for pre-GST and post-GST periods, the turnover figures, and the exclusion of VAT/WCT credit. The DGAP clarified that the data used in the investigation was based on the submissions provided by the Respondent during the investigation. The DGAP also stated that the additional benefit of ITC pertains to the entire project and should be passed on to all buyers, irrespective of whether they booked their flats pre or post-GST. The DGAP's approach of comparing pre and post-GST ITC availability was deemed justified and correct. 3. Liability for Penalty: The Authority observed that the Respondent had not passed on the commensurate benefit of ITC to the recipients, as mandated by Section 171 of the CGST Act, 2017. The Respondent's failure to pass on the benefit led to profiteering, and the Authority directed the DGAP to re-investigate and recalculate the profiteered amount, considering the Respondent's objections regarding the total area, turnover figures, and VAT/WCT credit. Conclusion: The Authority directed the DGAP to re-examine and re-calculate the profiteered amount within three months, considering the Respondent's objections. The case highlighted the importance of passing on the benefits of ITC to consumers and ensuring compliance with anti-profiteering provisions under the GST regime. The Authority's decision emphasized the need for accurate data and methodology in calculating the profiteered amount and the Respondent's obligation to pass on the benefits of ITC to the recipients.
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