9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (8) TMI 1457 - NAPA - GSTProfiteering - purchase of flat - Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in the price of Flat - contravention of of Section 171 of the Central Goods and Services Tax Act, 2017 - HELD THAT - It is clear from the plain reading of section 171 (1) that it deals with two situations - One relating to the passing on the benefit of reduction in the rate of tax and the second on 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-GST period. Hence, the only issue to be examined is whether there was any net benefit of ITC with the introduction of GST. The Authority finds 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 0.92%, whereas, during the post-GST period (July 2017 to December 2019), it was 4.26%. This confirms that in the post-GST period, the Respondent has benefited from additional ITC to the tune of 3.34% (4.26%-0.92%) of his turnover, and the same is required to be passed on by him to the recipients of supply, including the Applicant No. 1, if not already passed on. The Authority finds that the computation of the amount of ITC benefit to be passed on by the Respondent to the eligible recipients works out to Rs. 1,45,87,404/-. This Authority concurs with the DGAP's report dated 28-10-2020. The Authority determines that the Respondent has profiteered by Rs. 1,45,87,404/- in respect of the project Ruparel Orion during the period from 1-7-2017 to 31-12-2019 which includes Rs. 86215/- of the Applicant No. 1 and orders refund/return/passing on of the profiteered amount, if not already done, along with the interest @18% thereon, from the date, when the above determined profiteered amount was profiteered by him till the date of such payment, in line with the provisions of rule 133 (3) (b) of the CGST Rules 2017 - This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from homebuyers/customers/recipients commensurate with the benefit of ITC received by him.
Issues Involved:
1. Whether there was the benefit of reduction in the rate of tax or ITC on the supply of construction service by the Respondent after implementation of GST w.e.f. 1-7-2017. 2. Whether the Respondent passed on such benefit to the recipients by way of commensurate reduction in price, in terms of section 171 of the Central Goods and Services Tax Act, 2017. Detailed Analysis: Issue 1: Benefit of Reduction in Rate of Tax or ITC Post-GST - The DGAP conducted an investigation to determine if the benefit of ITC had been passed on by the Respondent to Applicant No. 1 concerning the construction service supplied. - The investigation period was from 1-7-2017 to 31-12-2019. - The Respondent was eligible to avail credit of Service Tax paid on input services before GST and could avail ITC of GST paid on all inputs and input services post-GST. - The DGAP's report indicated that the ITC as a percentage of turnover available to the Respondent during the pre-GST period was 0.92%, and during the post-GST period, it was 4.26%, confirming an additional benefit of ITC to the tune of 3.34% post-GST. Issue 2: Passing on the Benefit to Recipients - Section 171 of the CGST Act mandates that any reduction in tax rate or benefit of ITC must be passed on to the recipient by way of commensurate reduction in prices. - The DGAP's report calculated that the Respondent derived an additional benefit of ITC amounting to Rs. 1,45,87,404/- (inclusive of GST) for the project "Ruparel Orion." - The Respondent contended that there were mistakes in the DGAP's report and recalculated the profiteered amount to be Rs. 8,43,443/-. However, the DGAP's figures were based on the facts and data submitted by the Respondent himself. - The Authority found that the Respondent had not passed on the additional ITC benefit of 3.34% to the recipients, including Applicant No. 1, and upheld the DGAP's calculation of Rs. 1,45,87,404/- as the amount to be refunded or adjusted. Judgment and Orders: - The Respondent is ordered to refund/return/pass on the profiteered amount of Rs. 1,45,87,404/- along with interest @18% from the date of profiteering till the date of payment. - The Respondent must reduce the prices to be realized from homebuyers/customers/recipients commensurate with the benefit of ITC received. - The DGAP is directed to investigate all other projects of the Respondent under the same GST registration to ensure compliance with Section 171 of the CGST Act, 2017. - The concerned jurisdictional CGST/SGST Commissioner is directed to ensure compliance with this order and submit a compliance report within four months. - The Respondent is liable to pass on the benefit of ITC till the date of issue of the Completion Certificate (CC). Additional Directives: - An advertisement must be published in local newspapers to inform homebuyers/customers about the profiteering amount and their eligibility to claim the benefit of ITC. - The Hon'ble Supreme Court's orders extending the period of limitation due to the Covid-19 pandemic were acknowledged, ensuring that the judgment falls within the prescribed limitation period. Conclusion: The Authority concluded that the Respondent had profiteered by not passing on the benefit of additional ITC to the recipients post-GST implementation. The Respondent is required to refund the profiteered amount and adjust future prices to reflect the benefit of ITC.
|
