2019 (6) TMI 548 - NAPA - GST

Profiteering - applicability of provisions of section 171 of the CGST Act 2017 - it was alleged that the Respondent had charged extra VAT EDC (External Development Charges) and IDC (Internal Development Charges) - benefit of reduction in the tax rate or additional input tax credit had not been passed - HELD THAT - The complaint of the Applicant No. 1 was related to the pre-GST period and that the specific charges on the basis of which the said complaint arose pertained to VAT EDC and IDC. Since the project has been completed before coming into force of the GST w.e.f 01.07.2017 anti-profiteering provisions contained in Section 171 (1) of the CGST Act 2017 are not attracted. There is no merit in the application filed by the Applicants - application dismissed.

Summary

Issues:
Application under Rule 128 of CGST Rules, 2017 alleging extra charges pre-GST period - Examination by Standing Committee on Anti-Profiteering - DGAP report stating no benefit required to be passed on - Authority's decision on Section 171 applicability.

Analysis:
The case involved an application filed under Rule 128 of the CGST Rules, 2017, alleging that the respondent had charged extra VAT, EDC, and IDC during the pre-GST period. The Standing Committee on Anti-Profiteering referred the matter to the DGAP for detailed investigations under Rule 129(1) of the CGST Rules, 2017. The DGAP's report highlighted that the complaint was related to the pre-GST period, and no allegation was made regarding the non-passage of tax rate reduction or additional input tax credit benefits by the respondent.

The DGAP concluded that since the project was completed before the GST implementation, the provisions of Section 171(1) of the CGST Act, 2017, regarding passing on the benefit of tax rate reduction or input tax credit, were not applicable. Despite the profiteered amount being calculated as NIL, the Authority decided to grant a hearing to the applicant to ensure fair consideration of the facts. However, the applicant failed to appear for the hearings, even refusing to accept the notice sent by Postal Authorities.

Upon careful consideration of the DGAP's report and the evidence, the Authority focused on determining whether Section 171 of the CGST Act, 2017, was applicable in the case. Section 171 mandates the passing on of tax rate reductions or input tax credit benefits to recipients. The Authority found that since the specific charges in question pertained to the pre-GST period and the project was completed before GST implementation, the anti-profiteering provisions under Section 171(1) were not attracted. Consequently, the application was dismissed, and the order was directed to be shared with both the applicants and the respondent at no cost, with the case file to be closed upon completion.