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2020 (6) TMI 248 - NAPA - GSTProfiteering - purchase of Flat in the Respondent's project Hero Homes - allegation that the benefit of reduction in the rate of tax or ITC had not been passed on - contravention of provisions of Section 171 of the CGST 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 pertaining to 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. It is clear from the DGAP Report that the Respondent had launched the subject project in the post-GST regime and there wasn't any demand raised by the Respondent in the pre-GST regime. The registration and approval of the project, launching of the project and receipt of the payments had taken place in the post-GST regime and hence, there was no pre-GST tax rate or ITC structure which could be compared with the post-GST tax rate and ITC. On this basis, the DGAP has reported that the Respondent had neither benefited from additional ITC nor had there been a reduction in the tax rate in the post-GST period and therefore it does not qualify to be a case of profiteering. The instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017. Therefore, the allegation that the Respondent has not passed on the benefit of ITC in this case is not found sustainable - Application dismissed being not maintainable.
Issues Involved:
1. Whether there was any violation of the provisions of Section 171 of the CGST Act, 2017. 2. If yes, then what was the quantum of profiteering? Detailed Analysis: Issue 1: Violation of Section 171 of the CGST Act, 2017 The case originated from an application alleging that the Respondent had not passed on the benefit of Input Tax Credit (ITC) by way of commensurate reduction in the price of an apartment. The Haryana State Screening Committee on Anti-Profiteering observed extra charging of GST and forwarded the application for further investigation. The Director General of Anti-Profiteering (DGAP) conducted a detailed investigation and issued a notice to the Respondent to reply regarding the benefit of ITC. The DGAP examined various documents, including GSTR-1 & GSTR-3B Returns, ST-3 Returns, demand letters, sale agreements, balance sheets, electronic credit ledger, and project reports. The main issues for determination were whether the Respondent benefited from the reduction in the rate of tax or ITC after the implementation of GST and if such benefit was passed on to the recipients as per Section 171 of the CGST Act, 2017. The DGAP reported that the project "Hero Homes" was launched after the implementation of GST, and there was no pre-GST tax rate or ITC structure to compare with the post-GST regime. The Respondent contended that anti-profiteering provisions do not apply as the project was not in existence before GST. The DGAP concluded that there was no pre-GST tax rate or ITC availability to compare with the post-GST regime, and hence, no benefit needed to be passed on by way of reduced price. Issue 2: Quantum of Profiteering Since the project was launched in the post-GST regime, there was no pre-GST tax rate or ITC structure to compare with the post-GST regime. The DGAP reported that the Respondent neither benefited from additional ITC nor had there been a reduction in the tax rate in the post-GST period. Therefore, it does not qualify as a case of profiteering. Conclusion: The Authority examined the DGAP's Report and the written submissions of the Applicant. It was determined that the Respondent had launched the project in the post-GST regime, and there was no pre-GST tax rate or ITC structure to compare with the post-GST regime. Thus, the Respondent had neither benefited from additional ITC nor had there been a reduction in the tax rate in the post-GST period. Consequently, the provisions of Section 171 of the CGST Act, 2017, were not contravened. The application filed by the Applicant, alleging that the Respondent had not passed on the benefit of ITC, was dismissed as not maintainable. A copy of the order was sent to the Applicants and the Respondent free of cost.
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