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2020 (8) TMI 620 - NAPA - GSTProfiteering - purchase of flat - allegation that the Respondent had not passed on the benefit of Input Tax Credit by way of commensurate reduction in rice - violation of provisions of Section 171 (1) of the CGST Act, 2017 - Penalty - HELD THAT - It has been revealed that the Respondent has not passed on the benefit of input tax credit to his buyers w.e.f. 01.07.2017 to 30.06.2018 and hence, the Respondent has violated the provisions of Section 171 (1) of the CGST Act, 2017. Penalty - HELD THAT - Since no penalty provisions were in existence between the period w.e.f. 01.07.2017 to 30.06.2018 when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, the notice dated 15.05.2019 issued to the Respondent for imposition of penalty under Section 122 (1) (i) is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped.
Issues:
Violation of Section 171 (1) of the CGST Act, 2017 regarding passing on the benefit of Input Tax Credit to buyers. Imposition of penalty under Section 122 (1) (i) of the CGST Act, 2017 for non-compliance. Applicability of penalty provisions for violation of Section 171 (1) between July 2017 to June 2018. Analysis: Issue 1: Violation of Section 171 (1) of the CGST Act, 2017 The case involved an investigation by the DGAP based on a complaint where it was found that the Respondent did not pass on the benefit of Input Tax Credit to buyers after the introduction of GST in July 2017. The DGAP reported that the Respondent had denied the benefit of input tax credit to buyers, amounting to a specific sum, and thus, was found to have indulged in profiteering. The National Anti-Profiteering Authority, after careful consideration, determined the profiteered amount and held the Respondent in violation of Section 171 (1) of the CGST Act, 2017. Issue 2: Imposition of penalty under Section 122 (1) (i) of the CGST Act, 2017 The Respondent was issued a notice to explain why penalty should not be imposed under Section 122 (1) (i) for violating Section 171 (1). The Respondent argued against the imposition of penalty, stating that penalty should only be imposed in cases of mens rea and deliberate violation of the law. However, the Authority found that the Respondent had indeed violated Section 171 (1) by not passing on the benefit of input tax credit to buyers. It was noted that no penalty had been prescribed for this specific violation under Section 122 (1) (i) of the CGST Act. Issue 3: Applicability of penalty provisions for violation of Section 171 (1) between July 2017 to June 2018 The Authority highlighted that no penalty provisions existed for the violation of Section 171 (1) during the period when the Respondent committed the violation. It was noted that specific penalty provisions were added under Section 171 (3A) of the Finance Act, 2019, effective from January 2020. As the violation occurred prior to the existence of these penalty provisions, the Authority withdrew the penalty notice issued to the Respondent and dropped the penalty proceedings against him. In conclusion, the National Anti-Profiteering Authority found the Respondent guilty of not passing on the benefit of Input Tax Credit to buyers, but due to the absence of penalty provisions during the relevant period, the penalty proceedings were dropped.
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