9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (12) TMI 888 - NAPA - GSTProfiteering - purchase of flat - allegation that the Respondent had not passed on the benefit of input tax credit to him by way of commensurate reduction in price - contravention of provisions of Section 171 of the CGST Act, 2017 - Penalty - HELD THAT - The investigation has correctly established that the Respondent has violated provisions of Section 171 (1) of CGST Act 2017 since the benefit derived by the Respondent on account of additional ITC in the post-GST period from 01.07.2017 to 30.06.2019 was not passed on by him to his homebuyers/ recipients commensurately as required under Section 171 of the CGST Act. The contention of the Respondent is dismissed that the excess (more than commensurate) benefit amounting to ₹ 3,91,714/- passed on by him to 716 homebuyers/ recipients be adjusted against the 'less than commensurate' benefit passed on to the other 20 homebuyers/recipients because the provisions of Section 171 of the CGST Act, 2017 apply to each supply which implies that each homebuyer/ recipient is entitled to the commensurate benefit due to him in respect of the residential unit supplied to him. The adjustment sought by the Respondent, if agreed, would result in depriving the aforementioned 20 homebuyers of the benefit which would be against the legislative intent of Section 171 (1) of the CGST Act, 2017 and is hence not acceptable. Whereas the Respondent was required to pass on the ITC benefit of ₹ 2,71,11,917/- (including GST), in respect of the period July 2017 to June 2019, in terms of provisions of Section 171 of the CGST Act, 2017, he has only passed on ₹ 2,67,88,794/- (including GST) to his homebuyers and that the remaining amount of ITC benefit that remains to be passed on to 20 homebuyers (as detailed in Table D of this Order amounts to ₹ 7,14,837/- Hence we take the view that in compliance with the provisions of Section 171 of the CGST Act, 2017, the Respondent is required to pass on ITC benefit amounting to ₹ 7,14,837/- (inclusive of GST) to the twenty homebuyers - Respondent is thus directed to pass on the above amount to the said homebuyers within a period of three months of this Order. Demand of interest - HELD THAT - It is also revealed from the submissions of the Respondent that he has not passed on interest @18% on the profiteered amount to his homebuyers, including Applicant No. 1 and the 20 homebuyers who are yet to receive the commensurate benefit. Hence, in line with the provisions of Section 171 (1) of the CGST Act, 2017 read with Rule 133 (3) (b) of the CGST Rules, 2017, we order that the applicable interest shall be paid by the Respondent to his homebuyers from the date of receipt of the additional amount of consideration in the hands of the Respondent till the amount is paid to each buyer, as the Respondent has used this amount in his business. Accordingly, the DGAP is directed to ensure that the interest, at the applicable rate, is paid to the eligible home buyers and submit his report confirming payment of the interest within three months of this Order. Application disposed off.
Issues Involved:
1. Whether the Respondent benefitted from input tax credit (ITC) due to GST implementation and whether such benefit was passed on to homebuyers. 2. Calculation of the quantum of profiteering. 3. Verification of ITC benefit passed on to homebuyers. 4. Adjustment of excess benefit passed on to some homebuyers against the shortfall for others. 5. Requirement to pass on interest on the profiteered amount. Issue-wise Detailed Analysis: 1. Benefit from ITC and Passing it to Homebuyers: The DGAP investigated whether the Respondent benefitted from ITC due to GST implementation from 01.07.2017 and if such benefit was passed on to homebuyers as mandated by Section 171 of the CGST Act, 2017. The DGAP found that the Respondent had benefitted from additional ITC by 3.17% of the turnover in the post-GST period compared to the pre-GST period. The Respondent was required to pass this benefit to homebuyers through a commensurate reduction in prices. 2. Calculation of the Quantum of Profiteering: The DGAP calculated the profiteering amount by comparing the ITC to turnover ratios in pre-GST and post-GST periods. The total amount profiteered by the Respondent from 01.07.2017 to 30.06.2019 was ?2,71,11,917/-. The Respondent claimed to have passed on ?2,67,88,794/- to 736 homebuyers, leaving a shortfall of ?7,14,837/- that needed to be passed on to 20 homebuyers. 3. Verification of ITC Benefit Passed on to Homebuyers: The DGAP verified the Respondent’s claim of passing on the ITC benefit by examining tax invoices, demand letters, and ledger account statements. The DGAP confirmed that the Respondent had passed on the ITC benefit to 736 homebuyers. However, the Respondent had only provided acknowledgment letters from 2 homebuyers, prompting further verification by the DGAP. 4. Adjustment of Excess Benefit Passed on to Some Homebuyers: The Respondent argued that the excess benefit passed on to 716 homebuyers should be adjusted against the shortfall for 20 homebuyers. The DGAP and the Authority rejected this argument, stating that each homebuyer is entitled to the commensurate benefit due to them individually, as per Section 171 of the CGST Act, 2017. Adjusting the excess benefit would deprive the 20 homebuyers of their rightful benefit. 5. Requirement to Pass on Interest on the Profiteered Amount: The Authority ordered that the Respondent must also pass on interest at 18% on the profiteered amount to the homebuyers from the date of receipt of the additional consideration until the amount is paid. The DGAP was directed to ensure the payment of interest and report compliance within three months. Additional Observations: The investigation covered the period up to 30.06.2019, during which 736 out of 761 residential units were sold, and no commercial shops were sold. The Authority directed the DGAP to conduct a comprehensive investigation at the time of the occupancy certificate issuance to ensure any additional ITC benefit is passed on to homebuyers. Conclusion: The Respondent violated Section 171 of the CGST Act, 2017, by not passing on the full ITC benefit to homebuyers. The Respondent was ordered to pass on the remaining ITC benefit of ?7,14,837/- to 20 homebuyers and pay interest at 18% on the profiteered amount. The DGAP and CGST/SGST Commissioners were tasked with ensuring compliance and reporting back within specified timelines.
|
