9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (12) TMI 890 - NAPA - GSTProfiteering - purchase of Flat - Respondent had denied the benefit of ITC to the Applicant and other buyers amounting to ₹ 4,79,04,342/-, pertaining to the period w.e.f. 01.07.2017 to 30.09.2018 - violation of the provisions of Section 171 (1) of the CGST Act - HELD THAT - It has been revealed that the Respondent had not passed on the benefit of additional Input tax Credit (ITC) to the above Applicant No. 1 as well as other homebuyers who had purchased them in his Project Fusion Homes for the period from 01.07.2017 to 30.09.2018 and hence, the Respondent has violated the provisions of Section 171 (1) of the CGST Act, 2017. Penalty - HELD THAT - It is revealed from the perusal of the CGST Act and the Rules framed under it that the Central Government vide Notification No. 01/2020-Central Tax dated 01.01.2020 has implemented the provisions of the Finance (No. 2) Act, 2019 from 01.01.2020 vide which sub-section 171 (3A) was added in Section 171 of the CGST Act, 2017 and penalty was proposed to be imposed in the case of violation of Section 171 (1) of the CGST Act, 2017 - Since, no penalty provisions were in existence between the period w.e.f. 01.07.2017 to 30.09.2018 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the notice dated 21.01.2020 issued to the Respondent for imposition of penalty under Section 177 (3A) is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped.
Issues:
- Failure to pass on the benefit of additional Input tax Credit (ITC) to homebuyers - Violation of Section 171 (1) of the CGST Act, 2017 - Determination of profiteered amount - Liability for penalty under Section 171 (3A) of the CGST Act, 2017 - Imposition of penalty retrospectively Analysis: The case involved an investigation by the DGAP based on a complaint where it was found that the Respondent, a property developer, had not passed on the benefit of additional Input tax Credit (ITC) to a homebuyer who had purchased a flat in the project. The DGAP's report highlighted that the Respondent had denied ITC benefit to the buyer and others, amounting to ?4,79,04,342, from July 2017 to September 2018, thus violating Section 171 (1) of the CGST Act, 2017. Upon receiving the report, the Anti-Profiteering Authority issued a notice to the Respondent to show cause why the findings should not be accepted. After due consideration and hearings, the Authority determined the profiteered amount as ?4,79,04,342 and held the Respondent in violation of Section 171 (1) as per the provisions of the Act and CGST Rules, 2017, in an earlier order dated December 13, 2019. Furthermore, it was established that the Respondent had indeed not passed on the ITC benefit to the homebuyers, leading to profiteering during the mentioned period. This non-compliance was considered an offense under Section 171 (3A) of the CGST Act, 2017, making the Respondent liable for penalty imposition as per the provisions of the Act. Subsequently, the Respondent was issued a notice regarding the penalty under Section 171 (3A) and Rule 133 (3) (d). The Respondent, in response, submitted customer details and credit notes showing the ITC benefit passed on, along with challenging the Authority's earlier order in the Delhi High Court. The High Court had directed a partial deposit of the amount, requesting a stay on penalty proceedings until a final decision was reached. After reviewing all submissions and materials, the Authority found that the Respondent had indeed violated Section 171 (1) by not passing on the ITC benefit to the homebuyers. However, it noted that penalty provisions under Section 171 (3A) were introduced retrospectively from January 1, 2020, and did not apply to the period of violation. Consequently, the penalty notice issued to the Respondent was withdrawn, and the penalty proceedings were dropped. In conclusion, the Authority's decision highlighted the importance of complying with anti-profiteering provisions under the CGST Act, while also emphasizing the limitations of imposing penalties retrospectively in cases of non-compliance.
|
