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2020 (12) TMI 891 - NAPA - GSTProfiteering - purchase of flat - Respondent had denied the benefit of ITC to the Applicant and other buyers amounting to ₹ 5,83,593/-, pertaining to the period w.e.f. 01.07.2017 to 31.12.2018 - violation of the provisions of Section 171 (1) of CGST Act - Penalty - 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 Navkar Darshan for the period from 01.07.2017 to 31.12.2018 and hence, the Respondent has violated the provisions of Section 171 (1) of the CGST Act, 2017. Penalty - HELD THAT - It is also 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 31.12.2018 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the notice dated 15.01.2020 issued to the Respondent for imposition of penalty under Section 177 (3A) is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped.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: Violation of Section 171(1) of CGST Act, 2017; Imposition of Penalty under Section 171(3A)
In the present case, the Anti-Profiteering Authority received a report from the Director General of Anti-Profiteering (DGAP) stating that the Respondent did not pass on the benefit of additional Input Tax Credit (ITC) to a buyer who had purchased a flat in a project. The DGAP found that the Respondent had denied the benefit of ITC to the buyer and other customers, amounting to a specific sum, between July 2017 and December 2018, thereby violating Section 171(1) of the CGST Act, 2017. Subsequently, the Authority issued a notice to the Respondent, who failed to pass on the benefit of ITC, and determined the profiteered amount as mentioned in the report. The Respondent was found to have committed an offense under Section 171(3A) of the Act, leading to the imposition of a penalty. The Respondent, in response, claimed to have returned the amount with interest to all affected customers, citing a lack of knowledge about GST as it was his first project under the new tax regime. The DGAP verified the Respondent's claim through bank statements and confirmation letters from customers, confirming the repayment. However, the Authority found that the Respondent indeed did not pass on the benefit of ITC to the buyers, leading to a violation of Section 171(1) of the CGST Act, 2017. Regarding the imposition of a penalty under Section 171(3A), it was noted that the penalty provisions were introduced by the Finance (No. 2) Act, 2019, effective from January 2020. Since the violation occurred between July 2017 and December 2018, when no penalty provisions existed, the penalty prescribed under Section 171(3A) could not be imposed on the Respondent retrospectively. Consequently, the penalty proceedings initiated against the Respondent were dropped, and the notice for penalty imposition was withdrawn. In conclusion, the Authority upheld the finding that the Respondent had violated Section 171(1) of the CGST Act, 2017 by not passing on the benefit of ITC to buyers. However, due to the absence of penalty provisions during the relevant period, the penalty could not be imposed retrospectively, leading to the withdrawal of the penalty notice against the Respondent.
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