2021 (1) TMI 418 - NAPA - GST

Profiteering - purchase of flat - allegation that Respondent had not passed on the benefit of input tax credit by way of commensurate reduction in price - violation of the provisions of Section 171 (1) of GST Act - penalty - HELD THAT - It has been revealed that the Respondent has not passed on the benefit of Input tax Credit (ITC) to the above Applicant as well as other buyers who had purchased flats from the Respondent during 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. 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dated 10.02.2020 issued to the Respondent for imposition of penalty under Section 171 (3A) of the CGST Act is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped. Application disposed off.

Summary

Issues:
1. Failure to pass on the benefit of additional Input Tax Credit (ITC) to buyers.
2. Violation of Section 171 (1) of the CGST Act, 2017.
3. Imposition of penalty under Section 171 (3A) of the CGST Act, 2017.

Issue 1: The case involved the Applicant No. 2, acting as the DGAP, submitting a report stating that the Respondent did not pass on the benefit of additional ITC to buyers, including the Applicant No. 1 and other home buyers. The DGAP highlighted that the Respondent denied ITC benefits amounting to a specific sum for a particular period, indicating profiteering and a violation of Section 171 (1) of the CGST Act, 2017.

Issue 2: The Anti-Profiteering Authority issued a notice to the Respondent after considering the DGAP's report, giving an opportunity to show cause why the report should not be accepted and why liability for violating Section 171 (1) should not be fixed. Subsequently, the Authority determined the profiteered amount and held the Respondent in violation of Section 171 (1) based on the relevant provisions of the CGST Act and Rules.

Issue 3: The Respondent was further notified regarding the imposition of penalty under Section 171 (3A) of the CGST Act, 2017. The Respondent argued against the penalty, citing that the provision was effective prospectively from 01.01.2020, while the investigation period was prior to this date. The Authority acknowledged the absence of penalty provisions during the period of violation and withdrew the penalty notice, dropping the penalty proceedings against the Respondent. The decision was based on the retrospective imposition of penalties not being applicable in this case.

In conclusion, the judgment addressed the failure to pass on ITC benefits, the violation of Section 171 (1) of the CGST Act, 2017, and the subsequent withdrawal of penalty proceedings due to the non-retrospective applicability of penalty provisions during the relevant period.