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2022 (4) TMI 629 - NAPA - GSTProfiteering - supply of construction services related to the purchase of Flat - benefit of input tax credit (ITC), has been passed or not, by way of commensurate reduction in the price of the apartment purchased by him - violation of Section 171 of the CGST Act, 2017 - HELD THAT - In the given facts, where the project was launched after introduction of GST, booking/price of the flat has been made/finalised by the Applicant No. 1 in February 2018 and during the whole period the Respondent continued to pay the GST at same rate, and also in absence of any other legally enforceable document; the emails exchange between Applicant No. 1 and Respondent mentioned above in paragraph 8 are not relevant material in these proceedings of anti-profiteering under CGST/SGST Act, 2017. There are no reason to differ from the Report of the DGAP and therefore the findings that the provisions of Section 171 of the CGST Act 2017 have not been contravened in this case has been agreed. As per the provisions of Rule 133 (1) of the CGST Rules, 2017 this order was required to be passed within a period of 6 months from the date of receipt of the Report from the DGAP under Rule 129 (6) of the above Rules. Since, the present Report has been received by this Authority on 05.03.2020 the order was to be passed on or before 04.09.2020. However, due to prevalent pandemic of COVID-19 in the Country this order could not be passed on or before the above date. Thus, the instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017. Therefore, the allegation that the Respondent has not passed on the benefit of ITC in this case is not found sustainable. Accordingly, the application filed by Applicant No. 1, requesting action against the Respondent for alleged violation of the provisions of Section 171 of the CGST Act is dismissed being not maintainable. Application dismissed.
Issues Involved:
1. Whether there was any violation of the provisions of Section 171 of the CGST Act, 2017 in this case? 2. If yes, then what was the quantum of profiteering? Issue-Wise Detailed Analysis: Issue 1: Violation of Section 171 of the CGST Act, 2017 The primary concern raised by Applicant No. 1 was that the Respondent had not passed on the benefit of input tax credit (ITC) by way of commensurate reduction in the price of the apartment purchased. The application was examined by the Maharashtra State Screening Committee on Anti-Profiteering, which prima facie observed that it was a case of profiteering. The Standing Committee on Anti-Profiteering forwarded the application for detailed investigation to the Director General of Anti-Profiteering (DGAP). The DGAP issued a notice to the Respondent, who replied that the project "Lodha Primo" was launched post-GST implementation, and hence, the provisions of Section 171 were not applicable as there was no additional ITC availed or utilized. The Respondent provided various documents, including details of flat bookings, RERA registration, balance sheets, and sample invoices. The DGAP concluded that since the project was launched post-GST, there was no pre-GST tax rate or ITC structure to compare with the post-GST scenario, and therefore, the provisions of Section 171 were not attracted. Applicant No. 1 contended that the Respondent might have utilized ITC from materials purchased for other buildings in the project, which were not subject to GST, thus benefiting from ITC without passing it on. However, the DGAP found that the project was launched post-GST and there was no pre-GST tax rate or ITC structure for comparison. The DGAP also noted that the Respondent had opted to continue paying GST at 12% with ITC, as allowed by Notification No. 3/2019-Central Tax (Rate). The DGAP's report was reviewed, and it was found that the Respondent had not benefited from additional ITC nor had there been a reduction in the tax rate post-GST. Therefore, it was concluded that there was no violation of Section 171 of the CGST Act, 2017. Issue 2: Quantum of Profiteering Since it was determined that there was no violation of Section 171, the question of quantifying the profiteering did not arise. The DGAP's findings were accepted, and it was concluded that the Respondent had not contravened the provisions of Section 171 of the CGST Act, 2017. Consequently, the application filed by Applicant No. 1 was dismissed as not maintainable. Conclusion: The judgment concluded that the instant case did not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017. The allegation that the Respondent had not passed on the benefit of ITC was found to be unsustainable, and the application was dismissed. A copy of the order was directed to be sent to the Applicants and the Respondent free of cost.
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