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2022 (6) TMI 527 - NAPA - GSTProfiteering - construction service supplied by the Respondent - it is alleged that the Respondent had not passed on the benefit of input tax credit to him by way of commensurate reduction in the price - violation of the provisions of Section 171 (1) of the CGST Act, 2017 or not - penalty - HELD THAT - The Authority finds that, it is established that there had been no additional benefit of ITC to the Respondent and hence he was not required to pass on the benefit to the Applicant No. 1 by reducing the price of the flat. The Applicant No.1 could have availed the above benefit only if the above project was under execution/implementation before coming into force of the GST as the Respondent would have been eligible to avail ITC on the purchase of goods and services after 01.07.2017 on which he was not entitled to do so before the above date. Since there was no basis for comparison of ITC available before and after 01.07.2017, the Respondent was not required to recalibrate the price of the flat due to additional benefit of ITC. Hence, the allegations of the Applicant No. 1 made in this behalf are incorrect and therefore, the same cannot be accepted. The Authority finds that the Respondent has not contravened the provisions of Section 171 (1) of the CGST Act, 2017 and there are no merit in the Application filed by the Applicant and the same is accordingly dismissed.
Issues Involved:
1. Whether there is benefit of additional ITC available to the Respondent which has not been passed on by him to the Applicant? 2. Whether there was any violation of the provisions of Section 171 (1) of the CGST Act, 2017 by the Respondent? Issue-wise Detailed Analysis: I. Benefit of Additional ITC: The Director General of Anti-Profiteering (DGAP) conducted an investigation following an application alleging that the Respondent had not passed on the benefit of input tax credit (ITC) by way of commensurate reduction in the price of a unit in the Respondent's project "Roselia-2." The investigation covered the period from 01.07.2017 to 30.10.2020. The DGAP reported that the Respondent's project, including all related activities such as allotment, agreements, and construction, occurred entirely within the GST regime. The Respondent argued that the provisions of Section 171 of the CGST Act, 2017, which mandate passing on the benefit of ITC, were not applicable as the project was initiated post-GST. The DGAP concluded that there was no pre-GST tax rate or ITC structure available for comparison with the post-GST period, thus determining that the anti-profiteering provisions were not applicable to the project under investigation. II. Violation of Section 171 (1) of the CGST Act, 2017: The Authority noted that the Applicant did not make any submissions against the DGAP's Report despite being given multiple opportunities. The Authority reviewed the chronology of events and found that all significant activities related to the project, including the issuance of licenses, RERA registration, booking, allotment of flats, execution of Builder Buyer Agreements (BBA), and construction activities, took place after the implementation of GST. The Authority determined that since all events occurred post-GST, there was no pre-GST ITC benefit to compare with the post-GST period, and thus, no additional ITC benefit was available to the Respondent that needed to be passed on to the Applicant. Consequently, the Authority concluded that the Respondent did not violate the provisions of Section 171 (1) of the CGST Act, 2017. Conclusion: The Authority found no merit in the Applicant's allegations and dismissed the application, stating that the Respondent had not contravened the anti-profiteering provisions of the CGST Act, 2017. The order was issued within the period of limitation extended by the Hon'ble Supreme Court due to the Covid-19 pandemic. A copy of the order was directed to be sent to both the Applicants and the Respondent free of cost.
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