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2022 (6) TMI 1075 - NAPA - GSTProfiteering - Project Suncity Avenue-102 - allegation is that the benefit of reduction in the GST rate by way of commensurate reduction in prices, were not passed on - contravention of Section 171 of CGST Act - penalty - HELD THAT - This Authority observes that the benefit of additional Input Tax Credit of 3.07% of the turnover has accrued to the Respondent for the project Suncity Avenue 102 . This benefit was required to be passed on to the recipients, however, the same was not done commensurately by the Respondent. Section 171 of the CGST, 2017 has been contravened by the Respondent, in as much as the additional benefit of ITC @3.07% of the base price has not been passed on by the Respondent to 736 recipients. These recipients were identifiable as per the documents provided by the Respondent, giving the names and addresses along with Unit no. allotted to such recipients. Therefore, the total additional amount of Rs. 2,62,56,652/- was required to be returned to the such homebuyers. The Authority determines that the Respondent has profiteered an amount of Rs. 2,62,56,652/-. Therefore, given the above facts, the Authority under Rule 133 (3) (a) of the CGST Rules orders that the Respondent shall reduce the price to be realized from the buyers of the flats commensurate with the benefit of ITC received by him. The details of the recipients and benefit which is required to passed on to each recipient/homebuyer (including Applicant No. 1) alongwith the details of the unit are contained in the Annexure' A' to this order. The Authority directs that such profiteered amount as determined shall be passed on/returned by the Respondent to the recipients of supply alongwith interest @18% from the date such amount was profiteered by the Respondent uptil the date such amount is passed on/returned to the respective recipient of supply. Penalty - HELD THAT - The Respondent has committed an offence by violating the provisions of Section 171 (1) during the period from 01.07.2017 to 08.08.2019, and therefore, he is liable for imposition of penalty under the provisions of Section 171 (3A) of the above Act. However, perusal of the provisions of the said Section 171 (3A) shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.07.2017 to 08.08.2019 when the Respondent had committed the above violation. Hence, the said penalty under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, notice for the imposition of penalty is not required to be issued to the Respondents. This Order having been passed today falls within the limitation prescribed under Rule 133 (1) of the CGST Rules, 2017. Application disposed off.
Issues:
1. Non-compliance with Section 171 of the CGST Act, 2017. 2. Calculation and passing of Input Tax Credit (ITC) benefits. 3. Profiteering amount determination. 4. Compliance with anti-profiteering measures. 5. Penalty imposition under Section 171 (3A) of the CGST Act, 2017. Issue-wise Detailed Analysis: 1. Non-compliance with Section 171 of the CGST Act, 2017: The judgment addresses the issue of non-compliance with Section 171 of the CGST Act, 2017, which mandates the passing of benefits of ITC to recipients by way of commensurate reduction in prices. The Authority found that the Respondent failed to pass on the ITC benefits accrued post-GST implementation, amounting to 3.07% of the turnover, to the homebuyers, thus contravening Section 171. 2. Calculation and Passing of ITC Benefits: The DGAP's investigation revealed discrepancies in the calculation of the ITC benefits. Initially, the area of commercial shop units was not considered, leading to incorrect profiteering calculations. The revised report considered the total area, including commercial shop units, and recalculated the ITC benefits and profiteered amount. The Respondent claimed to have passed on Rs. 2,67,88,794/- to 736 homebuyers, but the DGAP identified that an additional Rs. 6,69,578/- was still due to 20 homebuyers. 3. Profiteering Amount Determination: The DGAP determined the total profiteered amount to be Rs. 2,62,56,652/-, including GST. This was based on the additional ITC of 3.07% of the turnover that should have resulted in a commensurate reduction in the base price. The Respondent's claim of passing on Rs. 2,67,88,794/- was acknowledged, but the DGAP highlighted that some homebuyers received excess benefits while others did not receive the required amount. 4. Compliance with Anti-profiteering Measures: The judgment emphasizes the need for compliance with anti-profiteering measures under the CGST Act. The Authority directed the Respondent to reduce the prices commensurate with the ITC benefits received and pass on the determined profiteered amount to the homebuyers along with 18% interest from the date of profiteering until the date of payment. The jurisdictional CGST/SGST Commissioner was tasked with ensuring compliance and submitting a report within four months. 5. Penalty Imposition under Section 171 (3A) of the CGST Act, 2017: The Authority acknowledged that the penalty provisions under Section 171 (3A) were not applicable retrospectively as they were inserted w.e.f. 01.01.2020, while the violation occurred between 01.07.2017 and 08.08.2019. Consequently, no penalty was imposed on the Respondent for the said period. Conclusion: The judgment concluded that the Respondent had contravened Section 171 of the CGST Act by not passing on the ITC benefits commensurately. The Respondent was ordered to pass on the profiteered amount of Rs. 2,62,56,652/- along with interest to the homebuyers. The jurisdictional CGST/SGST Commissioner was directed to ensure compliance and publish an advertisement to inform homebuyers about the order and their entitlement. The penalty provisions under Section 171 (3A) were deemed inapplicable for the period in question.
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