9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (7) TMI 67 - NAPA - GSTProfiteering - purchase of fiats - it is alleged that the benefit of input tax credit had not been passed on to the Applicant No. 1 and Applicant No, 2 by way of commensurate reduction in prices - Contravention of section 171 of CGST Act - penalty - HELD THAT - The Respondent has benefited from the additional ITC to the extent of 6.55% of the turnover during the period from 01.07.2017 to 31.03.2019 amounting Rs.4,74,88,840/- It has been verified by the DGAP that the Respondent has already passed on benefit amounting to Rs.1,88,56,367/- to 772 homebuyers. Hence. the Authority finds that. the profiteered amount required to be returned/passed on by the Respondent is Rs, 2,86,32,474 (inclusive of GST @ 12%/ 8% on the base price) as is evident from the above Report dated 28 08.2020. Hence, the Authority holds that the provisions of Section 171 (1) of the CGAT Act, 2017 have been contravened by the Respondent. The Respondent has realized an additional amount of Rs.34,418/- each from Applicant no, 1, 2 3. Rs.36,120/- from the Applicant no. 4. Rs.27,510/- each from Applicant no. 5, 7, 8, 9. 10, 11. 12,15. Rs.36.120/from the Applicant no. 6, Rs.48,029/- from the Applicant no. 13, Rs.70.068/from the Applicant no. 14. and Rs.71,868/-from the Applicant no. 16 and an additional amount of Rs.2,80,46,934/- from 772 flat buyers other than the above Applicants. The details of the amount of benefit of ITC passed on - These buyers are identifiable as per the documents placed on record. Therefore, the Respondent is directed to pass on an amount of Rs.34,418/- each to Applicant No. 1, 2 3, Rs.36,120/- to the Applicant No. 4, Rs.27.510/- each to Applicant No. 5, 7, 8. 9, 10. 11. 12.15, Rs.36,120/to the Applicant No, 6, Rs.48,029/- to the Applicant No. 13. Rs.70.068/- to the Applicant No. 14, and Rs.71,868/- to the Applicant No. 16 and Rs.2,80,46,934/- to the other 772 home buyers respectively along with the interest @ per annum from the dates from which the above profiteered amount was collected by him from them till the payment is made as prescribed under Rule of the CGST Rules. 2017. The Authority directs the Respondent to comply with this Order within a period of three months from the date of receipt of this order failing which the said amount shall be recovered in terms of the CGST Act, 2017. This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats of the above Project commensurate with the benefit of ITC received by him - This Authority as per Rule 136 of the CGST Rules 2017 directs the Commissioners of CGST/SGST Gurugram, Haryana to monitor compliance of this order under the supervision of the DGAP by ensuring that the amount profiteered by the Respondent. as determined by this Authority, is passed on to all the eligible buyers. It may be ensured that the benefit of ITC is passed on to each homebuyer as per Annexure- A attached with this Order along with interest @18%. This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017.
Issues Involved:
1. Whether the Respondent had passed on the benefit of input tax credit (ITC) to the buyers. 2. Methodology for calculating the benefit of ITC. 3. Legality and constitutionality of Section 171 of the CGST Act, 2017. 4. Whether the Respondent was entitled to VAT credit for the pre-GST period. 5. Compliance with the Anti-Profiteering provisions under the CGST Act, 2017. Detailed Analysis: 1. Whether the Respondent had passed on the benefit of input tax credit (ITC) to the buyers: The DGAP found that the Respondent had benefited from additional ITC post-GST implementation, which was not passed on to the buyers. The ITC as a percentage of turnover during the pre-GST period was 0%, while it was 6.55% during the post-GST period. The Respondent had not reduced the basic prices of the flats by 6.55% due to the additional ITC benefit and had charged GST on pre-GST basic prices, contravening Section 171 of the CGST Act, 2017. The DGAP calculated that the Respondent needed to pass on Rs. 4,74,88,840/- but had only passed on Rs. 1,88,56,367/- to 772 homebuyers, leaving a balance of Rs. 2,86,32,474/- to be passed on. 2. Methodology for calculating the benefit of ITC: The methodology for calculating the benefit of ITC was based on comparing the ratios of ITC to turnover in the pre-GST and post-GST periods. The DGAP's methodology was deemed appropriate, logical, and reasonable. The Respondent's contention that the methodology should consider the increased tax rates on inputs post-GST was rejected. The DGAP's approach of calculating the benefit based on the additional ITC available post-GST was upheld. 3. Legality and constitutionality of Section 171 of the CGST Act, 2017: The Respondent challenged the constitutionality of Section 171, arguing it was ultra vires of Article 246A and Article 19(1)(g) of the Constitution. The Authority held that Section 171 aimed to ensure that benefits of tax reduction and ITC were passed on to consumers, which was in the public interest and did not violate the Constitution. The Authority also rejected the contention that the composition of the Authority was unconstitutional, stating that it was constituted under Section 171(2) of the CGST Act, 2017, and did not require a judicial member. 4. Whether the Respondent was entitled to VAT credit for the pre-GST period: The Respondent claimed VAT credit for the pre-GST period, which was rejected. The DGAP found that the Respondent had opted for the composition scheme of 1% VAT and had not availed any VAT input credit. The Respondent's contention was found to be incorrect and not acceptable. 5. Compliance with the Anti-Profiteering provisions under the CGST Act, 2017: The Authority concluded that the Respondent had contravened Section 171(1) by not passing on the additional ITC benefit to the buyers. The Respondent was directed to pass on the remaining amount of Rs. 2,86,32,474/- to the buyers along with interest. The Commissioners of CGST/SGST Gurugram, Haryana, were directed to monitor compliance with this order. Conclusion: The Respondent was found to have contravened Section 171(1) of the CGST Act, 2017, by not passing on the benefit of ITC to the buyers. The methodology adopted by the DGAP for calculating the benefit of ITC was upheld, and the Respondent's contentions regarding the constitutionality of Section 171 and entitlement to VAT credit were rejected. The Respondent was directed to pass on the remaining benefit to the buyers along with interest.
|
