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2022 (8) TMI 210 - NAPA - GSTProfiteering - construction service - Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in the prices - contravention of section 171 of CGST Act - Penalty - HELD THAT - It is clear From the plain reading of Section 171 (1) mentioned above that it deals with two situations One relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax in the post GST period. Hence, the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. The Authority finds that. the ITC, as a percentage of the turnover, that was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 2.80%, whereas, during the post-GST period (July-2017 to September, 2019), it was 2.83%. This confirms that in the post-GST period. the Respondent has been benefited from additional ITC to the tune or 0.03% (2.83%-2.80%) of his turnover and the same is required to be passed on by him to the recipients of supply, including, the Applicant No. 1. The Authority finds that the computation of the amount of ITC benefit to be passed on by the Respondent to the eligible recipients works out to Rs. 4,44,563/-. The DGAP has calculated the amount of ITC benefit to be passed on to all the eligible recipients as Rs.4,44,563/- on the basis of the information supplied by the Respondent. The Respondent has not disputed the methodology adopted by the DGAP or the amount of profiteering worked out by the DGAP. The names of such homebuyers along with unit number and the benefit already passed on is enclosed with this order as Annexure-A. The Authority concur with the DGAP report dated 31.12.2020. The Authority determines that the Respondent have profiteered by an amount of Rs. 4,44,563/- for the project 'Tower F' in the project Anmol Fortune-II during the period of investigation i.e, 01.07.2017 to 30.09.2019. The Authority has also taken note of DGAP verification report dated 10.03.2021 regarding claim of the Respondent that they have passed on Rs. 58,65,423/-. As per the said report, only 23 home buyers out of 117 home buyers have confirmed receipt of the ITC benefit and 2 home buyers have denied receipt of any benefit from the Respondent, the remaining home buyers did not respond to the communication made by the DGAP. This Order having been passed today falls within the limitation prescribed under Rule 133 (1) of the CGST Rules, 2017.
Issues Involved:
1. Alleged profiteering by the Respondent by not passing on the benefit of Input Tax Credit (ITC) to the Applicant. 2. Investigation and findings by the Director General of Anti-Profiteering (DGAP). 3. Determination of whether the benefit of ITC was passed on to the recipients. 4. Calculation of the profiteered amount. 5. Compliance and verification of the benefit passed on to the home buyers. Issue-wise Detailed Analysis: 1. Alleged Profiteering by the Respondent: The Applicant No. 1 filed a complaint alleging that the Respondent did not pass on the benefit of ITC by way of a commensurate reduction in the prices of a flat purchased in the Respondent's project "Anmol Fortune" in Goregaon. The complaint was examined by the Maharashtra State Screening Committee on Anti-Profiteering and forwarded to the DGAP for a detailed investigation. 2. Investigation and Findings by DGAP: The DGAP conducted an investigation and submitted a report dated 31.12.2020. The investigation covered the period from 01.07.2017 to 30.09.2019. The DGAP issued a notice to the Respondent to reply whether the benefit of ITC had been passed on to the recipients by way of a commensurate reduction in prices. The Respondent was also allowed to inspect the evidence. The DGAP found that the Respondent had claimed to have passed on Rs. 58,65,423/- as the benefit of GST ITC to 117 customers, but this claim was found to be contradictory and not fully substantiated. 3. Determination of Whether the Benefit of ITC was Passed on to the Recipients: The DGAP's report concluded that the Respondent did not pass on the benefit of ITC to the recipients as required under Section 171 of the CGST Act, 2017. The report highlighted that the Respondent's claim of adjusting the benefit of ITC in the negotiated sale price was incorrect. The DGAP calculated that the additional ITC benefit of 0.03% of the turnover should have resulted in a commensurate reduction in the basic price and cum-tax price. 4. Calculation of the Profiteered Amount: The DGAP calculated the profiteered amount to be Rs. 4,44,563/-, which includes 12% GST on the base profiteered amount of Rs. 3,96,931/-. This calculation was based on the comparative figures of the ratio of ITC availed/available to the turnover in the pre and post-GST periods. The DGAP also noted that the Respondent had claimed to have passed on Rs. 58,65,423/- as the benefit of ITC, but only 23 out of 117 home buyers confirmed receiving the benefit. 5. Compliance and Verification of the Benefit Passed on to the Home Buyers: The DGAP's supplementary report dated 10.03.2021 verified the Respondent's claim of passing on the ITC benefit. The report found that only 23 home buyers confirmed receipt of the benefit, while 2 denied receiving any benefit, and the remaining did not respond. The DGAP concluded that the verification was neither definite nor conclusive. The Authority directed the concerned jurisdictional CGST/SGST Commissioner to ensure compliance with the order and to verify that the benefit of ITC is passed on to each recipient along with interest @18%. Conclusion: The Authority concurred with the DGAP's report and determined that the Respondent had profiteered by an amount of Rs. 4,44,563/- for the project 'Tower F' in the project "Anmol Fortune-II" during the investigation period. The Respondent was ordered to reduce the prices commensurate with the benefit of ITC received and to pass on the benefit to the recipients along with interest @18%. The concerned jurisdictional CGST/SGST Commissioner was directed to ensure compliance and submit a report within four months. The order also included provisions for public notification to inform the concerned customers about their entitlement to the ITC benefit.
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