2024 (10) TMI 113 - CCI - GST

Profiteering - benefit of reduction in the rate of tax or ITC on the supply of construction service by the Respondent, on implementation of GST w.e.f.01.07.2017 or not - Section 171 of the Central Goods and Services Tax Act, 2017 - HELD THAT - The DGAP has verified the documents submitted by the Respondent as well as the statutory returns filed by him and revealed that the Respondent had opted for GST @ 5% without ITC in terms of Notification No. 03/2019-Central Tax (Rate)dated 29.03.2019 and reversed all the ITC available pertaining to the F.Y. 2017-2018 and 2018-2019 from April, 2019 onwards and he had also reversed ITC availed in compliance with Rule 37 of the CGST Rules,2017,due to delay of more than 180 days in making payments to the suppliers for the value of supply along with tax, from the date of issuance of the invoices by the respective suppliers. He had also reversed the excess amount of ITC availed wrongly due to a clerical mistake, which resulted in a negative credit during the post-GST period. Therefore, the Respondent has not retained any ITC related to lreo Waterfront project and reversed all the ineligible ITC pertaining to the F.Y. 2017-2018 and 2018-2019. It can be concluded that post-GST, no benefit of additional ITC accrued to the Respondent in respect of the project Ireo Waterfront . Therefore, the Commission finds that the provisions of Section 171(1) of the CGST Act, 2017 are not attracted in the Respondent s project Ireo Waterfront . The proceedings in the present case are accordingly dropped.

Issues Involved:
1. Whether there was a benefit of reduction in the rate of tax or ITC on the supply of construction service by the Respondent, on implementation of GST w.e.f. 01.07.2017.
2. Whether such benefit was passed on by the Respondent to the recipients, in terms of Section 171 of the Central Goods and Services Tax Act, 2017.

Issue-wise Detailed Analysis:

1. Benefit of Reduction in Tax Rate or ITC:
The DGAP's investigation revealed that the Respondent opted for GST @ 5% without ITC as per Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019. The Respondent reversed all the ITC available from the financial years 2017-2018 and 2018-2019 starting from April 2019. Additionally, the Respondent reversed ITC availed due to a delay of more than 180 days in making payments to suppliers, as per Rule 37 of the CGST Rules, 2017. The DGAP verified the GSTR-3B returns and found that the Respondent had a negative credit during the post-GST period, indicating no net ITC availed by the Respondent in the post-GST period. Therefore, no benefit of additional ITC accrued to the Respondent in respect of the project "Ireo Waterfront."

2. Passing on the Benefit to Recipients:
The DGAP scrutinized the documents and evidence on record and concluded that the Respondent did not retain any ITC related to the "Ireo Waterfront" project and reversed all the ITC availed as of March 2019. The DGAP's report stated that the net input tax availment as on 31.03.2019 was negative, and no net ITC was availed by the Respondent in the post-GST period that could be compared with the pre-GST ITC to determine "profiteering." Consequently, no benefit on account of the availment of ITC needed to be passed on to the home buyers. The Commission, after reviewing the DGAP's report and the statutory returns filed by the Respondent, concluded that the provisions of Section 171(1) of the CGST Act, 2017, are not attracted in the Respondent's project "Ireo Waterfront."

Conclusion:
The Commission determined that post-GST, no benefit of additional ITC accrued to the Respondent in respect of the project "Ireo Waterfront." Therefore, the proceedings in the present case were dropped, and the provisions of Section 171(1) of the CGST Act, 2017, were not applicable. The order was sent to all interested parties, and the case file was consigned after completion.

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