9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (6) TMI 1284 - NAPA - GSTProfiteering - four towers/blocks of the project Celebrity Gardens - requirement to maintain separate bank accounts for each of the projects registered separately under the RERA Act 2016 - benefit of reduction in the rate of ITC not passed on by way of commensurate reduction in the price - contravention of section 171 of CGST Act - penalty - HELD THAT - It is on record that Applicant No. 1 had filed a complaint alleging that the Respondent has not passed on the benefit of ITC to him by way of a commensurate reduction in the price of the flat purchased by him (Applicant No. 1) from the Respondent. It is found that the DGAP after investigation has found that the Respondent has not passed on ITC benefit amounting to Rs.1, 54, 269/-(inclusive of GST) to his recipients/homebuyers as required under the provisions of Section 171 of the CGST Act 2017. The Authority finds and determines that the Respondent has profiteered by an amount of Rs. 1, 54, 269/- for the project Celebrity Garden Block K during the period of investigation i.e. 01.07.2017 to 30.09.2019. The above amount that has been profiteered by the Respondent from his Home buyers in the above mentioned project. The claim of their refund along with the interest @18% thereon from the date when the above amount was profiteered by him till the date of such payment in line with the provisions of Rule 133 (3) (b) of the CGST Rules 2017 need to be verified by the concerned CGST/SGST Commissionerate - 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 commensurate with the benefit of ITC received by him. Penalty - HELD THAT - It is evident from the narration of facts that Respondent has denied the benefit of Input Tax Credit (ITC) to the customers/Home buyers in contravention of the provisions of Section 171 (1) of the CGST Act 2017 and he has thus committed an offence under Section 171 (3A) of the above Act and therefore he is liable for imposition of penalty under the provisions of the above Section. However since the provisions of Section 171 (3A) have come into force w.e.f. 01.01.2020 whereas the period during which violation has occurred is w.e.f. 01.07.2017 to 30.09.2019 hence the penalty prescribed under the above Section cannot be imposed on Respondent retrospectively. This Order having been passed today falls within the limitation prescribed under Rule 133 (1) of the CGST Rules 2017. Application disposed off.
Issues Involved:
1. Compliance with RERA Act, 2016 regarding separate bank accounts for each project. 2. Variation in figures of ITC and turnover between DGAP's report and statutory tax returns. 3. Determination of whether the benefit of ITC was passed on to homebuyers. 4. Calculation of profiteering amount. 5. Verification of ITC benefit passed to eligible buyers. 6. Liability for penalty under Section 171(3A) of the CGST Act, 2017. 7. Investigation of other projects under the same GST registration for profiteering. Detailed Analysis: 1. Compliance with RERA Act, 2016: The NAA observed that the RERA Act, 2016 mandates real estate developers to maintain separate bank accounts for each registered project. The DGAP's report did not mention whether the Respondent complied with this provision. Since the Respondent obtained four separate RERA registrations for four blocks of "Celebrity Gardens," he should have maintained separate escrow/bank accounts. If not, the entire project should be considered a single project for profiteering computation. The DGAP was directed to revisit the investigation to ascertain if the Respondent passed on the benefit of ITC to homebuyers of the other three towers/blocks. 2. Variation in Figures of ITC and Turnover: The NAA found significant variations in the figures of ITC and turnover adopted by the DGAP in Table-'B' of his report dated 23.03.2020 compared to the figures in the statutory tax returns filed by the Respondent. The variations were detailed in a table showing differences in turnover and ITC for pre-GST and post-GST periods. The need for further investigation was emphasized to ensure the benefit of ITC was passed on. 3. Determination of ITC Benefit: An application was filed alleging that the Respondent did not pass on the benefit of ITC by reducing the price of a flat in "Celebrity Garden Block-K." The DGAP conducted a detailed investigation and found that the Respondent had additional ITC to the tune of 0.17% of the turnover in the post-GST period. The recalibrated base price and profiteering during the post-GST period were calculated, showing that the benefit of ITC amounting to Rs. 1,54,269/- needed to be passed on to the buyers. 4. Calculation of Profiteering Amount: Based on the figures in Table-C, the DGAP calculated that the Respondent had profiteered Rs. 1,54,269/- during the period 01.07.2017 to 30.09.2019. The Respondent accepted this amount and claimed to have passed it on to the customers. 5. Verification of ITC Benefit: The DGAP carried out a re-investigation and verified that the Respondent maintained separate bank accounts for each block under the RERA Act, 2016. The DGAP confirmed that the profiteering amount remained Rs. 1,54,269/-. The Respondent provided email IDs of 12 buyers, and 5 buyers confirmed receipt of the payment. 6. Liability for Penalty: The NAA found that the Respondent denied the benefit of ITC to customers, violating Section 171 (1) of the CGST Act, 2017, and committed an offense under Section 171 (3A). However, since Section 171 (3A) came into force on 01.01.2020, the penalty could not be imposed retrospectively for the period 01.07.2017 to 30.09.2019. 7. Investigation of Other Projects: The NAA directed the DGAP to investigate all other projects under the same GST registration for potential profiteering. The DGAP was already directed to investigate other projects as per Interim Order No. 34/2020 dated 11.12.2020. Conclusion: The NAA ordered the Respondent to reduce prices commensurate with the ITC benefit received and to refund the profiteered amount of Rs. 1,54,269/- along with 18% interest to the eligible buyers. The concerned CGST/SGST Commissioner was directed to ensure compliance and report back within four months. The order was issued within the extended limitation period due to the COVID-19 pandemic as per the Supreme Court's orders.
|
