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2022 (9) TMI 253 - NAPA - GSTProfiteering - purchase of a Flat - allegation is that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in the price - contravention of provisions of Section 171 (1) of the CGST Act, 2017 - 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. On this issue, the DGAP In his Report, has stated that ITC as a percentage of the turnover which was available to the Respondent during the pre-GST period (April-2015 to June-2017) was 1.03% and during the post-GST period (July-2017 to March-2019), it was 0.63%. On this basis, the DGAP has concluded his Report with the findings that the Respondent had neither been benefited from additional If nor there had been a reduction in the tax rate in the post-GST period for the Project Garden Avenue K-4 . The Authority has no reason to differ from the Report of DGAP and we therefore agree with his findings since there was no reduction in the rate of tax nor there was increased additional benefit on account of ETC. Hence, the provisions of Section 171 of CGST Act, 2017 are not liable to be invoked in this case. The Authority concludes that the instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017 as the Respondent has neither been benefited from additional ITC nor has there been a reduction in the tax rate in the post-GST period. The application filed by the Applicant No. 1 requesting action against the Respondent for alleged violation of the provisions of the Section 171 of the CGST Act is not maintainable and hence the same is dismissed.
Issues Involved:
1. Whether there was any violation of the provisions of Section 171 (1) of the CGST Act, 2017 in this case? 2. If yes, then what was the quantum of profiteering? Issue-wise Detailed Analysis: 1. Violation of Section 171 (1) of the CGST Act, 2017: The core issue was whether the Respondent violated Section 171 (1) of the CGST Act, 2017 by not passing on the benefit of Input Tax Credit (ITC) to the Applicant. The Applicant alleged that the Respondent did not reduce the price of the flat in "Garden Avenue K-4" project despite benefiting from ITC post-GST implementation. The DGAP conducted a detailed investigation, which included multiple notices and summons to the Respondent for document submission. The investigation period was from 01.07.2017 to 31.03.2019, as the Respondent opted for a new scheme from 01.04.2019. Findings: - The DGAP's report stated that the ITC as a percentage of turnover available to the Respondent during the pre-GST period was 1.03%, while in the post-GST period, it was 0.63%. This indicated that the Respondent did not benefit from additional ITC post-GST, but rather, the ITC availed decreased by 0.40%. - The DGAP concluded that there was no additional benefit of ITC on the implementation of GST, and thus, the provisions of Section 171 of the CGST Act, 2017 were not attracted. 2. Quantum of Profiteering: Since the DGAP found no additional benefit of ITC and no reduction in the tax rate post-GST, the question of determining the quantum of profiteering did not arise. The Applicant No. 1, upon reviewing the DGAP's report, expressed satisfaction with the findings and requested the closure of the complaint. Judgment: - The Authority agreed with the DGAP's findings that there was no violation of Section 171 (1) of the CGST Act, 2017 as there was no additional benefit of ITC nor a reduction in the tax rate in the post-GST period for the project "Garden Avenue K-4". - Consequently, the application filed by the Applicant No. 1 was dismissed as the allegation that the Respondent did not pass on the benefit of ITC was not sustainable. Additional Points: - The Hon'ble Supreme Court extended the period of limitation due to the COVID-19 pandemic, ensuring that the order fell within the prescribed limitation under Rule 133(1) of the CGST Rules, 2017. - A copy of the order was directed to be sent to the Applicants and the Respondent free of cost. This comprehensive analysis ensures that all relevant legal terminology and significant phrases from the original judgment are preserved while providing a clear and thorough summary of the issues and findings.
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