While hearing applications filed by 109 home buyers, the National Anti-profiteering Authority (NAA) has imposed the penalty on a builder for not passing the benefit of Input Tax Credit (ITC) to the Applicants in respect of the construction services.
The applicants booked flats with the Respondent under the Haryana Affordable Housing Policy 2013 and paid Excise Duty and Value Added Tax (VAT) before the GST-rollout. It was alleged that post-GST rollout, 12% tax was levied on the construction service which was further reduced to 8% w.e.f. 25.01.2018 but the benefit of Input Tax Credit (ITC) which was available to the Respondent and which was much more than the output tax liability of the Respondent had not been passed on to them and therefore the Applicants should not have been burdened with the entire GST of 12% or 8%. They claimed that the Respondent was charging 12% and 8% GST and was simultaneously also enjoying the benefit of ITC and was not giving the benefit of the ITC.
They alleged that the benefit of Input Tax Credit (ITC) had not been passed on to them in respect of the construction service supplied by the Respondent.
After hearing both the sides, the NAA observed that the Respondent had an obligation to pass on the benefit of ITC in terms of reduction in tax and hence he cannot appropriate the ITC which had become available to him on the GST which had been paid by the Applicants.
“The Respondent cannot appropriate this benefit as this is a concession given by the Government from its own tax revenue to reduce the prices being charged by the builders from the vulnerable section of society which cannot afford high-value apartments. The Respondent is not being asked to extend this benefit out of his own account and he is only liable to pass on the benefit of ITC to which he has become entitled by virtue of the grant of ITC on the Construction Service by the Government.”
The authority further ordered the respondent to reduce the price to be realized by the buyers of the flats incommensurate with the benefit of ITC received by him.
“Since the present investigation is only up to 28.02.2018 any benefit of ITC which shall accrue subsequently shall also be passed on to the buyers by the Respondent. He shall not only pass on the benefit as has been mentioned above to the 109 Applicants who are before us but to all the 2476 buyers as they are identifiable. Respondent is further directed to refund or reduce the amount, to the extent calculated above to each and every buyer at the time of collecting the last installment along with the interest @ 18% per annum to be calculated from the date of the receipt of the excess amount from each buyer, within a period of 3 months from the date of receipt of this order,” it said.
