In a recent case, the National Anti-Profiteering Authority held that if the respondent has denied the benefit of ITC to the buyers, then provisions of Section 171 of the CGST Act, 2017 have been contravened by him as he has profiteered an amount and liable to be punished under this Act.
The brief facts of the case are that the Applicant had booked a flat in the Respondent’s project “Nirala Greenshire” situated at Uttar Pradesh and he alleged that the Respondent had increased the price of the flat after introduction of GST and had not passed on the benefit of input tax credit by way of commensurate reduction in the price. The Uttar Pradesh State Screening Committee on Anti-profiteering on prima facie having satisfied itself that the Respondent had not passed on the appropriate benefit of input tax credit to the above Applicant and forwarded the said application to the DGAP for detailed investigation.
The DGAP submitted that the ITC as percentage of total turnover which was available to the respondents during the pre GST period was 1.47% and during the post GST period the ratio was 6.89%, the respondent had benefited from the additional ITC of the total turnover which he was required to pass on to the flat buyers of this project. The respondent not submitted evidence to prove that CENVAT credit of the pre-GST period, pertaining to unsold units was not carried forward to the post-GST period. No evidence to prove such CENVAT credit that accrued in the pre-GST period in respect of the unsold units had been reversed. The DGAP further submitted that on the basis of the aforesaid the turnover had, in fact, accrued to the respondent and the same was required to be passed on to the applicant.
The Respondent submitted in the light of judgments in cases Godrej Foods Ltd vs. Union of India 1993(68) ELT 28(SC) And Perfect Mechanical Industries Ltd Vs. CCE 2004(169) ELT 219 (TRI. DEL.) that he has duly passed on the GST benefit of minimum 3% to his customers. He said that in the contention of carried forward CENVAT Credit of pre-GST period in respect of unsold units if carried forward any excess Credit, then it was a case of tax evasion and not of profiteering. The DGAP had incorrectly mentioned that he had charged GST even in respect of the flats which were booked after getting the completion certificate. The DGAP’S report had made incorrect finding that he had benefited from additional ITC of the turnover and the above finding was based on the average Method applied by the DGAP on his own accord.
The bench comprising of members B.N Sharma, Chairman, J.C. Chauhan Technical Member and Amand Shah, Technical Member held that the respondent has denied the benefit of ITC to the buyers of the flats and the shops being constructed by him in his project “Nirala Greenshire”. The provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has profiteered an amount of which includes GST from all the flat buyers. He has committed an offence under section 171(3A) of the Act. 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. And the Authority as per Rule 136 of CGST Rules 2017 directs the commissioners of CGST/SGST to monitor this order for ensuring that the amount profiteered by the respondent is passed on to all the eligible buyers.Subscribe Taxscan AdFree to view the Judgment