GST: NAA didn’t impose Penalty on Eldeco Infrastructure for denying benefit of ITC to Flat Buyers as no penalty provisions existed

The National Anti-Profiteering Authority (NAA) found M/s Eldeco Infrastructure & Properties Private Limited guilty of profiteering but did not impose the penalty for denying the benefit of Input Tax Credit (ITC) to Flat Buyers as no penalty provisions existed when the ITC was denied.

The Applicant, Varun Goel, alleged profiteering against the respondent, M/s Eldeco Infrastructure & Properties Private Limited and submitter that the respondent had not passed on the benefit of additional Input tax Credit (ITC) to the Applicant as well as 124 other house and plot buyers who had purchased them in his Project “Eldeco County”, as per the provisions of Section 171 (1) of the CGST Act, 2017.

 The DGAP in his report had also submitted that the Respondent had denied the benefit of ITC to the buyers amounting to Rs. 41.82.198/- pertaining to the period with effect from July 01, 2017, to August 31, 2018, and had thus indulged in profiteering and violation of the provisions of Section 171 (1) of the above Act.

The Respondent was issued notice asking him to explain why the penalty mentioned in Section 122 read with Rule 133(3) (d) should not be imposed on him.

In response to the notice the Respondent stated that the penal provisions under Section 122 of the Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be invoked and penalty imposed on him as he has not violated any of the provisions.

He has also submitted that being a law-abiding and compliant corporate body, it had been his endeavor to comply with various provisions of the GST law including the anti-profiteering provisions contained in Section 171 of the above Act.

The Authority headed by the Chairman Dr. B.N. Sharma the Respondent has not passed on the benefit of additional ITC to the buyers of his flats/plots with effect from July 01, 2017, to August 31, 2018, which he was required to pass on every month as he was availing the benefit of ITC every month to discharge his GST liability.

The Authority also observed that the respondent has passed on the benefit of ITC in the month of February, 2019 after this Authority had initiated proceedings against the Respondent vide its notice dated December 07, 2018.

Therefore, the Authority while withdrawing the notice of penalty under Section 122 (1) (i) held that no penalty provisions were in existence between the period with effect from July 01, 2017 to August 31, 2018 when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) can not be imposed on the Respondent retrospectively.