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NAA imposes Penalty on Builders for not passing GST reduction benefits to Flat Buyers

Income Tax Credit - NAA - taxscan

The National Anti-Profiteering Authority (NAA) has held that the benefit of Input Tax Credit (ITC) should not be denied to buyers.

The Order was rendered by NAPA comprising of Chairman, B.N. Sharma and two other technical members J.C.Chauhan and Anand Shah on an appeal given by Shubra Vipin Gajbhiye and Director General of Anti-Profiteering(DGAP).

The Applicant No. 1 had alleged profiteering by the M/s pyramid arcade in respect of the purchase of Flats No. 6 in Respondent’s project “Pyramid City 5” situated at Beas, Nagpur. The above Applicant had also alleged that the Respondent had not passed on the benefit of ITC availed by him by way of commensurate reduction in the price of the above flats.

The aforesaid reference was considered by the Standing Committee on Anti-profiteering, wherein it was decided to forward the same to the DGAP to conduct the detailed investigation into the complaint according to Rule 129 (1) of the CGST Rules, 2017. 2. the DGAP found that the Applicant No. 1 had booked a flat in the Respondent’s project “Pyramid City -5”, in the pre-GST era and had paid the booking amount of Rs50,000, vide Cheque dated 28.03.2017 and the first demand letter/invoice was raised by the Respondent in the post-GST era.

Thus, the DGAP issued Notice asking the Respondent to intimate as to whether he admitted that the benefit of ITChad not been passed on by him to the Applicant No. 1 by way of commensurate reduction in the price of the flat and in case it was so, to suo-moto compute the quantum of the same and mention it in his reply to the Notice and furnish the same along with the supporting documents. The Respondent did not avail of the opportunity to inspect the non-confidential evidence/information furnished by the Applicant No. 1. Vide e-mail dated 17.06.2019, Applicant No. 1 was also given an opportunity.

The Coram also observes that the Respondent has denied benefit of ITC to the buyers of the flats and the shops being constructed by him in his Project ‘Pyramid City 5’ in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offense under Section 171 (3A) of the above Act and therefore, he is apparently liable for imposition of penalty under the provisions of the above Section.

The Authority as per Rule 136 directs the Commissioners of CGST/SGST Maharashtra to monitor this order under the supervision of the DGAP by ensuring that the amount profiteered by the Respondent as ordered by the Authority is passed on to all the eligible buyers.

For Full Text of the Order Click here.

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