No penalty for denying ITC benefit to Customers prior to January 1, 2020: NAA [Read Order]

The National Anti-Profiteering Authority (NAA) found M/s VTWO Ventures guilty of profiteering but did not impose the penalty for denying the benefit of Input Tax Credit (ITC) as no penalty provisions existed when the ITC was denied.

The Applicant, Kerala State Screening Committee on Anti-Profiteering, alleged profiteering against the respondent, M/s VTWO Ventures that the respondent had not passed on the benefit of Input Tax Credit (ITC) to the Applicant from 28% to 18% in respect of luggage trolley bag/ suitcases with effect from November 15, 2017, 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. 18,887 pertaining to the period with effect from November 15, 2017, to March 31, 2018, and had thus indulged in profiteering and violation of the provisions of Section 171 (1) of the Act.

The Authority headed by the Chairman Dr. B.N. Sharma held that the Respondent has not passed on the benefit of ITC when the GST rate was reduced from 28% to 18% on the products with effect from November 15, 2017, to the buyers which he was required to pass to the consumers.

However, the NAA noted that the profiteering was committed by the respondent before January 1, 2020 so the penalty cannot be imposed against the respondent and therefore withdrawn the penalty proceedings against the respondent.