2019 (2) TMI 1757 - NAPA - GST

Respondent ordered to refund Rs. 1,25,33,555 profiteered amount under CGST Act

Sh. Amit Tandon, Director General of Anti-Profiteering, Central Board of Indirect Taxes & Customs, Versus M/s. Adani M2K Projects LLP,

Sh. Amit Tandon, Director General of Anti-Profiteering, Central Board of Indirect Taxes & Customs, Versus M/s. Adani M2K Projects LLP, - TMI Issues Involved:1. Alleged profiteering by not passing on the benefit of Input Tax Credit (ITC) post-GST implementation.2. Determination of the quantum of profiteering.3. Compliance with Section 171 of the CGST Act, 2017.4. Imposition of penalty under Section 171(3A) of the CGST Act, 2017.Detailed Analysis:1. Alleged Profiteering by Not Passing on ITC Benefit:The complaint was filed alleging that the Respondent did not pass on the benefit of ITC by reducing the price of Flat No. B-501 in the 'Oyster Grande' project. The Haryana State Screening Committee observed that the Respondent's tax burden had been reduced due to the availability of ITC on input materials, which needed to be passed on to customers as per Section 171 of the CGST Act, 2017. The Standing Committee on Anti-profiteering forwarded the complaint to the Director General of Anti-Profiteering (DGAP) for detailed investigation.2. Determination of the Quantum of Profiteering:The DGAP's investigation covered the period from 01.07.2017 to 31.12.2018. The Respondent submitted various documents, including GSTR-1, GSTR-3B returns, and details of the payment plan agreed upon with the Applicant. The DGAP found that the ITC as a percentage of turnover was 5.57% during the pre-GST period and 7.08% during the post-GST period, indicating an additional benefit of 1.51% post-GST. The DGAP calculated the profiteered amount to be Rs. 1,25,33,555, which included GST on the base profiteered amount of Rs. 1,11,90,675. This amount included Rs. 1,46,656 profiteered from the Applicant No. 1.3. Compliance with Section 171 of the CGST Act, 2017:The Authority noted that Section 171(1) mandates the passing on of any reduction in tax rate or benefit of ITC to the recipient by way of commensurate reduction in prices. The DGAP's report confirmed that the Respondent had not passed on the additional ITC benefit of 1.51% to the buyers, thereby contravening Section 171. The Respondent agreed to the computation of profiteering made by the DGAP and undertook to pass on the ITC benefit.4. Imposition of Penalty under Section 171(3A) of the CGST Act, 2017:The Authority ordered the Respondent to reduce the price commensurate with the benefit of ITC and refund the profiteered amount along with interest at 18% from the date of profiteering till the date of payment. The Respondent was directed to pass on the benefit to the eligible home buyers within three months, failing which the amount would be recovered by the concerned Commissioner CGST/SGST. The Authority also issued a notice to the Respondent to explain why a penalty under Section 171(3A) should not be imposed for denying the ITC benefit.Conclusion:The Respondent was found to have contravened the provisions of Section 171 of the CGST Act, 2017, by not passing on the ITC benefit to the buyers. The total profiteered amount of Rs. 1,25,33,555, including GST, was ordered to be refunded to the buyers along with interest. The Respondent was also liable for a penalty under Section 171(3A) for profiteering. The DGAP was directed to carry out a comprehensive investigation at the time of the issue of the occupancy certificate to determine any additional ITC benefit.