Respondent found guilty of illegal tax charges, ordered to refund, adjust prices, and face potential penalties.

The Respondent was found to have illegally charged GST and Service Tax without passing on Input Tax Credit benefits to buyers. The Directorate General of Anti-Profiteering (DGAP) determined a profiteered amount of Rs. 41,82,198, which the Respondent accepted and refunded to customers. The Respondent was directed to adjust prices to reflect ITC benefits and ensure future compliance. The Authority highlighted the deliberate violation of the CGST Act, leading to potential penalty imposition. Compliance monitoring by the tax authorities was ordered to oversee implementation of the directive.

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Issues Involved:
1. Alleged illegal charging of GST and Service Tax.
2. Non-passing of Input Tax Credit (ITC) benefit.
3. Investigation and findings by the Directorate General of Anti-Profiteering (DGAP).
4. Computation and acceptance of profiteered amount.
5. Penalty and compliance monitoring.

Detailed Analysis:

1. Alleged Illegal Charging of GST and Service Tax:
The Applicant No. 1 alleged that the Respondent charged Rs. 10,61,460 as GST on 90% of the basic sale price and Rs. 44,227 as Service Tax on 10% of the basic sale price for a built-up house in the "Eldeco Country" project. The house was sold at a base price of Rs. 98,28,312, and it was alleged that the benefit of ITC was not passed on to the Applicant post-GST implementation on 01.07.2017.

2. Non-passing of Input Tax Credit (ITC) Benefit:
The DGAP's investigation revealed that the Respondent did not pass on the benefit of additional ITC accrued post-GST implementation, which was required under Section 171 of the CGST Act, 2017. The ITC as a percentage of the total turnover during the pre-GST period was 0.61%, compared to 3.45% during the post-GST period, resulting in a net benefit of 2.84% of ITC to the Respondent.

3. Investigation and Findings by the Directorate General of Anti-Profiteering (DGAP):
The DGAP issued a notice to the Respondent, who claimed that the project was almost completed in the pre-GST regime and there was nominal procurement during the GST regime. The Respondent also argued that the sale of the building post-completion certificate was not liable to Service Tax/GST. However, the DGAP found that the Respondent had received booking amounts before the GST regime and completion certificate post-GST, justifying the charging of Service Tax and GST on demands raised.

4. Computation and Acceptance of Profiteered Amount:
The DGAP computed the profiteered amount as Rs. 41,82,198, which included Rs. 2,83,026 from Applicant No. 1 and Rs. 38,99,172 from 124 other recipients. The Respondent accepted the DGAP's computation and provided details of refunds made to customers, including interest, totaling Rs. 59,57,306. The Respondent also provided detailed submissions and evidence of passing on the ITC benefit to customers.

5. Penalty and Compliance Monitoring:
The Authority found that the Respondent's failure to pass on the ITC benefit until February 2019 constituted a deliberate violation of Section 171 of the CGST Act, 2017. The Respondent was issued a notice to explain why a penalty under Section 122 of the CGST Act should not be imposed. The Authority directed the Commissioner of CGST/SGST, Haryana, to monitor the order's compliance and submit a report within four months.

Conclusion:
The Respondent was directed to reduce prices commensurate with the ITC benefit and ensure any future ITC benefits are passed to buyers. The Authority emphasized the deliberate nature of the Respondent's actions and the necessity for penalty imposition. Compliance monitoring by the Commissioner of CGST/SGST, Haryana, was mandated to ensure the order's execution.

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