2020 (8) TMI 773 - NAPA - GST

Dismissal of CGST Act Section 171 Violation Allegation; Respondent Not Liable for ITC Benefit Pass-on

The application filed by Applicant No. 1 alleging a violation of Section 171 of the CGST Act was dismissed. The Respondent was found not liable to pass on ... Profiteering - purchase of flat - allegation that the Respondent was actually required to pass on the benefit of ITC for the construction done after the GST implementation which he had not passed on. - contravention of section 171 of CGST Act - HELD THAT:- It is revealed from the plain reading of Section 171 (1) that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax in the post GST period; hence the only issue to be examined is as to whether there was any additional benefit of ITC with the introduction of GST availed by the Respondent or not. On this issue it has been revealed from the DGAP's Report that no ITC has been availed by the Respondent in the post-GST period and therefore, there was no additional benefit of ITC which had accrued to the Respondent post-GST as compared to pre-GST period. This case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017 as the Respondent had not availed benefit of additional ITC in the post-GST regime. Hence, the allegation of not passing on the benefit of ITC is not established against the Respondent. Therefore, the Respondent is not liable to pass on the benefit of ITC to the Applicant No. 1 and the other recipients. Accordingly, the provisions of Section 171 (1) of the CGST Act. 2017 have not been contravened in the present case. The application filed by the Applicant No. 1 requesting action against the Respondent for alleged violation of the provisions of the Section 171 of the CGST Act is not maintainable and hence the same is dismissed. Issues Involved:1. Entitlement of Applicant No. 1 to the benefit of Input Tax Credit (ITC).2. Violation of Section 171 of the Central Goods and Services Tax (CGST) Act, 2017.Detailed Analysis:1. Entitlement of Applicant No. 1 to the Benefit of ITC:The Applicant No. 1 filed a complaint alleging that the Respondent had included VAT and Service Tax in the MRP of a flat and demanded 12% GST on the pending amount, resulting in double taxation. The Applicant claimed that the Respondent failed to pass on the benefit of ITC for construction done after GST implementation.The Director General of Anti-Profiteering (DGAP) conducted an investigation and found that the Respondent had not availed any CENVAT credit or ITC in the pre-GST and post-GST periods. The Respondent's project 'Aryan Founttain Square' was mostly completed by 2014, with the Occupancy Certificate (OC) obtained on 11.04.2018. Since the Respondent did not avail any ITC in the post-GST period, there was no additional benefit of ITC to be passed on to the Applicant No. 1.2. Violation of Section 171 of the CGST Act, 2017:Section 171 (1) of the CGST Act mandates that any reduction in the rate of tax or benefit of ITC must be passed on to the recipient by way of commensurate reduction in prices. The DGAP's investigation revealed that there was no reduction in the rate of tax in the post-GST period, and the Respondent had not availed any additional ITC. Thus, the Respondent did not have any ITC benefit to pass on to the recipients.The Respondent had not paid due Service Tax in the pre-GST period and had defaulted in the payment of GST and filing of GST Returns in the post-GST period. The State GST Authorities had cancelled the Respondent's GST registration on 31.08.2018. Given these facts, the case did not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017, as the Respondent had not availed any additional ITC in the post-GST regime. Therefore, the allegation of not passing on the benefit of ITC was not established against the Respondent.Conclusion:The application filed by Applicant No. 1 requesting action against the Respondent for alleged violation of Section 171 of the CGST Act was dismissed. The Respondent was not liable to pass on the benefit of ITC to the Applicant No. 1 or other recipients, and the provisions of Section 171 (1) of the CGST Act, 2017, were not contravened in this case. The order was passed considering the delay caused by the COVID-19 pandemic, in accordance with Notification No. 55/2020-Central Tax dated 27.06.2020.Order:The application filed by Applicant No. 1 is dismissed. A copy of the order is to be sent to both the Applicants and the Respondent free of cost. The file of the case is to be consigned after completion.