NAPA dismisses anti-profiteering complaint against builder for allegedly not passing ITC benefits under Section 171

NAPA dismissed application alleging violation of Section 171 CGST Act, 2017 regarding non-passing of ITC benefits in flat purchase. The project launched post-GST implementation with booking finalized in February 2018. Respondent consistently paid GST at same rate throughout. Authority agreed with DGAP findings that anti-profiteering provisions were not contravened. Email exchanges between parties deemed irrelevant without legally enforceable documents. Application found not maintainable as no sustainable evidence of ITC benefit retention by respondent.

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Issues Involved:
1. Whether there was any violation of the provisions of Section 171 of the CGST Act, 2017 in this caseRs.
2. If yes, then what was the quantum of profiteeringRs.

Issue-Wise Detailed Analysis:

Issue 1: Violation of Section 171 of the CGST Act, 2017

The primary concern raised by Applicant No. 1 was that the Respondent had not passed on the benefit of input tax credit (ITC) by way of commensurate reduction in the price of the apartment purchased. The application was examined by the Maharashtra State Screening Committee on Anti-Profiteering, which prima facie observed that it was a case of profiteering. The Standing Committee on Anti-Profiteering forwarded the application for detailed investigation to the Director General of Anti-Profiteering (DGAP).

The DGAP issued a notice to the Respondent, who replied that the project "Lodha Primo" was launched post-GST implementation, and hence, the provisions of Section 171 were not applicable as there was no additional ITC availed or utilized. The Respondent provided various documents, including details of flat bookings, RERA registration, balance sheets, and sample invoices. The DGAP concluded that since the project was launched post-GST, there was no pre-GST tax rate or ITC structure to compare with the post-GST scenario, and therefore, the provisions of Section 171 were not attracted.

Applicant No. 1 contended that the Respondent might have utilized ITC from materials purchased for other buildings in the project, which were not subject to GST, thus benefiting from ITC without passing it on. However, the DGAP found that the project was launched post-GST and there was no pre-GST tax rate or ITC structure for comparison. The DGAP also noted that the Respondent had opted to continue paying GST at 12% with ITC, as allowed by Notification No. 3/2019-Central Tax (Rate).

The DGAP's report was reviewed, and it was found that the Respondent had not benefited from additional ITC nor had there been a reduction in the tax rate post-GST. Therefore, it was concluded that there was no violation of Section 171 of the CGST Act, 2017.

Issue 2: Quantum of Profiteering

Since it was determined that there was no violation of Section 171, the question of quantifying the profiteering did not arise. The DGAP's findings were accepted, and it was concluded that the Respondent had not contravened the provisions of Section 171 of the CGST Act, 2017. Consequently, the application filed by Applicant No. 1 was dismissed as not maintainable.

Conclusion:

The judgment concluded that the instant case did not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017. The allegation that the Respondent had not passed on the benefit of ITC was found to be unsustainable, and the application was dismissed. A copy of the order was directed to be sent to the Applicants and the Respondent free of cost.

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