Construction service provider cleared of anti-profiteering charges under Section 171(1) CGST Act 2017 as no additional ITC benefit found

NAPA dismissed the anti-profiteering application against a construction service provider. The complainant alleged the respondent failed to pass on input tax credit benefits through price reduction under Section 171(1) of CGST Act, 2017. NAPA held no additional ITC benefit existed as the project commenced after GST implementation on 01.07.2017, making no pre-GST comparison possible. Since no additional ITC benefit was available, no price reduction was required. The application was dismissed without penalty.

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Issues Involved:
1. Whether there is benefit of additional ITC available to the Respondent which has not been passed on by him to the ApplicantRs.
2. Whether there was any violation of the provisions of Section 171 (1) of the CGST Act, 2017 by the RespondentRs.

Issue-wise Detailed Analysis:

I. Benefit of Additional ITC:
The Director General of Anti-Profiteering (DGAP) conducted an investigation following an application alleging that the Respondent had not passed on the benefit of input tax credit (ITC) by way of commensurate reduction in the price of a unit in the Respondent's project "Roselia-2." The investigation covered the period from 01.07.2017 to 30.10.2020. The DGAP reported that the Respondent's project, including all related activities such as allotment, agreements, and construction, occurred entirely within the GST regime. The Respondent argued that the provisions of Section 171 of the CGST Act, 2017, which mandate passing on the benefit of ITC, were not applicable as the project was initiated post-GST. The DGAP concluded that there was no pre-GST tax rate or ITC structure available for comparison with the post-GST period, thus determining that the anti-profiteering provisions were not applicable to the project under investigation.

II. Violation of Section 171 (1) of the CGST Act, 2017:
The Authority noted that the Applicant did not make any submissions against the DGAP's Report despite being given multiple opportunities. The Authority reviewed the chronology of events and found that all significant activities related to the project, including the issuance of licenses, RERA registration, booking, allotment of flats, execution of Builder Buyer Agreements (BBA), and construction activities, took place after the implementation of GST. The Authority determined that since all events occurred post-GST, there was no pre-GST ITC benefit to compare with the post-GST period, and thus, no additional ITC benefit was available to the Respondent that needed to be passed on to the Applicant. Consequently, the Authority concluded that the Respondent did not violate the provisions of Section 171 (1) of the CGST Act, 2017.

Conclusion:
The Authority found no merit in the Applicant's allegations and dismissed the application, stating that the Respondent had not contravened the anti-profiteering provisions of the CGST Act, 2017. The order was issued within the period of limitation extended by the Hon'ble Supreme Court due to the Covid-19 pandemic. A copy of the order was directed to be sent to both the Applicants and the Respondent free of cost.

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