Builder guilty for not passing additional ITC benefit to buyers of flats post-GST implementation

Relevant Text of Order is as follows

52. The Authority based on the facts discussed above and based on the various parameters as discussed in the Table-8 above determines the additional benefit of the ITC ratio as 77%. Based on this ratio, taking into consideration, the turnover of the post-GST period, the profiteered amount for the period 01.07.2017 to 24.01.2018  is determined as Rs. 1,03,06,413/- for residential flats and commercial shops which includes 12% GST on base profiteered amount of Rs. 92,02,154/-. For the period 25.01.2018 to 31.12.2018, the profiteered amount is determined as Rs. 1,66,71,248/- which includes 12% GST on the commercial shops and 8% GST on residential flats on the base profiteered amount of Rs. 1,54,04,296/-. Therefore, the total benefit of ITC to be passed on during the period  01.07.2017 to 31.12.2018, comes to Rs. 2,69,77,661/- which includes GST@12% or 8%, as applicable on the base amount of Rs. 2,46,06,450 /. Accordingly, the above amounts shall be paid to the above Applicants and the other eligible house buyers by the Respondent along with interest @18% from the date from which these amounts  were realised from them till they are paid as per  the provisions  of Rule 133(3) (b) of the CGST Rules, 2017, failing which they shall be recovered by the concerned Commissioner CGST / SGST and paid to the eligible house buyers.

53. From the above discussions it is clear that the Respondent has profiteered by an amount of Rs. 2,69,77,661/- during the period of investigation. Therefore, in view of the above facts, this Authority under Rule 133 (3) (a) of the CGST Rules, 2017, orders that the Respondent shall reduce/refund the price to be realized from the buyers of the flats commensurate with the benefit of ITC received by him as has been detailed above. As far as the final computation of the additional ITC that will be available to the Respondent is concerned, the same could not be determined at the time of investigation by the DGAP, as the construction of the project was yet to be completed. However during the course of proceedings, the Respondent has submitted that he has received occupation certificate on 09.01.2019 and there was no inventory of unsold units left on the date of issue of occupation certificate. As the present investigation has been conducted only up to 31.12.2018, therefore, we order that any additional benefit of  ITC, which may accrue to the Respondent subsequently, shall also be passed on by him to all the eligible buyers. In case this additional benefit is not passed on to the Applicants No.1 to 71 or to other eligible buyers, they shall be at liberty to approach the Haryana State Level Screening Committee for initiating fresh proceedings under the provisions of Section 171 of the above Act against the Respondent. The concerned jurisdictional CGST or SGST Commissioner shall take necessary action to ensure that the benefit of additional ITC was passed on to the eligible house buyers in future.

54. It is also evident from the above narration of facts that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section. Accordingly, a Show Cause Notice be issued to him directing him to explain as to why the penalty prescribed under  Section  171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him. Accordingly, the  notice  dated 12.06.2019 vide which it was proposed to impose penalty under Section 29, 122-127 of the above Act read with Rule 21 and 133 of the CGST Rules, 2017 is withdrawn to that extent.

55. Further the Authority as per Rule 136 of the CGST Rules 2017 directs the Commissioners of CGST/SGST Haryana to monitor this order under the supervision of the  DGAP by ensuring that the amount profiteered by the Respondent as ordered by the Authority is passed on to all the buyers. A report in compliance of this order shall be submitted to this Authority by the DGAP within a period of 3 months from the date of receipt of this order.

56. A copy each of this order be supplied to the Applicants, the Respondent, Commissioners CGST/SGST as well as Principal Secretary (Town & Planning) Government of Haryana for necessary action. File be consigned after completion.

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Tags : GST, NAA, NAA Orders, Anti-Profiteering