2022-TIOL-NEWS-149 Part 2 Dated: Monday, June 27, 2022

GST - The respondent was given the benefit of ITC on supply of Construction services after implementation of GST w.e.f. 1.7.2017 and respondent was required to pass on such benefit of ITC to homebuyers/shop buyers by way of commensurate reduction in prices in terms of Section 171 of CGST Act, 2017 - The respondent claimed that he has passed on major part of profiteered amount i.e. Rs 1,29,17,507/- and he will pass on remaining ITC benefit soon after the order of this authority - Section 171 of CGST Act, 2017 has been contravened by respondent in as much as additional benefit of ITC @3.06% of basic price has not been passed on by respondent to 1039 recipients of supply - Therefore, the Authority under Rule 133(3)(a) of CGST Rules orders that respondent shall reduce the price to be realized from buyers of flats/ shops commensurate with benefit of ITC received by him - Such amount profiteered as determined shall be passed alongwith interest @ 18% - To ensure the same, an advertisement may also be published in minimum of two local Newspapers/vernacular press in Hindi/English/local language with the details i.e. Name of builder, project, location and amount of profiteering i.e. Rs 2,73,04,997/- so that applicants alongwith non applicant customers can claim the benefit of ITC which is not passed on to them - Homebuyers/shop buyers may also be informed that the detailed NAA order is available on Authority's website www.naa.gov.in - Order falls within the limitation prescribed under Rule 133(1) of CGST Rules, 2017: NAA

GST - Anti-Profiteering - The applicant had filed a complaint against the Respondent-company in respect of a flat purchased by the applicant in a project being developed by the Respondent - The applicant alleged that the respondent had not passed on the benefit of GST rate reduction by way of commensurate reduction in the price of the flats - The complaint was forwarded to the Standing Committee on Anti Profiteering, which further forwarded it to the DGAP - The DGAP computed the amount of tax payable by the respondent and also computed the amount of ITC that was supposed to be passed on.

Held - It is evident from narration of facts that Respondent has denied the benefit of ITC to the buyers of flats in contravention of Section 171(1) of the CGST Act - Thus the respondent has comitted offence u/s 171(3A) of the Act - Hence the respondent is liable to face penalty for the same - However, since the penalty provisions u/s 171(3A) came into effect w.e.f. 01.07.2020, whereas the alleged violation occurred between 01.07.2017 to 31.12.2018, thereby the penalty cannot be imposed on the respondent retrospectively - The authorities concerned are directed to ensure compliance with this order - It may be ensured that benefit of ITC be passed on to each customer along with interest @ 18% as per Rule 133(3)(b) of the CGST Rules: NAA

GST - The issues to be decided are, whether there is benefit of additional ITC available to respondent which has not been passed on by him to the applicant and whether there is any violation of provisions of Section 171(1) of CGST Act, 2017 by respondent - The two projects namely 'The Serenas' and 'Signum 36' have been developed and executed by respondent under a single GST registration on same plot of land - On the issue of reduction in tax rate, Authority finds that there was reduction of rate of tax from 12% to 8% (after land abatement) vide Notfn 01/2018 Central Tax-Rate w.e.f. 25.1.2018 - Respondent has charged 12% till 24.1.2018 and 8% from 25.1.2018 in respect of project 'Serenas' - Therefore, respondent has passed on the benefit of reduction in rate of tax in compliance with provisions of Section 171 of CGST Act, 2017 to homebuyers in project 'The Serenas' - The Authority holds that ITC as a percentage of turnover that was available to respondent during pre-GST period was 2.26% and during post GST period, it was 5.26% for project 'Signum 36' whereas no such benefit accrued with respect to project 'Serenas' - The respondent has been profiteered by an amount of Rs 42,21,321/- for project 'Signum 36' - Said amount shall be refunded alongwith interest @18% in line with provisions of Rule 133(3)(b) of CGST Rules, 2017 within a period of three months - To ensure the same, an advertisement of appropriate size to be visible to public may also be published in minimum of two local Newspapers/vernacular press in Hindi/English/local language with the details i.e. Name of builder, project, location and amount of profiteering i.e. Rs 42,21,321/- so that concerned recipients of supply/shop buyers can claim the benefit of ITC which is not passed on to them - Homebuyers/shop buyers may also be informed that the detailed NAA order is available on Authority's website www.naa.gov.in - Order falls within the limitation prescribed under Rule 133(1) of CGST Rules, 2017: NAA

GST - Anti-Profiteering - Complaints were filed by the applicants against the Respondent herein, wherein it was alleged that the Respondent had not passed on benefit of ITC rate reduction in respect of a property being developed by the Respondent and in which the applicants had purchased units - It was alleged that the Respondent did not reduce prices of the flats commensurate to the reduction in rate of GST - The complaint was forwarded to the Standing Committee, who further sent it to the DGAP - The DGAP held that the provisions of Section 171 come into play only when there is reduction in rate of tax or increase in the benefit of ITC - In the present case, as the project had been lauched after implementation of GST, there could be no pre-GST tax rate or ITC availability that could be compared with the post-GST tax rate and ITC, so as to determine if there was any benefit which was required to be passed on by way of reduced price - Hence the DGAP concluded that the Anti-Profiteering provisions were inapplicable to the project under investigation.

Held - It is seen that all the events, the licenses, RERA certificate, booking, draw, allotment of flats, BBA, construction activity and receipt of payments has all taken place in the post-GST era - Besides, the applicant was alloted flat after coming into force of the GST w.e.f 01.07.2017 - Hence there was no pre-GST rate of tax or ITC availability that could be compared with the post-GST tax rate and the ITC to determine whether there was any benefit that was required to be passed on by way of reduced price - It is established that there was no additional benefit of ITC to the Respondent and hence he is not required to pass on benefit to the above applications by reducing the price of the flats - Since there is no basis for comparison of ITC available before and after 01.07.2017, the Respondent is not needed to re-calibrate price of flats due to additional benefit of ITC - Thus the allegations of profiteering are incorrect and merit being dropped, as the Respondent is not established to have contravened the provisions of Section 171 of the CGST Act: NAA

GST - Anti Profiteering - The Applicants had filed a complaint against the Respondent herein, alleging that the respondent has not passed on benefit of GST rate reduction in respect of 'services by way of admission to exhibition of cinematograph films', the rate for which had been reduced w.e.f. 01.01.2019 vide Notfn No 27/2018-CT(R) - It was alleged that the respondent had increased the base price of the tickets, rather than reducing the price thereof - Applications were examined by the Standing Committee on Anti Profiteering, whereupon the matter was forwarded to the DGAP - After considering the data furnished by the Respondent, the DGAP rejected the Respondent's claim of having collected & paid the GST - the DGAP also rejected the contention of not having charged GST separately or that best prices had been maintained, were set aside too - The DGAP also treated the base price of all the tickets for all the movies as the same - The Respondent was held to be have profiteered considering that that GST rate in respect of cinema service had been reduced to 18% from 28%.

Held - The Respondent is directed to reduce the prices of the cinema tickets of regular category as per the provisions of Rule 133(3)(a) of the CGST Rules 2017, keeping in mind the reduction in the rate of tax so that the benefit is passed on to the consumers - The profiteered amount as calculated by the DGAP be deposited into the CWF along with 18% interest - The respondent is also directed to refund to the applicants an amount of Rs 11.73/- along with interest @ 18% - The Respondent has committed offence u/s 171(3A) of the CGST Act by denying benefit of rate reduction - Notice be issued to Respondent proposing to impose penalty u/s 171(3A) of the Act - Relevant authorities directed to monitor implementation of order: NAA

- Application disposed of: NAPA

GST - The respondent was given the benefit of ITC on supply of Construction services after implementation of GST w.e.f. 1.7.2017 and respondent was required to pass on such benefit of ITC to homebuyers by way of commensurate reduction in prices in terms of Section 171 of CGST Act, 2017 - The respondent claimed that he has passed on substantial amount of GST ITC - Section 171 of CGST Act, 2017 has been contravened by respondent in as much as additional benefit of ITC @3.07% of base price has not been passed on by respondent to 736 recipients - The respondent has profiteered an amount of Rs 2,62,56,652/- - Therefore, the Authority under Rule 133(3)(a) of CGST Rules orders that respondent shall reduce the price to be realized from buyers of flats/ shops commensurate with benefit of ITC received by him - Such profiteered amount as determined shall be passed alongwith interest @ 18% - To ensure the same, an advertisement may also be published in minimum of two local Newspapers/vernacular press in Hindi/English/local language with the details i.e. Name of builder, project, location and amount of profiteering i.e. Rs2,62,56,652/- so that applicants alongwith non applicant customers can claim the benefit of ITC which is not passed on to them - Homebuyers/shop buyers may also be informed that the detailed NAA order is available on Authority's website www.naa.gov.in - Order falls within the limitation prescribed under Rule 133(1) of CGST Rules, 2017: NAA