Anti-Profiteering Authority has issued Order No. 66/2019 dated 06th December, 2019 in case of Sh. Pawan Kumar (Applicant) Vs. Apex Meadows Pvt. Ltd (Respondent).
Fact of the case:
The Applicant had stated in their complaint that respondent has resorted to profiteering in respect of the Purchase of flat in “The Celest” located in Vishakhapatnam Project.” on the ground that the respondent had not passed the benefit of ITC by way of commensurate reduction in the price after implementation of GST w.e.f. 01.07.2017 and had charged GST on the pre-GST full amount of instalments.
NAA observed that:
- DGAP in his report, based on the following analysis, has stated that the ITC as % of turnover available to respondent during the pre-GST period (Apr’16 to June’17) was 4.39% and during the post-GST period (July’17 to October’18), it was 10.42% which showed that the respondent post introduction of GST had benefitted from additional ITC to the extent of 6.03%.
- Respondent has also submitted that the tax on the input services has been increased from 15% to 18% and hence he has not received any additional benefit of ITC which he was required to pass on. NAA held that the respondent has also got the benefit of ITC on goods and it is only the additional benefit of ITC, from his supplies in the value chain, which he has availed post-GST which he is required to pass on. From DGAP Report it is clear that the additional ITC benefit of 6.03% of the turnover was restored by him which he is bound to pass on.
- Respondent has also submitted that area was not a correct basis to allocate credit pertaining to sold and unsold portions and “value” was more logical and correct base. Respondent has submitted his computations on the basis of value. NAA held that the DGAP has already considered value as turnover in his computations and he has arrived at relevant ITC only after considering the area sold and turnover. Therefore the above argument of the Respondent cannot be considered.
- Respondent has also argued that Section 171 of the CGST Act, 2017 violates Article 19 (1) (g) of the Constitution which is Right to trade, as it tries to fix prices. NAA observed that, as section 171 was inserted in the Act to ensure that benefit of GST rate reduction or ITC benefit is passed on to the eligible customers on account of GST implementation. It has nowhere acted as price regulator but has worked in interest of consumers.
- Respondent has further argued that no methodology or guidelines have been prescribed under GST laws to ascertain benefits to be passed. NAA held that the Authority has notified the Methodology and Procedure vide its Notification dated 28.03.2018 under Rule 126 of the CGST Rules, 2017. As the facts of each case are different so no fixed mathematical methodology can be prescribed for each case separately.
- From the above facts, it is evident that the respondent has denied benefit of ITC to the buyers of the flats and the shops being constructed by him in his Project ‘The Celest” located in Vishakhapatnam” in contravention of the provisions of Section 171.
- Authority directed the respondent to pass on the benefit of` ITC to the buyers along with interest @ 18% per annum.
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