GST Update

 Desk of CA. Praveen Sharma – 1020 Series (CAPS) 

GSTAT-DELHI (PB) IN THE CASE OF DG Anti Profiteering, Director General of Anti-Profiteering, DGAP V/s

Vasavi 

A complaint was filed against the builder, M/s Vasavi and GP Infra LLP, alleging profiteering for not passing on the benefit of Input Tax Credit (ITC) to homebuyers after implementation of GST.

The complaint was investigated by the Directorate General of Anti-Profiteering (DGAP) after reference from the Standing Committee on Anti-Profiteering.

DGAP initially determined profiteering of approximately ?6.02 crore, out of which around ?3.48 crore had already been passed on to buyers, leaving a balance profiteered amount of ?2.54 crore.

The matter was remanded by the GSTAT for re-examination on limited issues including methodology of computation, treatment of service ITC, denial of ITC benefit by customers, pricing mechanism, and GST applicability on profiteered amount.

Upon reconsideration, DGAP revised the profiteered amount to ?1.51 crore and determined that the balance amount still required to be passed on to buyers was ?71.37 lakh (exclusive of GST).

DGAP held that ITC benefit includes both goods and input services and rejected the contention that service-related ITC should be excluded from profiteering computation.

The Tribunal observed that adjustment of ITC benefit through reduction in customer dues or pricing mechanism is a valid mode of passing benefit and does not necessarily require separate cash refund.

GSTAT held that the builder had derived additional ITC benefit after implementation of GST and had failed to fully pass on the same to homebuyers as required under Section 171 of the CGST Act.

The Tribunal further held that GST collected on the excess realization also forms part of the profiteered amount. Accordingly, the builder was directed to pass on ?71.37 lakh along with GST @12%, totaling approximately ?79.94 lakh.

The builder was also directed to pay interest @18% per annum from the date of collection till actual refund to buyers, and penalty proceedings under Section 171(3A) were held to be applicable for the post-01.01.2020 period.


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CAPS