The National Anti-Profiteering Authority (NAA) holds the Signature Builders guilty of profiteering and for not passing the benefit of additional ITC to the home buyers but did not impose the penalty.

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Mr. Abhishek the applicant, in this case, claimed that the Respondent, Signature Builders had not passed on the benefit of additional Input Tax Credit (ITC), according to the provisions of Section 171 (1) of the CGST Act, 2017, to him and also to the other home buyers who had purchased flats in his Project “Orchard Avenue-93”.

The Directorate General of Anti-profiteering (DGAP) has said in its report that the Signature Builders had denied the benefit of ITC to the Applicant and other buyers amounting to Rs. 2,58,80,927, for the period w.e.f 1.07.2017 to 31.12.2018 and had thus indulged in profiteering and violation of the provisions of Section 171(1).

B.N. Sharma chairman of NAA headed the authority and have given the judgement that the Signature Builders had not passed on the benefit of additional Input Tax Credit (ITC) to the Applicant and other home buyers who had purchased flats in his Project “Orchard Avenue-93” during the period from 01.07.2017 to 31.12.2018 and hence, the Respondent has violated the provisions of Section 171 (1) of the CGST Act, 2017.

The authority clarified that Section 112 of the Finance Act, 2019 specific penalty provisions have been added for violation of the provisions of Section 171 (1) of the CGST Act, 2017 which have come in to force w.e.f. 01.01.2020 vide Notification No. 01/2020 Central Tax dated 01.01.2020, by inserting Section 171 (3A) in the CGST Act, 2017.

So when the Respondent had violated the provisions of Section 171 (1), no penalty provisions were in existence between the period w.e.f. 01.07.2017 to 31.12.2018. Due to this, the authority held that the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively.

With Warm Regards,

CL Bureau.

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