Benefit of Additional ITC on Construction Services: NAA finds M/s Savaliya Procon Guilty of Anti-Profiteering

The National Anti-Profiteering Authority (NAA), has found M/s Savaliya Procon guilty of anti-profiteering since benefit of additional ITC available on ‘construction services’ not passed on to the purchaser.

An application was filed against the respondent M/s Savaliya Procon alleging that the respondent had not been passed on the benefit of additional ITC available after the introduction of GST on ‘construction services’ by way of commensurate reduction in price.

The respondent contented that the DGAP Report was vague and the methodology adopted for computing profiteering amount was arbitrary and the same was evident from the report. The respondent also contended that there was violation of principles of natural justice while determining the profiteered amount.

The DGAP concluded that the benefit of additional ITC of 2.18% of the taxable turnover accrued to the respondent and the same was required to be passed on to the applicant and other home buyers. On this account, the respondent has realized an additional amount to the tune of Rs. 85,77,419/- and contravened the provisions section 171 of the Act.

The Coram of Mr. Amand Shah, Chairman, Mr. Pramod Kumar Singh, Technical Member and Mr. Hitesh Shah, Technical Member has observed that the Report of the DGAP is prepared on the basis of the document and data provided by the respondent and as per the provisions enshrined under section 171 of the CGST Act, 2017 which the respondent has violated by not passing on the benefit of ITC to his home and flat buyers.

The Authority has held that the respondent has profiteered by an amount of 85,77,419/- during the period of investigation. The amount that has been profiteered by the respondent from the home buyers including the applicant shall be refunded, along with interest at the rate of 18% from the date of such refund, in accordance with the provisions of Rule 133 (3) (b) of the GCST Rules 2017.

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