NAA finds Builder Guilty for issuing False Invoices charging excessive GST from Buyers [Read Order]

The National Anti-Profiteering Authority (NAA) imposed the penalty on M/s S3 Infrareality Pvt Ltd for denying the benefit of Input Tax Credit (ITC) to buyers of flats and for also issuing false Invoices charging excessive GST from buyers.

The Applicant, Ashok Khatri alleged profiteering by the Respondent,  M/s S3 Infrareality Pvt Ltd in respect of the purchase of a flat in the project “Auric City Homes”. In the said application the Applicant alleged that the Respondent had not provided any tax invoice for the supply of construction service and denied ITC amounting to Rs.1,48,60,874.

The Authority headed by Chairman B.N. Sharma and Technical Members J.C. Chauhan and Amand Shah held that the Respondent had not passed on the benefit of additional Input Tax Credit (ITC) to the Applicant as well as other homebuyers who had purchased them in his Project “Eldeco County and hence, the Respondent has violated the provisions of Section 171 (1) of the CGST Act, 2017.

Further, the Respondent was issued a show-cause notice to state why penalty should not be imposed on him for violation of the above provisions as per Section 122 (1) of the above Act as he had apparently issued incorrect or false invoices while charging excess consideration and GST from the buyers.

However from the perusal of Section 122 (1) it is clear that the violation of the provisions of Section 171 (1) is not covered under it as it does not provide penalty for not passing on the benefits of tax reduction and ITC and hence the above penalty cannot be imposed for violation of the anti-profiteering provisions made under Section 171 of the above Act.

“Since, no penalty provisions were in existence between the period when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively Accordingly, the notice dated 11032019 issued to the Respondent for imposition of penalty under Section 122 (1) () is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped,” the NAA said.