Court Buzz, GST

Case law round up: Penalty under Section 171, cannot be imposed retrospectively.

In this month’s case law round-up we bring you an interesting proposition laid down by the National Anti Profiteering Authority.

No. of cases: 4

The NAA in its four recent orders has laid down that by the provisions of the Finance (No. 2) Act, 2019 from 01.01.2020, sub-section 171 (3A) was added to Section 171 of the CGST Act, 2017 and penalty was proposed to be imposed in the case of violation of Section 171 (1) of the CGST Act, 2017. Since no penalty provisions were in existence between the period w.e.f. 01.07.2017 to 30.03.2018, for any violation(s) of the provisions of Section 171 (1) between the above-mentioned period, the penalty prescribed under Section 171 (3A) cannot be imposed retrospectively.

Here are the case laws where the NAA did not impose any penalty for the period from 01.07.2017 to 30.03.2018, on violation of the provisions under Section 171(1), CGST Act, 2017.

M/s. VTwo Ventures Pvt. Ltd.

The Applicant No. 1 found that the Respondent had not passed on to his recipients, the benefit of reduction in the rate of tax of GST w.e.f. 15.11.2017 from 28% to 18% in respect of his supplies of “luggage trolley bag/suitcases”, namely “Tropic 45 Weekender Black” and “Neolite Strolly 53 360 (VIP) FIR”, as per the provisions of Section 171 (1) of the CGST Act, 2017. The Respondent had denied the benefit of GST rate reduction to his recipients amounting to Rs. 18,887/-, pertaining to the period w.e.f. 15.11.2017 to 31.08.2018 and had thus indulged in profiteering and violation of the provisions of Section 171 (1) of the CGST Act, 2017.

M/s. Puri Constructions Pvt. Ltd.

The Respondent had not passed on the benefit of Input Tax Credit in respect of the flat purchased by Applicant No. 1 in the “Anand Vilas” project of the Respondent on introduction of the GST w.e.f. 01.07.2017, as per the provisions of Section 171 (1) of the CGST Act, 2017. Thus, the Respondent had denied the benefit of input tax credit to the above Applicant and other buyers amounting to Rs. 1,01,06,773/- pertaining to the period from July, 2017 to June, 2018 and had thus indulged in profiteering and violation of the provisions of Section 171 (1) of the CGST Act, 2017.

M/s. Horizon Projects Pvt. Ltd.

The Respondent had not passed on the benefit of Input Tax Credit in respect of the flat purchased by the Applicant in the “Runwal My City” project of the Respondent on introduction of the GST w.e.f. 01.07.2017, as per the provisions of Section 171 (1) of the CGST Act, 2017. The Respondent had denied the benefit of input tax credit to the above Applicant and other buyers amounting to Rs. 3,20,49,507/-

M/s Harish Bakers and Confectioners Pvt. Ltd.

The Respondent had denied the benefit of GST rate reduction from 28% to 18% in respect of the two products viz. the Nestle Munch Nuts 32 Gm. Chocolate and the Cadbury Dairy Milk Chocolate to his customers, the profiteered amount was held to be Rs. 15,958/-,pertaining to the period w.e.f. 15.11.2017 to 31.03.2018 and had thus indulged in profiteering and violation of the provisions of Section 171 (1) of the above Act.

Vox Analytica GST
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