Penalty prescribed under Section 171 (3A) cannot be imposed retrospectively :NAA
Forum: National Anti-Profiteering Authority
The DGAP conducted an investigation on the benefit of reduction in the rate of GST from 28% to 18% in respect of the two products viz. the Nestle Munch Nuts 32 Gm. Chocolate and the Cadbury Dairy Milk Chocolate with effect from 15.11.2017. The DGAP vide its report submitted that the Respondent had denied the benefit of GST rate reduction to customers and thus indulged in profiteering and violation of the provisions of Section 171 (1) of the CGST Act, 2017. The profiteered amount was held to be Rs. 15,958/-.
The NAA vide its Order No. 17/2018 dated 07.12.2018, determined the profiteered amount as Rs. 15,958/- and held the Respondent in violation of the provisions of Section 171 (1) of the CGST Act, 2017. During the course of the hearing, it was held that the Respondent had not only collected extra amount on account of price of the above products but he had also compelled them to pay more GST on the additional amount therefore, he had apparently committed an offence under Section 122 (1) (i) of the CGST Act, 2017 and hence, he was liable for imposition of penalty under the provisions of the above Section.
When Respondent violated the provisions of Section 171(1), Section 122 (1) (i) did 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 CGST Act, 2017.
Vide Section 112 of the Finance Act, 2019 specific penalty provisions have been added for violation of the provisions of Section 171 (1) which have come in to force w.e.f. 01.01.2020, by inserting Section 171 (3A). 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.
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