The penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively.
Anti-profiteering- The brief facts of the case are that an application was filed by the Applicant No. 1, alleging profiteering by the Respondent in respect of purchase of Shop No. GF-0131-A, in the Respondent's project “Mercado” situated in Sector-80, Gurugram. The above Applicant had also alleged that the Respondent had not passed on the benefit of input tax credit to him by way of commensurate reduction in price of the Shop and had also charged GST @12% on the instalments paid by him.
It is established from the perusal of the above facts that the Respondent has benefited from the additional ITC to the extent of 5.91% of the turnover during the period from July, 2017 to June, 2019 as is evident from Table-B supra. It is also apparent from the above that the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has not passed on the benefit of ITC to his buyers.
Held that- the Respondent has denied the benefit of ITC to the buyers of the shops being constructed by him in his above project w.e.f. 01.07.2017 to 30.06.2019, in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus resorted to profiteering. Hence, he has committed an offence under Section 171 (3A) of the CGST Act, 2017, and therefore, he is liable for imposition of penalty under the provisions of the above Section. However, perusal of the provisions of Section 171 (3A) under which penalty has been prescribed for the above violation shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.07.2017 to 30.06.2019 when the Respondent had committed the above violation and hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively.