Discount after increasing price cannot be considered as passing on of benefit of additional ITC: NAA

Shri. Pradeep Kumar Vs Fusion Buildtech Pvt. Ltd. (National Anti-Profiteering Authority)

The Respondent’s further contention that he had already offered more than 10% discount in basic prices to all the customers who have booked flats Post GST and the discount had been given mainly on account of availability of ITC, thus the allegation that he had failed to give the necessary discount was absolutely incorrect. However the discount offered by the Respondent to the customers cannot be considered as passing on of the benefit of additional ITC as the above discount has been given by the Respondents to set off the prices which he had increased  and not on  account  of the benefit of ITC. It would also  be relevant to refer Section  (15) (1) of the CGST Act, 2017 which reads as under:-

“The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply.”

We therefore observe that Section 15 (3) (a) provides that the value of the supply shall not include any discount which is given before or at the time of the supply, even if such discount has been duly recorded in the invoice issued in respect of such supply. Thus, GST is chargeable on actual transaction value after excluding any discount (conditional  as well as unconditional) and therefore, for the purpose of computation of profiteering actual transaction value has to be considered for computation of profiteering amount. Further, the discount which was to be given to the customers by the Respondent is purely his business call. Accordingly, the discount of more than 10% in basic prices claimed to have been paid to the house buyers by the Respondent cannot be held as the benefit of ITC and hence, the claims made by the Respondents in this behalf cannot be accepted.

It is established from the perusal of the above facts that the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has profiteered an amount of 4,79,04,342/- which includes GST on the base profiteering amount of Rs. é,27,71,733/- from all the flat buyers. This amount is inclusive of Rs. 2,36,428/- (including GST on the base amount of Rs. 2,11,096/-) which is the profiteered amount in respect of the Applicant No. 1. All these buyers are identifiable as per the documents placed on record and therefore, the Respondent is directed to pass on this amount of Rs. 4,79,04,342/-  along with interest @18% per annum  to these flat buyers from the dates from which the above amount was collected by him from these buyers till the payment is made, within a period of 3 months from the date of passing of this order.

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