Penalty proceedings dropped by National Anti Profiteering Authority for non existence of penalty provision under section 171 prior to 01st January 2020.

Authority held that since penalty provision for contravention of section 171(1) was inserted in law by Finance Act (No. 2), 2019 w.e.f. 01.01.2020, therefore penalty prescribed u/s 171(3A) cannot be imposed for period prior to 01.01.2020.
 

Respondent's Submission

The Respondent submitted that the penal provisions under Section 171(3A) of the CGST Act read with Rule 133(3)(d) of the CGST Rules should not be invoked and penalty should not be imposed as the Central Government vide Notification No. 01/2020- Central Tax dated 01.01.2020 has appointed the 1st day of January. 2020 as the date on which the provisions of Section 92 to 112 of the Finance (No. 2) Act, 2019 shall come into force.

Respondent further submitted that provisions of Section 171(3A) inserted vide Section 112 of the Finance Act, 2019 are effective prospectively from 01.01.2020 and they cannot have retrospective operation. 

Held by Authority

We have carefully considered the submissions of the Respondent and all the material placed before us and it has been revealed that respondent has violated the provisions of Section 171(1) of the CGST Act, 2017.

It is also revealed from the perusal of the CGST Act and the Rules framed under it that the Central Government vide Notification No. 01/2020 - Central Tax dated 01.01.2020 has implemented the provisions of the Finance (No. 2) Act, 2019 from 01.01.2020 vide which sub-section 171(3A) was added in Section 171 of the CGST Act 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 prior to 01.01.2020, 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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