Profiteering and ITC pass-through on flat sale: DGAP finds no contravention, buyer gets no ITC benefit.

Profiteering inquiry concerned pass-through of input tax credit where the flat was booked in the post-GST period. Reliance on judicial guidance (Delhi High Court) led to the conclusion that price would reflect ITC available only post-GST, so no benefit of ITC accrued to the buyer; accordingly the investigatory authority (DGAP) found no contravention of section 171 of the Central Goods and Services Tax Act and took into account ITC availed and pre/post-GST transaction values. Complaints asserting a legal right to ITC pass-through were rejected as unsupported by the record.

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Issues: Whether the respondent contravened Section 171 of the Central Goods and Services Tax Act, 2017 by not passing on benefit of input tax credit to the complainant (i.e., whether profiteering occurred in respect of the flat booked in post-GST period in Phase-I of the project).

Analysis: The investigation compared ITC availed and purchase value of inputs and services in the pre-GST and post-GST periods for Phase-I; Phase-II was excluded as construction commenced in the post-GST period. The DGAP revised its earlier calculation and, applying the methodology consistent with the guidelines in Reckitt Benckiser India Pvt. Ltd. v. Union of India and taking into account ITC amounts and ITC-to-purchase-value ratios for pre-GST and post-GST periods, found that the ITC ratio decreased in the post-GST period and no cost saving attributable to implementation of GST was shown. A subsequent re-investigation under Rule 129 of the CGST Rules, 2017 led to a revised DGAP report concluding no contravention of Section 171. The complainants reliance on a prior confirmation by the respondent and assertions of inconsistency in earlier calculations were examined and rejected as not creating a legal right to ITC benefit where the price was fixed after availability of post-GST ITC.

Conclusion: The respondent did not contravene Section 171 of the Central Goods and Services Tax Act, 2017; the DGAP report dated 03.02.2025 is accepted and the objections of the complainant are rejected.

Ratio Decidendi: Where the price of a flat booked and fixed in the post-GST period reflects input tax credit available to the builder in the post-GST period, no benefit of such input tax credit is available to the purchaser under Section 171 of the CGST Act, 2017 for the purpose of claiming profiteering.

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