2026 (2) TMI 381 - AT - GST

Profiteering under GST: re-investigation ordered to verify passing of input tax credit benefit and time-bar issues.

Profiteering under GST is examined for whether input tax credit (ITC) benefits were passed to buyers by commensurate reduction in price; the alleged ... Profiteering u/s 171 - benefit of Input Tax Credit passed to recipients by way of commensurate reduction in price - re-investigation under Rule 133(4) of the CGST Rules, 2017 - time-bar / limitation contentions under Sections 73 and 74 - HELD THAT:- It is to be noted that the Respondent had participated in the investigation process, therefore, this fact that a benefit of Rs. 173/- has been passed to the Complainant and the other Villa buyers need to be verified on the basis of examining the relevant documents to be produced by the Respondent. The matter requires further investigation by the DGAP on the basis of the data supplied by the Respondent in his Written Statement. Respondent vehemently argued that the entire proceedings are manifestly time-barred. The transaction occurred in 2017-2019, but the complaint and investigation commenced in 2024-2025. In its Written Statement, the Respondent submitted applicable time limit under Section 73 and 74 during the financial year 2017-2018, 2018-2019 and it is shown to be lapsed on the part of the DGAP. The matter requires further investigation in view of the Written Submission and the data demonstrated through different tables in it. Further this fact is to be examined extensively as to whether against the profiteered amount Rs 32.78 per sq ft. The amount of Rs. 173/- alleged to have been passed by the Respondent can be termed as the benefit of Input Tax Credit to the complainant and other home buyers by way of commensurate reduction in prices. The matter is sent back to the DGAP for re-investigation under Section 133 of the CGST Rules, 2017 to examine as to whether the Respondent has already passed the benefit of ITC to the Respondent commensurately to the reduction of rate of tax. The matter is sent back to the DGAP for further investigation under Rule 133(4). Issues: (i) Whether the Respondent has passed on the benefit of Input Tax Credit (ITC) to the complainant and other buyers by way of commensurate reduction in price in terms of Section 171 of the CGST Act, 2017; (ii) Whether the proceedings/investigation by the DGAP are time-barred.Issue (i): Whether the Respondent has passed on the benefit of Input Tax Credit to the complainant and other buyers by commensurate reduction in price.Analysis: The Tribunal considered the DGAP investigation findings that showed a difference in credit ratios pre- and post-GST and an initial calculation of alleged profiteering. The Respondent produced tables and submissions claiming a demonstrable reduction in price and a passed-on benefit higher than the DGAP calculation, but those documents were not part of the original DGAP report and require verification. The Tribunal found that the asserted benefit of Rs. 173 per sq. ft. needs documentary examination and reconciliation with the investigation record.Conclusion: No final determination on whether ITC benefit was passed on; the matter is remanded to the DGAP for re-investigation under Rule 133(4) of the CGST Rules, 2017 to verify and quantify whether the Respondent has passed on the ITC benefit commensurately.Issue (ii): Whether the DGAP proceedings are time-barred.Analysis: The Tribunal noted the Respondent's contention regarding limitation under Sections 73 and 74 and the temporal span of transactions (2017-2019) vis-a-vis the initiation of proceedings (2024). The Tribunal observed that the limitation contentions and relevant time-bar calculations were raised in the Written Statement and were not finally resolved during the hearing, and that these issues require further factual and legal examination during re-investigation.Conclusion: No final finding on time-bar; limitation raised by the Respondent is to be examined afresh by the DGAP during the re-investigation.Final Conclusion: The Tribunal has remitted the matter to the DGAP for further investigation under Rule 133(4) of the CGST Rules, 2017 to verify the Respondent's documentary claims regarding passed-on ITC benefit and to examine limitation issues; no substantive fiscal determination has been made by the Tribunal.Ratio Decidendi: Where a respondent produces material not considered in the original investigation raising doubts about the DGAP's profiteering calculation or limitation, the appropriate course is to remit the matter to the DGAP under Rule 133(4) for re-investigation and verification rather than to record a final substantive finding.