2026 (2) TMI 1069 - AT - GST

Input tax credit pass-through: failure to remit quantified ITC benefit requires refund to recipients with interest and statutory penalty.

Failure to pass on the benefit of input tax credit for specified projects was found to create an enforceable liability: the quantified profiteered amount ... Profiteering u/s 171 - identifiability of recipients for distribution of profiteered amount - recalculation of base price by adjusting additional input tax credit - liability to pay interest under Rule 133(3)(b) of the CGST Rules, 2017 - penalty u/s 171(3A) of the CGST Act, 2017 - Profiteering under Section 171 of the CGST Act, 2017 - HELD THAT:- Tribunal finds that the Respondent vide its email dated13.10.2025 has accepted the profiteered amount calculated by the DGAP in its report. Further, the Applicants namely Shri Lalit Tyagi, Shri Amarendra Pratap Singh, and Shri Akhilesh Kumar Singh have submitted applications seeking withdrawal of their complaints vide their letters attached to emails dated 11.02.2026 wherein they have submitted that “no benefit, monetary or otherwise, including any alleged benefit of ITC under GST laws (Section 171 of the CGST Act, 2017), remains outstanding or accrued in our favour from the Respondent Company”. Thus, the tribunal is of the view that the Respondent has profiteered by an amount of Rs. 98,72,474/- which needs to be passed on to home buyers. Further, as per Rule 133(3)(b) of the Central Goods and Services Tax Rules, 2017, the Respondent is liable to pay interest as applicable to Applicant. The Respondent shall pay the profiteered amount of Rs. 98,72,474/- to the homebuyers along with applicable interest within 30 days and submit compliance report to the jurisdictional CGST/SGST Commissioner with intimation to the DGAP within 2 months. Penalty u/s 171(3A) of the CGST Act, 2017 - HELD THAT:- Penalty under Section 171(3A) of the CGST Act is concerned, the said provision came into force w.e.f. 01.01.2020, and as the period of contravention in the present case is from 01.07.2017 to 31.03.2024. therefore, penalty is leviable as per Section 171(3A) of the CGST Act. The case is disposed of, accordingly. Issues: Whether the Respondent has profiteered by failing to pass on benefit of input tax credit to recipients for the period 01.07.2017 to 31.03.2024, and if so, whether the Respondent is liable to refund the profiteered amount with applicable interest and liable to penalty under Section 171(3A) of the Central Goods and Services Tax Act, 2017.Analysis: The Tribunal considered the DGAP investigation report prepared under Section 171 of the Central Goods and Services Tax Act, 2017 read with Rule 129 of the Central Goods and Services Tax Rules, 2017 which computed additional benefit from increased input tax credit for three projects (Pebbles, Hynish Tower-10 and Greens) and quantified aggregate profiteering. The Respondent accepted the DGAP-calculated amounts in its communication. The Tribunal noted the identifiability of recipients on the record and applied Rule 133(3)(b) of the Central Goods and Services Tax Rules, 2017 for interest liability. The Tribunal also noted that Section 171(3A) of the CGST Act, 2017 (effective from 01.01.2020) prescribes penalty equivalent to ten percent of the amount profiteered unless the amount is deposited within thirty days of the order.Conclusion: The Tribunal held that the Respondent has profiteered to the extent quantified by the DGAP report (aggregate profiteered amount Rs. 98,72,474/- including GST) and is liable to pay the profiteered amount to the eligible homebuyers along with applicable interest; penalty is leviable under Section 171(3A) of the Central Goods and Services Tax Act, 2017 in accordance with its terms.Ratio Decidendi: Failure to pass on the benefit of input tax credit as mandated under Section 171 of the Central Goods and Services Tax Act, 2017 results in an enforceable liability to refund the quantified profiteered amount to identifiable recipients with applicable interest under Rule 133(3)(b) of the Central Goods and Services Tax Rules, 2017 and attracts penalty under Section 171(3A) of the Central Goods and Services Tax Act, 2017.