Anti-profiteering under GST: ITC benefit must be passed on through commensurate price reduction, with interest on retained sums.

In an anti-profiteering matter under Section 171 of the CGST Act, the Tribunal applied a project-wise, area-based computation to hold that the benefit of input tax credit had not been passed on to homebuyers by commensurate price reduction. It relied on the DGAP's reinvestigation and the supplier's prior admissions to conclude that post-GST ITC savings were retained as profiteering. The Tribunal further held that GST collected on the higher price formed part of the additional realisation and was payable to the affected homebuyers along with the quantified profiteered amount. Interest at 18% was also directed from the date of each buyer's last instalment.

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Issues: (i) Whether the respondent had profiteered by not passing on the benefit of input tax credit to homebuyers by commensurate reduction in the price of flats; (ii) whether the respondent was liable to pay the profiteered amount together with GST on the additional realisation; (iii) whether interest was payable on the determined amount.

Issue (i): Whether the respondent had profiteered by not passing on the benefit of input tax credit to homebuyers by commensurate reduction in the price of flats

Analysis: The substantive framework under Section 171 of the Central Goods and Services Tax Act, 2017 requires passing on any tax reduction or input tax credit benefit to recipients by way of commensurate price reduction. The Tribunal relied on the DGAP's reinvestigation, the project-wise and area-based computation, and the respondent's own admissions made in prior proceedings that ITC benefit had not been passed on in the pre-GST and post-GST comparison. The Tribunal accepted that the post-GST savings in ITC, measured against total purchase value and apportioned over total sold area, established profiteering on a per square foot basis.

Conclusion: The respondent was held to have profiteered an amount of Rs. 2,07,08,131/-.

Issue (ii): Whether the respondent was liable to pay the profiteered amount together with GST on the additional realisation

Analysis: The Tribunal applied the principle that GST collected on the higher price formed part of the additional realisation retained by the supplier and could not be appropriated contrary to the consumer-protection object of Section 171. On that basis, GST at the applicable rate was added to the profiteered amount to arrive at the total sum payable to the homebuyers.

Conclusion: The respondent was held liable to pay Rs. 2,31,93,107/- in aggregate, including GST on the additional realisation.

Issue (iii): Whether interest was payable on the determined amount

Analysis: Once profiteering and the total amount payable were determined, the Tribunal directed payment of interest at 18% from the date of each homebuyer's last instalment on the amount attributable to that buyer, in accordance with the statutory framework governing restitution of profiteered sums.

Conclusion: Interest at 18% was held payable on the determined amount from the relevant dates of payment.

Final Conclusion: The complaint of non-passing of ITC benefit was upheld, the profiteered amount was quantified on a project-wide, area-linked basis, and the respondent was directed to refund the quantified sum with applicable interest to the affected homebuyers.

Ratio Decidendi: In anti-profiteering matters under Section 171 of the CGST Act, 2017, the benefit of ITC must be passed on on a fair, project-specific and area-based basis, and judicial admissions by the supplier can conclusively establish profiteering when supported by the computation of post-GST savings.

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