GST anti-profiteering requires passing on additional input tax credit, with refund, interest, and penalty when benefit is retained.

Additional input tax credit under GST must be passed on through a commensurate reduction in price; where the benefit is not passed on, the amount is treated as profiteering and is recoverable with interest. The material described in the note indicates that the post-GST input tax credit ratio increased, the benefit was not transmitted to homebuyers, and the quantified profiteered amount was therefore liable to refund with interest at 18% per annum. The note also states that penalty under Section 171(3A) applies where the contravention falls within the provision's operative period, subject to the statutory saving for timely deposit.

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Issues: (i) Whether the respondent derived the benefit of additional input tax credit after the introduction of GST and whether such benefit was passed on to the homebuyers in terms of Section 171 of the Central Goods and Services Tax Act, 2017; (ii) whether the respondent is liable to refund the profiteered amount along with interest; (iii) whether penalty under Section 171(3A) of the Central Goods and Services Tax Act, 2017 is attracted.

Issue (i): Whether the respondent derived the benefit of additional input tax credit after the introduction of GST and whether such benefit was passed on to the homebuyers in terms of Section 171 of the Central Goods and Services Tax Act, 2017.

Analysis: The investigation showed an increase in the ratio of input tax credit to purchase value in the post-GST period as compared to the pre-GST period. The respondent accepted the DGAP computation and agreed to refund the amount quantified in the report. The material on record established that the benefit of additional input tax credit was not passed on by way of commensurate reduction in price.

Conclusion: The issue was decided against the respondent and in favour of the Revenue.

Issue (ii): Whether the respondent is liable to refund the profiteered amount along with interest.

Analysis: Section 171 of the Central Goods and Services Tax Act, 2017 creates the obligation to pass on the benefit at the time of supply, and Rule 133(3)(b) of the Central Goods and Services Tax Rules, 2017 authorises return of the amount not passed on together with interest at 18% per annum from the date of collection until return. On the admitted facts, the quantified profiteered amount was required to be returned with interest.

Conclusion: The respondent was directed to refund the profiteered amount with interest at 18% per annum, against the respondent and in favour of the Revenue.

Issue (iii): Whether penalty under Section 171(3A) of the Central Goods and Services Tax Act, 2017 is attracted.

Analysis: The period of contravention covered the period after Section 171(3A) came into force, and the finding of profiteering brought the case within the penal provision. The provision contemplates penalty equivalent to ten per cent of the amount profiteered, subject to the statutory saving on timely deposit.

Conclusion: Penalty under Section 171(3A) of the Central Goods and Services Tax Act, 2017 was held to be leviable.

Final Conclusion: The Tribunal found profiteering on account of unrepassed additional input tax credit, ordered refund with interest, and held the penalty provision applicable.

Ratio Decidendi: Where additional input tax credit arises under GST and is not passed on by commensurate reduction in price, the supplier is liable to refund the profiteered amount with statutory interest, and penalty follows where the contravention falls within the penal provision's operative period.

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