GST anti-profiteering under Section 171 turns on additional input tax credit, with GST, interest, and penalty consequences following.

Additional input tax credit under GST was treated as the decisive factor for anti-profiteering, and the benefit had to be passed on to homebuyers under Section 171 even if credit was unutilised or prices were fixed under a development agreement. The profiteered amount was computed as inclusive of GST because the consideration collected already included that component, and interest at 18% per annum was stated to follow mandatorily from the date of collection until return. Penalty under Section 171(3A) was also attracted because the contravention continued after that provision came into force, subject to the statutory proviso on timely deposit.

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

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

Analysis: The input tax credit to purchase value ratio increased from 8.25% in the pre-GST period to 14.00% in the post-GST period, showing an additional benefit of 5.75%. The benefit under Section 171 is to be computed on the availability of input tax credit and not on its actual utilisation. Accumulation of unutilised credit does not negate the statutory obligation to pass on the benefit. The plea that prices were fixed under a development agreement does not override the mandate of Section 171.

Conclusion: The respondent derived additional input tax credit benefit and failed to pass it on to the homebuyers. The issue is decided in favour of Revenue.

Issue (ii): Whether the profiteered amount is payable with GST and interest

Analysis: The profiteered amount was computed on the basis of consideration excluding GST, whereas the respondent had collected consideration inclusive of GST. The amount realised therefore included the GST component, and the profiteered sum was rightly taken as inclusive of GST. Rule 133(3)(b) empowers return of the amount not passed on along with interest at 18% per annum from the date of collection till actual return, and such interest is mandatory.

Conclusion: The GST component and interest were rightly made payable along with the profiteered amount. The issue is decided in favour of Revenue.

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

Analysis: Section 171(3A) came into force on 01.01.2020, and the period of contravention continued beyond that date. On a finding of profiteering under Section 171(1), penalty equivalent to ten per cent becomes attracted, subject to the statutory proviso regarding deposit within thirty days.

Conclusion: Penalty under Section 171(3A) is attracted. The issue is decided in favour of Revenue.

Final Conclusion: The respondent is liable to refund the profiteered amount with the corresponding GST component and interest, and penalty consequences also follow from the finding of profiteering.

Ratio Decidendi: For the purposes of anti-profiteering under Section 171, the decisive factor is the availability of additional input tax credit after GST, not its actual utilisation, and the profiteered amount may include the GST component collected on the enhanced realisation, with mandatory interest and statutory penalty where the contravention continues after the penal provision comes into force.

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