GST anti-profiteering analysis confirms additional input tax credit must be passed on to homebuyers, with interest and penalty exposure.

Under GST anti-profiteering rules, the additional input tax credit available on introduction of GST was examined against pre-GST and post-GST construction costs to assess whether the benefit was passed on to homebuyers through reduced prices. The revised methodology accepted the inclusion of input services credit, and email denials by some buyers did not outweigh accounting records, ledgers and credit notes. The analysis also confirms that profiteered amounts are buyer-specific, cannot be cross-adjusted between buyers, include the GST component collected, and may carry interest; penalty applies where the contravention continues beyond the relevant penalty provision.

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Issues: (i) whether the respondent derived additional benefit of Input Tax Credit on introduction of GST and whether such benefit was passed on to homebuyers by commensurate reduction in prices; (ii) whether the respondent was liable to return the balance profiteered amount along with interest and GST, and whether penalty was attracted.

Issue (i): whether the respondent derived additional benefit of Input Tax Credit on introduction of GST and whether such benefit was passed on to homebuyers by commensurate reduction in prices.

Analysis: The respondent became entitled under GST to avail Input Tax Credit on both goods and input services, and the comparison of pre-GST and post-GST ITC to construction cost showed additional benefit. The methodology adopted by the DGAP on remand was found to be appropriate. Exclusion of service-related ITC was rejected. Denial by some buyers through email did not outweigh books of account, customer ledgers and credit notes. Contemporaneous pricing records also showed that the expected ITC benefit had been factored into sale prices in some cases, but not to the extent required under the anti-profiteering framework.

Conclusion: The respondent derived additional ITC benefit and did not fully pass it on; the revised computation of profiteering was upheld.

Issue (ii): whether the respondent was liable to return the balance profiteered amount along with interest and GST, and whether penalty was attracted.

Analysis: The balance profiteered amount was determined on the basis of revised computation, and excess benefit passed on to some buyers could not be adjusted against shortfall of others because entitlement under the anti-profiteering provision is buyer-specific. The profiteered amount was held to be inclusive of the corresponding GST component collected from buyers, and the recipient was entitled to restitution of the excess realisation with interest. Since the period of contravention extended beyond the commencement of the penalty provision, penalty was held to be attracted.

Conclusion: The respondent was directed to pass on the balance profiteered amount with GST and interest, and penalty was held to be attracted.

Final Conclusion: The respondent was found to have profited from unreduced prices after GST, the revised profiteering computation was accepted, and restitution with interest was ordered to the eligible homebuyers.

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