Anti-profiteering timelines are directory, GST on excess recovery is refundable, and interest and penalty follow under the CGST framework.

The anti-profiteering referral timeline under Rule 128 was treated as directory, so delay in the Standing Committee's reference did not vitiate the proceedings. The profiteered amount was held to include GST collected on the higher realization from homebuyers, because restitution had to restore buyers to the position they would have occupied had the ITC benefit been passed on timely. Interest at 18% per annum was held recoverable from each date of excess collection until refund, and penalty under Section 171(3A) was attracted for contravention continuing after 01.01.2020, subject to the statutory proviso on timely deposit.

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Issues: (i) Whether the reference made by the Standing Committee to the DGAP on 28.06.2019 was barred by limitation under Rule 128 of the CGST Rules, 2017 and whether such delay vitiated the proceedings; (ii) Whether GST at 12% on the profiteered amount was liable to be included in the amount to be passed on to the eligible homebuyers; (iii) Whether the Respondent was liable to pay interest on the profiteered amount under Rule 133(3)(b) of the CGST Rules, 2017 and from which date; (iv) Whether penalty under Section 171(3A) of the CGST Act, 2017 was attracted.

Issue (i): Whether the reference made by the Standing Committee to the DGAP on 28.06.2019 was barred by limitation under Rule 128 of the CGST Rules, 2017 and whether such delay vitiated the proceedings.

Analysis: The prescribed timeline under Rule 128 was held to be directory and not mandatory. The anti-profiteering regime was treated as beneficial legislation meant to protect consumers, and procedural delay by the statutory authority, in the absence of any stipulated consequence, could not defeat substantive rights. Reliance was placed on the principle that statutory timelines for performance of public duties are often directory where no consequence for non-compliance is provided.

Conclusion: The objection on limitation was rejected and the proceedings were held not to be vitiated.

Issue (ii): Whether GST at 12% on the profiteered amount was liable to be included in the amount to be passed on to the eligible homebuyers.

Analysis: The profiteered amount formed part of the consideration collected from the homebuyers, and the GST component was recovered on the higher price resulting from non-passing of the ITC benefit. The amount to be restituted was therefore required to include the GST collected on the additional realization, so that the buyers were restored to the position they would have occupied had the benefit been passed on at the correct time.

Conclusion: The GST component was rightly included in the profiteered amount and was held refundable to the eligible homebuyers.

Issue (iii): Whether the Respondent was liable to pay interest on the profiteered amount under Rule 133(3)(b) of the CGST Rules, 2017 and from which date.

Analysis: The power to levy interest was treated as flowing from the width of Section 171 of the CGST Act, 2017, and Rule 133(3)(b) was held to be a valid enabling provision. The interest provision was found to have existed in the applicable rules prior to 28.06.2019, and Notification No. 31/2019-Central Tax was held not to have introduced it for the first time. Interest at 18% per annum was therefore payable from the respective dates when the higher amount was collected from each homebuyer until actual refund.

Conclusion: The Respondent was held liable to pay interest at 18% per annum from the date of collection of the higher amount till refund.

Issue (iv): Whether penalty under Section 171(3A) of the CGST Act, 2017 was attracted.

Analysis: Section 171(3A) came into force on 01.01.2020, and the contravention period in the present case extended beyond that date. Penalty was therefore attracted for the post-01.01.2020 period. The proviso permitting avoidance of penalty upon deposit of the profiteered amount within thirty days was noted.

Conclusion: The Respondent was held liable to penalty under Section 171(3A), subject to the statutory proviso regarding timely deposit.

Final Conclusion: The investigation report was accepted, the profiteering determination was affirmed, and the Respondent was directed to refund the profiteered amount with interest and face the consequential penalty under the anti-profiteering framework.

Ratio Decidendi: Under the CGST anti-profiteering framework, procedural timelines in the referral process are directory, the profiteered amount may include GST collected on the higher realization, interest is recoverable from the date of collection of the excess amount, and penalty applies for contravention occurring after the commencement of Section 171(3A).

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