Real-estate anti-profiteering uses project-specific credit-to-purchase comparisons, requiring commensurate price reductions and including GST on excess collections.
Real-estate anti-profiteering calculations may quantify additional input tax credit by comparing actual pre-GST credit and post-GST ITC with corresponding project purchase values, rather than turnover, where buyer receipts, construction activity and credit accrual do not align. The resulting project-level savings may be allocated across eligible sold area as a per-square-foot benefit and passed to buyers through commensurate price reductions. Pre-GST purchases and credits remain relevant despite a post-GST commencement certificate if certified records establish project nexus. GST collected on excess realisation forms part of the profiteered amount. Penalty exposure applies for conduct within the provision's effective period, subject to timely-deposit exemption.
Issues: (i) Whether the DGAP's methodology of comparing pre-GST credit and post-GST ITC against corresponding purchase values is legally and factually sustainable? (ii) Whether the Commencement Certificate dated 04.09.2017 precludes consideration of pre-GST purchase and credit data for determining additional ITC benefit? (iii) Whether the revised computation of profiteering based on the total project area, eligible sold area and per-square-foot benefit is factually and legally sustainable? (iv) Whether penalty under Section 171(3A) of the Central Goods and Services Tax Act, 2017 is attracted?
Issue (i): Whether the DGAP's methodology of comparing pre-GST credit and post-GST ITC against corresponding purchase values is legally and factually sustainable?
Analysis: Section 171 requires the benefit of additional input tax credit to be passed on through a commensurate reduction in price. A turnover-based methodology is unsuitable for real-estate projects because buyer receipts, construction activity and ITC accrual do not necessarily correspond during a project's life cycle. The purchase-value methodology instead used actual pre-GST Service Tax and VAT credit and actual post-GST ITC against the corresponding project expenditure, quantified the project-level savings, and distributed it as a per-square-foot benefit. This project-specific methodology had a rational nexus with the credit benefit to be quantified. The 1.70% incremental ITC benefit was derived from the assessee's own credit and purchase-value data.
Conclusion: The methodology and the 1.70% additional ITC benefit were accepted. Against the assessee.
Issue (ii): Whether the Commencement Certificate dated 04.09.2017 precludes consideration of pre-GST purchase and credit data for determining additional ITC benefit?
Analysis: The Commencement Certificate established the date of formal authorisation to commence construction, but did not by itself establish that no project-related goods or services were procured before GST. The pre-GST credit and purchase figures were drawn from certified statutory returns and records supplied by the assessee. No material established that those transactions lacked project nexus or related to another project.
Conclusion: The post-GST commencement date did not render the pre-GST purchase and credit data inadmissible or irrelevant for the Section 171 determination. Against the assessee.
Issue (iii): Whether the revised computation of profiteering based on the total project area, eligible sold area and per-square-foot benefit is factually and legally sustainable?
Analysis: The revised exercise was undertaken to address the discrepancy between the earlier project area and the area reflected in the Occupancy Certificate. Although the total built-up area included common facilities and could not automatically be equated with saleable area, the assessee did not furnish the directed detailed reconciliation. The revised computation consistently adopted total project area of 5,36,891 sq. ft. and eligible sold area of 3,34,570 sq. ft., yielding a per-square-foot benefit of Rs. 43.56 and a base profiteered amount of Rs. 1,45,73,861. GST collected on the excess realisation formed part of the profiteered amount.
Conclusion: The revised computation of Rs. 1,63,22,724 inclusive of GST was accepted. Against the assessee.
Issue (iv): Whether penalty under Section 171(3A) of the Central Goods and Services Tax Act, 2017 is attracted?
Analysis: The penalty provision came into force on 01.01.2020, and the investigation period extended beyond that date until 31.03.2023.
Conclusion: Penalty liability under Section 171(3A) arises, subject to the statutory exemption where the profiteered amount is deposited within thirty days. Against the assessee.
Final Conclusion: The project-specific additional ITC benefit is enforceable through commensurate price reduction and proportionate passing on to eligible homebuyers, together with applicable interest; GST collected on the excess realisation forms part of that benefit.
Ratio Decidendi: In a real-estate anti-profiteering determination, actual pre-GST credit and post-GST ITC may be compared against corresponding purchase values, rather than turnover, to quantify project-level savings and derive a per-square-foot benefit, provided the underlying transactions have a project nexus.