TaxTMI 
TaxTMI 
2025 (10) TMI 1247
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....9(6) of the CGST Rules, 2017. 3. Subsequently, upon consideration of the principles of law enunciated by the Hon'ble High Court of Delhi in Writ Petition No. 7743/2019 and connected matters (Reckitt Benckiser India Pvt. Ltd. v. Union of India & Ors.), decided on 29.01.2024, wherein the methodology adopted by the NAA and DGAP for real estate cases was extensively reviewed, the Commission directed DGAP to carry out re-investigation of the present matter. The relevant part of the Hon'ble Delhi High Court's judgment dated 29.01.2024 in W.P. (C) No. 7743/2019 and connected matters, which have a direct bearing on the method of computation of profiteering in real estate matters is reproduced here: (i) Para 124. NO FIXED/UNIFORM METHOD OR MATHEMATICAL FORMULA CAN BE LAID DOWN FOR DETERMINING PROFITEERING This Court is of the view that no fixed/uniform method or mathematical formula can be laid down for determining profiteering as the facts of each case and each industry may be different. The determination of the profiteered amount has to be computed by taking into account the relevant and peculiar facts of each case. There is 'no one size that fits all' formula or m....
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....redit which has become available to the builder in the post Goods and Services Tax period and which was not available to him in the pre Goods and Services Tax. Further, the Hon'ble Delhi High Court, vide Para 129 of its Order 29.01.2024 observed that: "However, this Court finds that methodology adopted by NAA and DGAP to arrive at profiteering amount of the real estate industry was generally based on the difference between the ratio of Input Tax Credit to Turnover under the pre-GST and post-GST period. This Court is in agreement with the contention of the learned counsel of the Petitioners representing the real estate companies that the methodology adopted by NAA is flawed as in the real estate sector there is no direct correlation between the turnover and the ITC availed for a particular period The expenses in a real estate project are not uniform throughout the life cycle of the project and the eligibility of credit depends on the nature of the construction activity undertaken during the particular period. As it is an admitted position that neither the advances received nor the construction activity is uniform throughout the life cycle of the project, the accrual ....
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....issible, explaining the absence of such records. 6.3 DGAP found that the Noticee continued to avail input tax credit after the receipt of Occupation Certificate also, the period covered by the current investigation for calculation of profiteered amount is from 01.07.2017 to 31.03.2024. 6.4 The current investigation covers the period from 01.07.2017 to 31.03.2024 regarding computation of alleged profiteering. Prior to GST implementation, the Respondent was eligible to avail CENVAT credit on service tax paid but not on central excise duty as per the then prevailing CENVAT Credit Rules, 2004. Post-GST, the Respondent availed Input Tax Credit (ITC) on GST paid on inputs and input services. 6.5 From the information submitted by the Noticee for the period April, 2012 to March, 2024, the details of the input tax credit availed by them, their purchase value of Goods and Services (Purchase Value) of the project "SKYON" and the ratio of input tax credit to the purchase value of Goods and Services, during the pre-GST (April, 2012 to June, 2017) and post-GST (July, 2017 to March, 2024) periods were calculated and are furnished in table-'A' below Table-'A' (Amount in Rs) Sr.No....
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....ing in this project. 7. Project Name-"Ireo City Central" and "Managed Service Apartment" 7.1 The Respondent has informed that the projects "Ireo City Central" and "Managed Service Apartment" are not distinct but jointly constructed and developed under a single commercial license with a single contractor. The former project was launched in June 2012 and has received the Occupancy Certificate, whereas the latter project launched in February 2012 is yet to receive the same. 7.2 The current investigation covers the period from 01.07.2017 to 31.03.2024 regarding computation of alleged profiteering. Prior to GST implementation, the Respondent was eligible to avail CENVAT credit on service tax paid but not on central excise duty as per the then prevailing CENVAT Credit Rules, 2004. Post-GST, the Respondent availed Input Tax Credit (ITC) on GST paid on inputs and input services. 7.3 From the information submitted by the Noticee for the period April, 2012 to March, 2024, the details of the input tax credit availed by them, their purchase value of Goods and Services (Purchase Value) of the project "Ireo City Central" and "Managed Service Apartment" and the ratio of input tax cred....