TaxTMI 
TaxTMI 
2026 (1) TMI 1057
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.... now operating as Arkade Developers Limited, by way of not passing on the benefit of input tax credit through commensurate reduction in price in the Respondent's project "Arkade Earth - Bluebell," Mumbai, in alleged contravention of Section 171 of the CGST Act, 2017. 2. The Standing Committee on Anti-Profiteering, having examined the Applicant's complaint under Rule 128 of the CGST Rules, in its meeting, formed the opinion that a prima facie case of profiteering existed. Consequently, the matter was referred to the Directorate General of Anti-Profiteering for detailed investigation to collect all necessary evidence to determine whether the benefit of input tax credit had been passed on by the Respondent to its customers. The DGAP accordingly initiated investigation and furnished its initial investigation report dated 31.01.2023, inter alia concluding that Section 171 of the CGST Act, 2017 had been contravened by the Respondent in the present case. 3. Subsequently, upon consideration of the principles of law enunciated by the Honourable High Court of Delhi in Writ Petition (Civil) No. 7743/2019 and connected matters, "Reckitt Benckiser India Pvt. Ltd. v. Union of India....
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....e commensurately and pass on the benefit. (c) If the construction of the flat is started in the pre Goods and Services Tax period and its construction was continued in the post Goods and Services Tax period and it was purchased by the consumer by paying the full amount of price upfront in the pre Goods and Services Tax period, the buyer is entitled to claim benefit of Input Tax Credit on the taxes paid on the construction material purchased by the builder in the post Goods and Services Tax period during which he has been given benefit of Input Tax Credit on the taxes on which Input Tax Credit was not available in the pre Goods and Services Tax and cost of such taxes has been built in the price of the flat by the builder. (d) If the flat is constructed in the post Goods and Services Tax period and it is purchased after construction being complete by making upfront payment of the full price, no benefit of Input Tax Credit would be available as the price of the flat would have been fixed after taking into account the Input Tax Credit 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....
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....tion furnished by the Applicant during the period 01.05.2024 to 02.05.2024, though such opportunity was not availed by the Respondent. Similarly, the Co-Respondent was provided the same opportunity, which was not availed. 5. In response to the Notice dated 15.04.2024, the Respondent, vide multiple letters and email communications dated 06.05.2024, 15.05.2024, 04.06.2024, 18.06.2024, 03.07.2024, 13.11.2024, 21.11.2024, and 02.12.2024, submitted comprehensive documentary evidence and information, including: (i) GST Registration Certificate; (ii) GSTR-1, GSTR-3B, and GSTR-9 returns for the period July 2017 to March 2024; (iii) Tran-1 return filed for transitional credit; (iv) Electronic Credit Ledger records; (v) ST-3 returns and VAT returns for the pre-GST period (April 2016 to June 2017); (vi) Certified project-specific CENVAT, VAT, and GST credit ledgers; (vii) Sale agreements for all customers in the project; (viii) Audited balance sheets and profit-and loss accounts for the financial years 2017-18 to 2022-23; (ix) Trial balances; (x) Architect's Certificates (Form-1) dated 31.03.2018;....
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....ereby confirming that the ITC benefit had already been passed on through commensurate price adjustments duly acknowledged by the buyers. Consequently, the investigation has been confined to the Applicant's unit and these 56 other post-GST buyers solely for computation purposes, though no contravention arises for the latter due to the aforesaid contractual passing-on of benefits. The investigation period has been determined to span from 01.07.2017 to 12.04.2021, being the date of issue of the Occupancy Certificate. 8. The DGAP, in strict compliance with Para 129 of the High Court's ruling, which explicitly rejects the ITC-to-turnover ratio methodology and mandates an area-based computation approach, has adopted a project-wise methodology focusing on the ratio of Input Tax Credit to total purchase value, rather than turnover. Based on Chartered Accountant-certified project-specific financial data submitted by the Respondent, the DGAP has extracted and verified the following figures: 8.1 Pre-GST Period (April 2016 to June 2017) • CENVAT credit availed by the Respondent: Rs. 11,71,694/- • VAT input tax credit availed: Nil (Respondent was register....
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....me as per Notification No. 11/2017-Central Tax Rate dated 28.06.2017): Rs. 14,751/- • Total profiteered amount: Rs. 1,37,672/- (Rupees One Lakh Thirty-Seven Thousand Six Hundred Seventy- Two only) This computation stands mathematically unassailed and has been fully accepted by the Respondent in its written reply dated 03.12.2025. 9. Significantly, it stands recorded at Para 26 of the DGAP's report that, before concluding the investigation, the Respondent categorically informed the DGAP that it had already passed on the computed ITC benefit to the Applicant. In support of this assertion, the Respondent submitted: (i) Cheque No. 611785 dated 06.08.2021 drawn on Union Bank of India for a sum of Rs. 1,40,732/-, transferred as the benefit of GST Input Tax Credit to the Applicant; (ii) Copy of the Respondent's bank statement (entry dated 19.10.2021) reflecting and confirming the credit entry and fund transfer; and (iii) Signed acknowledgement letter from the Applicant evidencing receipt and encashment of the said cheque. The DGAP has verified and authenticated all these documentary proofs in the presence of the Respondent. 10. Nota....