AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 203
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....ee Park Dwarka Krishna Phase-II'. 2. The Complainant has alleged that the Respondent did not pass on the benefit of Input Tax Credit (For short 'ITC') to the Complainant by way of commensurate reduction in the prices on purchase of Flat No. Willows 1040 in the above referred project on the introduction of GST w.e.f. 01.07.2017, in terms of Section 171 of Central Goods & Services Act, 2017, (hereinafter referred as to 'CGST Act, 2017'). 3. The complaint was examined by the Standing Committee on Anti-Profiteering and same was forwarded to Director General of Anti-Profiteering (hereinafter referred to as 'the DGAP') under Rule 129(1) of the CGST Rules, 2017 for detailed investigation. 4. The investigation was set into motion by the DGAP. Notice was issued to the Respondent calling upon to show cause whether the benefit of the ITC had been passed on to the consumers by way of commensurate reduction in prices, and if so, to suo-moto determine the quantum thereof. 5. Upon completion of the investigation, the DGAP submitted its report dated 23.03.2020 to the National Anti-Profiteering Authority (For short 'the NAA'), the erstwhile authority. This report was challenged by the R....
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....) 1. Purchase Value of Goods and Services (Excluding Taxes and Duties) 62,40,70,289 102,62,63,862 2. Credit of Service Tax availed 4,25,44,214 - 3. Credit of VAT availed - - 4. Total Credit Availed in Pre-GST Period 4,25,44,214 - 5. Net ITC of GST Availed - 3,42,78,735 6. Ratio of Credit Availed to Purchase Value (in%) 6.81% 3.34% Difference ( -3.47%) 12. The DGAP also considered that the Respondent had claimed that they had already passed on benefit of Rs. 62,53,926/- to their homebuyers through credit notes. However, since DGAP had already concluded that no benefit accrued to the Respondent (as shown in the above table), the DGAP did not verify the correctness of this claim. Proceedings before this Tribunal:- 13. The Principal Bench of the GST Appellate Tribunal (GSTAT), constituted under sub-section (3) of section 109 of CGST Act, 2017, has been empowered to examine and to adjudicate Anti-Profiteering cases w.e.f. 01.10.2024, vide Notification No. 18/2024-Central Tax dated 30.09.2024. 14. A notice was issued to the Complainant calling upon his objections against the DGAP report dated 08.01.....
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....the DGAP's own reports. In the report of 2020, it was computed that additional ITC benefit was 9.07% while in 2025 it declined to -3.47%. The DGAP did not cross check the purchase value as stated by the Respondent, rather it accepted all figures without independent verification. (viii) Invoices for Bill No. 3, 4 & 5 and dated 29.01.2018, 22.03.2018, 19.02.2019 respectively explicitly state 'ITC benefit not passed on'. It reflects that the Respondent acknowledged that ITC benefit was accrued. (ix) The DGAP did not compute per sq. ft. benefit correctly in consonance with the judgment of the Hon'ble High Court of Delhi. 16. Per contra, the Respondent submitted its detailed written submission against the objections filed by the Complainant which are summarised hereunder:- (a) The Respondent is engaged in Real Estate business. It has developed a township project known as Raintree Park, Dwarka Krishna in Guntur. The project consisted of 632 apartments. For Phase-II of the project, OC was received on 30.03.2019. For construction and development of the building, the Respondent engaged IJM Infrastructure as an engineering, Procurement and construction contracto....
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....ase value requires no response from the Respondent as it was under the domain of the DGAP to adopt the methodology to determine total savings on account of introduction of GST. (i) The objection made by the Complainant regarding the reversal of ITC is factually incorrect. The DGAP has correctly considered reversal of the ITC of Rs. 15,04,41,109/- from GSTR-9 of the financial year 2019-20 instead of ITC reversal of Rs. 16,69,36,170/- as submitted by the Respondent related to Phase-II of Raintree Park. The DGAP has followed the observations made by the Hon'ble High Court of Delhi, that savings on account of GST is required to be calculated for the entire project. (j) The reversal of the ITC on account of unsold units on the date of receipt of OC is considered for determining the savings on account of introduction of GST. (k) Insofar as the objection made by the Complainant regarding the investigation by the DGAP at the end of IJM Infrastructure is concerned, the Respondent was itself selling units to the homebuyers and IJM Infrastructure did not have any active role on accrual of benefit of additional ITC at the end of the Respondent. It is immaterial wheth....
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....nt of profiteering is to be attributed to the total area constructed to determine profiteering per sq. ft. (iii) The flats sold after the issuance of OC were kept out of the scope of the investigation as per paragraph 5 of Schedule III of the CGST Act. (iv) Insofar as the objection raised by the Complainant that the DGAP failed to examine IJM Infrastructure's ITC flow and pricing structure is concerned, it was found during the investigation that IJM Infrastructure was a contractor to the Respondent providing work contract services. It has no active role in accrual of benefit of additional ITC due to introduction of GST, as they are not retaining ITC to themselves nor they are selling the units to the homebuyers. Therefore, the objection raised by the Complainant is incorrect. (v) There is no inconsistency between the report dated 23.03.2020 and 08.01.2025 submitted by the DGAP since, the latter report is prepared on the basis of the observation made by Hon'ble High Court of Delhi in the Judgment of Reckitt Benckiser (Supra). (vi) The DGAP prepared its report on the basis of the data supplied by the Respondent which is verified and certified by a ....
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.... both supplied by him. Explanation 2. --For the purposes of this section, the expression "Authority" shall include the "Appellate Tribunal (3) The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed. (3A) Where the Authority referred to in sub-section (2), after holding examination as required under the said sub-section comes to the conclusion that any registered person has profiteered under sub-section (1), such person shall be liable to pay penalty equivalent to ten per cent. of the amount so profiteered: Provided that no penalty shall be leviable if the profiteered amount is deposited within thirty days of the date of passing of the order by the Authority. Explanation. -For the purposes of this section, the expression "profiteered" shall mean the amount determined on account of not passing the benefit of reduction in rate of tax on supply of goods or services or both or the benefit of input tax credit to the recipient by way of commensurate reduction in the price of the goods or services or both". 23. The provisions contained in Section 171 of the CGST Act mandates t....
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....rrors while arriving at the conclusion that the Respondent has not contravened Section 171 of the CGST Act, while in its earlier report dated 23.03.2020, it was concluded by the DGAP that the Respondent has indulged in the profiteering. Further, the Complainant was not satisfied with the computation of ratio of credit availed on purchase value (in percentage) during pre-GST and post-GST period. It is alleged the DGAP in the earlier report recorded additional ITC benefit of 9.7% to the Respondent and profiteered amount of 2,88,00,435/- whereas in the latest report, additional benefit of ITC reduced to -3.47% with Nil profiteered amount. The methodology of the DGAP of ITC percentage of purchase value method is defective. 28. The Hon'ble High Court of Delhi in Reckitt Benckiser (Supra) observed that no fixed/uniform method or mathematical formula can be laid down for determining profiteering. The Hon'ble Court observed that:- "124. 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 comp....
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....s on which Input Tax Credit was not available in the pre-Goods and Services Tax period viz. Central Excise Duty, Entry Tax etc. (b) If the construction of the flat had started in the pre-Goods and Services Tax period and continued/completed in the post-Goods and Services Tax period and a buyer purchased the flat by making full upfront payment in the post-Goods and Services Tax period he is entitled to the benefit of Input Tax Credit on the material which has been purchased in respect of this flat during the post-Goods and Services Tax period and on which benefit of Input Tax Credit has been availed by the builder. The builder has to reduce the price 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 the 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 ....
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....irect co-relation between the turnover and the ITC availed for a particular period as the expenses in a real estate project are not uniform throughout the life cycle of the project. The eligibility of credit depends on the nature of the construction activity undertaking during the particular period. For the purpose of computation of profiteering, one has to calculate the total saving on account of GST and divide such savings by total area to arrive at the per square feet benefit to be passed on to the recipient i.e. the homebuyers. 30. The learned counsel for the Respondent, through the written submission filed on behalf of the Respondent, elaborated the findings recorded by Hon'ble High Court of Delhi which are tabulated hereunder. It specifies the categories which are entitled to receive the benefit of profiteering in terms of Section 171 of the CGST Act. Clause of Para 128 Construction of the flat Payment of consideration by the buyers Whether entitled to the benefit of ITC a. Pre-GST period Pre-GST period No b. Started in pre-GST and completed in GST period GST period Yes, entitled to the benefit of ITC on the material purchased in GST per....
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.... and Services and Tax for each project and then divide the same by total area to arrive at the per square feet benefit to be passed on to each flat buyer. This would ensure that flat-buyers with equal square feet area received equal benefit. The Court, while hearing the present batch of matters on merits, shall take the aforesaid direction/interpretation into account." (Emphasis added) 33. As per the above methodology, the DGAP considered the data supplied by the Respondent which was duly certified and verified by the Chartered Accountant. On the basis of the comparative purchase value of goods and services during pre-GST and post-GST period, the credit of Service Tax and the net ITC of GST availed during pre and post GST era, the DGAP calculated the difference of ratio of credit availed to purchase value. The DGAP found that during pre-GST period, ratio of purchase value in (in %) was 6.81% and that during the post-GST period, it declined to 3.34%. Since the benefit available to the Respondent post introduction of GST declined by 3.47%, the DGAP concluded that the Respondent did not contravene provisions of Section 171 of the CGST Act. The claim of the Respondent that ....
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.... Vch Type Vch No. Debit Credit Brought Forward 53,01,522.00 51,30,537.00 19-8-2020 To Advance Maintenance Advance Maintenance for the unit Willows 0942 Being the entry for Advance Maintenance for the unit Willows 0942 Journal JV 08/20-09 27,166.00 By Interest on Overdue Int waiver for the unit Willows0942 Being entry for Int waiver for the unit Willows0942 Journal JV 08/20-10 26,139.00 To Interest on Overdue Int charged for the unit Willows0942 Being entry for Int charged for the unit Willows0942 Journal JV 08/20-11 26,139.00 To Vat Payable VAT Chgs for the unit Willows0942 Being entry for VAT Chgs for the unit Willows0942 Journal JV 08/20-12 20,704.00 By GST Anti-Profiteering GST Anti-Profiteering Ration Portion Transfer to customer A/C for Willows0942 Being the entry for GST Anti Profiteering Ration Portion Transfer to customer A/C for Willows0942 Journal JV 08/20-13 64,257.00 38. During the course of investigation, in order to verify the Respondent's claim of having passed on ITC benefit amounting to Rs. 61,08,682/....
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....flow of ITC from the EPC contractor. 45. The objection of the Complainant regarding narrowing of the scope of investigation by the DGAP by confining it to only 107 units out of 632 units is found to be unjustifiable and erroneous. This fact is not controverted by the Complainant that out of total 632 units in Phase II, 132 units were sold before the issuance of OC. 400 units were booked after the issuance of OC. 100 units remain unsold. Out of 132 units 25 units were cancelled by respective homebuyers. Thus, 525 units (400 after OC + 100 unsold + 25 cancelled) were kept out of the purview of the investigation by the DGAP. 46. The DGAP had taken into consideration the saleable area of 1,44,158 Sq. Ft. relating to 107 units which were sold before issuance of OC. The Learned Representative of the DGAP submitted that the calculation of the difference of the ratio of credit availed to purchase value (in %) has been computed only for these 107 units. 47. The learned representative of the DGAP submitted ITC pertaining to the residential units which were unsold on the date of issuance of OC (i.e. 525 units) is required to be reversed by the Respondent as per Para 5 of Schedule III....
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....ed blended reduced figure by unfairly reducing it to Rs. 3,42,78,735/-. 53. The DGAP examined the relevant documents along with the certificate given by the Chartered Accountant (CA) and the GSTR-9 of the Respondent for FY 2019-20. According to CA certificate, the Respondent had availed ITC of Rs.18,47,19,844 during July 2017 to FY 2019-20. As per the letter dated 13.09.2024, ITC reversed during this period is Rs. 16,69,36,170/- whereas as per GSTR-9, it was Rs. 15,04,41,109/-. The DGAP had considered reversal figure as Rs 3,42,78,735/- for the entire project for FY 2019-20 as the OC of the project was received in FY 2019-20. 54. Sri Dhruv Tiwari, learned counsel who is assisted by Sri Shivam Batra, Advocate, impressed upon the findings given by Hon'ble High Court of Delhi in para 129 of its judgement passed in Reckitt Benckiser (Supra). It is submitted that Hon'ble High Court of Delhi has held that savings on account of GST is required to be calculated for the entire project. 55. We are in agreement with the submissions made by the learned counsel for the Respondent. The findings of the Hon'ble High Court make it clear that the value of total ITC available to the builder ....
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....n view of the findings of the Hon'ble High Court of Delhi, we are of the view that the outcome of the DGAP's earlier report dated 23.03.2020 and present report was bound to be different and inconsistent due to adoption of different methodology altogether. However, we are of also of the view that such inconsistency does not adversely affect the conclusion of the DGAP that there has been no contravention of Section 171 of the CGST Act by the Respondent. The objection of the Complainant on this count cannot be accepted. 63. The Complainant has further contended that the DGAP prepared its report on the basis of selective and incomplete data supplied by the Respondent, and that the figures furnished by the Respondent were accepted without independent verification. 64. The learned representative of the DGAP has strongly refuted this contention. He submitted that the report was prepared on the basis of data provided by the Respondent, which was duly verified and certified by a Chartered Accountant. In addition, the GSTR‑9 returns filed by the Respondent were also taken into consideration. 65. Per contra, learned counsel for the Respondent submitted that the report of the DG....