TaxTMI 
TaxTMI 
2026 (4) TMI 360
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.... Ajesh Kumar, C-601, Fakhruddin Memorial CGHS, Plot-18 Sector-10, Dwarka, New Delhi (for short 'the Complainants') alleging that M/s Sobha Limited, 5th Floor, Rider House, Plot No. 136-P, Sector-44, Gurugram-122 003 (for short 'the Respondent') has indulged in profiteering in contravention of Section 171 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as 'CGST Act') in respect of construction services supplied by the Respondent. 4. This application was examined by the Standing Committee on Anti-Profiteering. Upon being prima facie satisfied that the Respondent had not passed on the benefit of reduction in GST rate as mandated under Section 171 of the CGST Act, 2017 the Standing Committee referred the matter to the Director General of Anti-Profiteering (for short 'the DGAP') under Rule 129(1) of the Central Goods and Services Tax Rules, 2017 (for short 'CGST Rules') for detailed investigation. 5. The Complainants have alleged that the Respondent did not pass on the benefit of input tax credit (for short 'ITC') on introduction of GST with effect from 01.07.2017, by way of commensurate reduction in the prices of flat purchased by them in their project 'I....
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....ing a direction to the DGAP to furnish complete records supplied by the Respondent during the course of investigation. 11. Notice was issued to the Respondent to participate in the proceedings. 12. The Respondent filed preliminary objections challenging the maintainability of the present proceedings which are summarised hereunder: - (i) That the Complainants, through an application dated 17.06.2019, sought allotment from the Respondent for purchase of Duplex Villa No. E-61A. Upon due consideration and deliberation, the parties entered into a Builder and Buyer Agreement (for short 'BBA') on 08.07.2019. Accordingly, the contractual relationship between the parties stood established by virtue of the aforesaid agreement. (ii) That the prices were determined after factoring in the availability of ITC to the Respondent in the post-GST regime, which benefit was not available under the pre-GST regime. The Complainants had, at the relevant time, consented to and accepted the prices so fixed by the Respondent. (iii) That no construction was going on at the time of execution of the BBA. The construction activity could commence only after entering upon of the a....
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....d Counsel, appearing on behalf of the Respondent, vehemently argued that the Complainants have no cause of action and locus standi to agitate against the DGAP report. In support of his submission, he relied upon paragraph 128(d) of the decision rendered by Hon'ble High Court of Delhi in Reckitt Benckiser India Pvt. Ltd. (Supra). 15. Learned counsel for the Respondent has further emphasized upon the payment schedule (Annexure-IV) mutually agreed between the Respondent and the Complainants prior to execution of BBA on 08.07.2019. It was agreed that the transactions would be subject to GST at applicable rate of 12%, amounting to Rs. 41,72,668/- (Rs. 20,86,334/- CGST + Rs. 20,86,334/- SGST). The Complainants was, at all times, fully aware of the applicable rate of GST and total tax liability, as the same was agreed at the time of submission of the application itself. 16. Learned counsel for the Respondent further contended that the CGST Act came into force on 01.07.2017. The Complainants applied for allotment of Duplex Villa No. E-61A on 17.06.2019. Upon due deliberation and consideration of the said application, the parties entered into BBA on 08.07.2019. The entire payment was ....
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....here: - "128. There is not dispute with regard to the methodology to be adopted in the following four scenarios; - (a) If the flat was completely constructed in the Pre-Goods and Services Tax period i.e. before 01st July, 2017 and if it was purchased by making upfront payment of the whole price in the pre-Goods and Services Tax period no benefit of Input Tax Credit would be required to be passed on as the price will include the cost of taxes 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 constructio....
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....d after construction being completed by making upfront payment of the full price. Thus, the methodology for computation of profiteering in accordance with clause (d) of this paragraph may be adopted when the following two conditions are satisfied: (i) That the flat is constructed in post-GST period, and (ii) That the flat is purchased after construction being completed after making upfront payment of the full price. 24. In our opinion, the expression "the flat is constructed in the post-Goods and Service Tax period" by no means implies that the flat was already constructed or it was yet to be constructed. Similarly, the term "after making upfront payment of the full price" cannot be interpreted to mean that the entire payment should have been made in one go (in a single lumpsum). Ordinarily, when a new project is launched by a builder, the proposed buyer opts for "construction-linked plan" to facilitate ease of payment and to maintain their financial equilibrium. In ordinary course financing facilities are availed from the different banks or other financial institutions providing housing loan to the buyers. As the construction of the flat progresses, in accorda....
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....at: - "10. It is observed that section 171 of the CGST Act, 2017 applies only in cases involving reduction in tax rate or increase in ITC, particularly in projects spanning pre-GST and post-GST periods. Since the impugned project commenced wholly in the post-GST regime there is no comparative ITC benefit arising for passing on. 11. Reliance placed on Paragraph 128(d) of the Judgment dated 29.01.2024 of the Hon'ble Delhi High Court wherein it had been held that no benefit of ITC is required to be passed on where both construction and supply take place entirely post-GST period." 30. Having considered the DGAP report, preliminary objections, reply submitted by the Complainants and rival contentions of the parties, we arrive at the conclusion that the preliminary objections raised by learned counsel for the Respondent deserve to be accepted. Since the entire activity had undertaken from in post-GST period, therefore, the case of the Respondent is fully covered with the preposition as laid down in paragraph 128 (d) of the decision. Resultantly, no benefit of ITC would be available to the Complainants as the price of the flat had been fixed after taking into account ....