AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 1859
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....nant alleged that the Respondent did not pass on the benefit of Input Tax Credit (hereinafter referred to as "ITC") to the Complainant by way of commensurate reduction in the prices in respect of the purchase of Flat - K/28/1005 in the aforesaid project upon the introduction of GST w.e.f. 01.07.2017, in terms of Section 171 of the Central Goods and Services Tax Act, 2017, (hereinafter referred to as "CGST Act, 2017"). 3. The said complaint was examined by the Standing Committee on Anti-Profiteering in its meeting held on 08.05.2024, and the minutes of the said meeting were forwarded to the Directorate General of Anti-Profiteering (hereinafter referred to as "the DGAP") for a detailed investigation in respect of the application filed under Rule 129(1) of the CGST Rules, 2017. 4. Upon completion of the investigation, the DGAP submitted its Report dated 25.03.2025 to the Principal Bench, GSTAT, which has been summarized as follows: a. The DGAP conducted investigation for the period 01.04.2017 to 30.09.2024, as the Respondent had not opted for the scheme of payment of GST @ 5% without ITC w.e.f. 01.04.2019. b. The Respondent had opted for old scheme for discharg....
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.... @ 18% (effective rate 12% after 1/3rd abatement towards land value) on construction services vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. Accordingly, the Respondent was liable to pay GST @ 12% with ITC, and therefore, the additional ITC benefit was required to be passed on to the homebuyers. g. Based on the above findings, the DGAP has computed the amount of profiteering by applying the additional ITC benefit of 5.75% on the post-GST purchase value and apportioning the same on a per square foot basis, which is tabulated in Table-B below: Table-B Particulars Post-GST Period A July 2017 to 30.09.2024 Ratio of Credit availed to Purchase Value as per Table-A above (%) B 8.25% / 14.00% Increase in input tax credit availed Post-GST (%) C 5.75% Purchase Value of Goods and Services (Excluding Taxes and Duties) during Post-GST Period D 24,18,91,674/- Total savings on account of additional ITC benefit E= D*C/100 1,39,08,771/- Total saleable area (in Sq. Ft.) as per the list of buyers F 16,01,387 Total saving per Sq. Ft. G= E/F 8.69/- Total Sold Area (in Sq. Ft) H 15,34,201 ....
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....re, cannot be treated as a benefit for the purposes of Section 171 of the CGST Act, 2017. 7.4. It is further contended that only that portion of ITC which is utilized for discharge of output tax liability can be considered as a benefit, and mere availability of ITC in the books does not reduce the cost. Accordingly, the methodology adopted in the DGAP Report, which treats the entire additional ITC as a benefit, is erroneous and contrary to the scheme of the GST law. 8. The DGAP, vide communication dated 06.04.2026, contended the following: 8.1. The methodology adopted for determination of profiteering is in accordance with the judgment of the Hon'ble High Court of Delhi dated 29.01.2024, wherein it has been held that, in real estate cases, the benefit of Input Tax Credit accrued in the GST regime is required to be computed for the project as a whole and passed on to buyers on a per square foot basis. 8.2. The methodology based on comparison of ITC to turnover has been held to be inappropriate, and therefore, the approach adopted by the DGAP in the present case, computing additional ITC and distributing the same proportionately over the saleable area is legally val....
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....se of the hearing held on 16.04.2026, through his Authorised Representative, submitted that he accepts the findings of the DGAP Report. However, it was contended that GST @ 12% on the profiteered amount, i.e. Rs. 15,99,865/-, ought not to be levied. 11. Further, the Complainant, vide email dated 16.04.2026, submitted that he was unable to attend the hearing scheduled on the said date due to health reasons and requested that his earlier letter dated 13.02.2026, along with attachments, be placed before the Hon'ble Tribunal. He stated that the said letter had been sent earlier through courier as well as email but had not been taken on record by the Tribunal. The Complainant also requested that a copy of the submissions filed by the Respondent be provided to him. 12. Hearings in the matter were held on 08.01.2026, 10.03.2026, 08.04.2026 and 16.04.2026. Sh. Naresh Kumar Chawla, Chartered Accountant and Authorised Representative, assisted by Sh. Naresh Kumar Aggarwal, Chartered Accountant, appeared for the Respondent. Sh. Rahul Rao Gautam, Additional Assistant Director, assisted by Sh. Anurag Gupta, appeared for the Directorate General of Anti-Profiteering. None appeared on behalf ....
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....the Respondent became entitled to avail Input Tax Credit on a wider base of inputs and input services used in the construction of the project. The contention that there has been no reduction in cost due to increase in GST rates is not tenable. The availability of additional Input Tax Credit reduces the overall tax incidence and cost of supply. The DGAP has established, on the basis of records, that the additional ITC benefit of 5.75% accrued to the Respondent. Accordingly, the benefit arising therefrom was required to be passed on to the homebuyers in terms of Section 171 of the CGST Act, 2017. 17. It is also noted that the Respondent, during the hearing held on 16.04.2026, accepted the findings of the DGAP Report. However, the contention regarding non-levy of GST @ 12% on the profiteered amount of Rs. 15,99,865/- has been reiterated. 18. In light of the above, this Tribunal concludes that the Respondent has derived the benefit of additional Input Tax Credit, as determined in the DGAP Report, after the introduction of GST, and such benefit is required to be passed on to the homebuyers in terms of Section 171 of the CGST Act, 2017. The Respondent has accepted the findings of t....
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....he amount not passed on by way of commensurate reduction in prices, along with interest at the rate of 18% per annum, from the date of collection of the higher amount till the date of its actual return. The said provision is mandatory and leaves no discretion in the matter. 22. With regard to the issue of interest, reference may be made to the judgment of the Hon'ble Delhi High Court in Reckitt Benckiser India Pvt. Ltd. v. Union of India, WP (C) 7743/2019, wherein the Hon'ble Court has dealt with this issue in paragraph 153 of the judgment. The relevant extract is reproduced below: 153. This court is of the view that Section 171 of the Act, 2017 is broad enough to empower the Central Government to prescribe penalty and interest to ensure that the suppliers are deterred from pocketing the benefits meant for the consumers when taxes amounts so pocketed by the supplier /registered person would not have a sufficient deterrent effect on deviant behavior unless interest and penalty are levied to prevent such actions from taking place in the first place. The width and amplitude of Section 171 by which the authority is empowered to ensure that a reduction in tax rate or the Inp....