TaxTMI 
TaxTMI 
2026 (6) TMI 376
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.... the old GST scheme w.e.f. 01.04.2019, under which tax was levied at 12% (post 1/3rd abatement towards land value), with the benefit of Input Tax Credit (For short "the ITC") being available. 2. The present proceedings arise out of an application filed by Shri Selvakumar V, Rana Nilayam 48/934 (3), Ambalathara, Thottam, Poonthura, Trivandrum, Kerala-695026 (hereinafter referred to as 'the Applicant') alleging that the Respondent has indulged in profiteering under Section 171 of the Central Goods and Services Tax Act, 2017 (for short to as "CGST Act, 2017") in respect of construction services in their Project "Compact Homes-Narmada". 3. The Applicant alleged that the Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in the price on purchase of a Flat No. B4/4419 in the Respondent's Project "Compact Homes-Narmada" on introduction of GST w.e.f. 01.07.2017, in terms of Section 171 of the Central Goods and Services Tax Act, 2017 (for short "The CGST Act, 2017"). 4. This Application was examined by the Standing Committee on Anti-profiteering. The standing committee made a reference under Rule 129 (1) of the CGST Rules, 2017 (for short "the C....
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....jections, which are summarized as under:- (i) The Respondent obtained registration under Tamil Nadu Real Estate Regulatory Authority (hereinafter referred to as "TNRERA") declaring commencement of construction after 23.10.2017. (ii) Further it was declared that the project was completed on 31.02.2019 and was ready for occupation. It indicates that the entire project comprising 336 residential units across 4 blocks along with common amenities was completed within a period of about 16 months. Such timeline is highly improbable for such a large project. (iii) At the time of booking in 2018, it was observed that 3 blocks were already substantially completed and 4th block was approximately 50% completed. This situation establishes that substantial construction had already been started before GST period. Thus, the Respondent has mis-represented actual stage of construction before the DGAP and the GSTAT. (iv) The Respondent has charged GST @ 18% from the allottees. Excess GST has been charged from the allottees and benefit of ITC has not been passed on to them. Buyers have suffered significant financial loss of their hard-earned money. (v) Enti....
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....y inapplicable to the Applicant. (v) The Applicant raised the dispute regarding non-refund of Input ITC against the Respondent before the TNRERA. The said Authority after due consideration declined to accept the claim of the Applicant for refund of ITC. (vi) Since the entire construction and the upfront payment is made by the Applicant during the GST regime, therefore, the matter of the Respondent is squarely covered with the paragraph 128(d) of the decision rendered by Hon'ble High Court of Delhi in Reckitt Benckiser India Pvt. Ltd. v UOI (2024) 14 Centax 374 (Delhi). 12. The DGAP submitted their clarification which are summarised as:- (i) An explanation was sought from the Respondent regarding mismatch in the GST ITC as claimed by the Applicant. It was observed that the Respondent was executing multiple projects. On the basis of the scrutiny balance sheet and statutory Returns filed by the Respondent of the whole project it was found to be difficult to bifurcate the data pertaining to the project "Compact Homes-Narmada". Therefore, the DGAP relied upon the certificate issued by the Chartered Accountant of the Respondent. (ii) It is verified ....
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.... Shri Selvakumar. V., and Ms. Sharanya Vijay. K, learned Counsel on behalf of the Respondent. 18. Perused the record. 19. Section 171 of the CGST Act, 2017 reads thus: "Section 171 Anti-profiteering measure- (1) Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices. (2) The Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him. Provided that the Government may by notification, on the recommendations of the Council, specify the date from which the said Authority shall not accept any request for examination as to whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goo....
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.....S.T. is reduced, the benefit should immediately be passed on to the end-user by way of reduction in the prices commensurate with the reduction in the rate of tax. This, in other words, would mean that, the moment there is a cut in the rate of G.S.T., the price of the commodity or the services rendered has to be reduced automatically to the extent of the reduction in the rate of tax. If the supplier continues to sell the product at the same price particularly when the prices are inclusive of G.S.T., the respondent-Department or the beneficiary is not being benefitted by the Government's decision in lowering the rate of tax." (Emphasis added) 22. Ms. Sharanya Vijay. K, learned Counsel for the Respondent placed heavy reliance on the paragraph 128(d) of the decision of Hon'ble High Court of Delhi in Reckitt Benckiser (Supra), which is reproduced 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....
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....t to the Respondent in accordance with the agreement during GST era. 24. As apparent from the material available on record, these facts are not controverted by the Applicant that the Construction Agreement was executed between the Applicant and the Respondent on 28.05.2018. The Sale Deed of the flat, booked by the Applicant was executed on 28.05.2018. the entire construction activity had been undertaken by the Respondent only after the execution of the agreement. The price of the unit was determined after factoring the benefit of ITC which became available to the Respondent in post-GST regime and was not admissible under pre-GST regime and on the basis of prevailing during the GST regime. The Applicants' have accepted the price so fixed and proceeded thereafter. The aforesaid document contains the details of the flat, its area and the agreed rates per Sq. Ft. between the Applicant and the Respondent. The entire payment was made by the Applicant to the Respondent in accordance with the agreement during GST era. 25. Another aspect which is pertinent to be taken into consideration is that the Respondent received building permit on 17.07.2017 and TNRERA Registration Certificate w....
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....sions used in clause (d) of paragraph 128 of the Judgement do not mean that it would be applicable only if the construction of the flat has been completed at the time of agreement. The fact that the "construction of flat was yet to be raised" or the property was not "fully constructed" is of no consequences to attract the conditions as laid down in paragraph 128(d) of the said Judgement. What is crucial is that the entire spectrum of activities from inception to completion must have taken place during the post-GST period." (Emphasis added) 27. The coordinate Bench of this Tribunal in DGAP v Pyramid Infratech Pvt. Ltd (2026) 39 Centax 113 (Tri. GST-Delhi) observed that: "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....