TaxTMI 
TaxTMI 
2026 (7) TMI 1107
X X X X Extracts X X X X
X X X X Extracts X X X X
....y known as Vimal Builders), having its address at Godrej Colliseum, 1301 A Wing, Somaiya Hospital Road, GTB Nagar, Everard Nagar, Sion (East), Mumbai - 400022, and its registered office at Samridhi House, Office Floor, Plot No. 157, 18th Road, Near Ambedkar Garden, Chembur East, Mumbai - 400071 (hereinafter referred to as "the Respondent"), has failed to pass on the commensurate benefit of Input Tax Credit (hereinafter referred to as "ITC") to the Applicant in respect of Flat No. 506 situated in the project titled "Everest Countryside." 3. Pursuant thereto, the Maharashtra State Screening Committee examined the said application and observed that the Respondent had not passed on the benefit of additional ITC to the Applicant by way of commensurate reduction in price and, accordingly, with its recommendation, forwarded the matter to the Standing Committee on Anti-Profiteering for further action. 4. Further, the said 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 Act, the Standing Committee referred the matter ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... input tax credit as a percentage of the purchase value available to the Respondent during the pre-GST period, i.e., April 2012 to June 2017, was 3.9%, and during the post-GST period, i.e., July 2017 to March 2019, was 17.5% in the project "EVEREST COUNTRYSIDE". 10.2 This clearly confirms that the Respondent benefited from additional input tax credit during the post-GST period. The methodology adopted by the DGAP is tabulated hereinunder:- Table-'A' (Amount in Rs) S. No. Particulars Pre-GST Period Post-GST Period 1. Purchase Value of Goods and Services (Excluding Taxes and Duties) 13,13,59,307 74,18,207 2. Credit of Service Tax availed 52,13,341 - 3. Credit of VAT availed - - 4. Total Credit Availed in Pre-GST Period 52,13,341 - 5. ITC of GST Availed - 13,03,929 6. Ratio of Credit Availed to Purchase Value (in %) 3.9 17.5 10.3 It was further stated in the said report that the Central Government, on the recommendation of the GST Council, had levied 18% GST (effective rate was 12% in view of 1/3rd abatement for land value) on construction service, vide Notification No. 11/2017-....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 11.3 That no interest is chargeable, as the provisions relating to interest are not applicable in the facts of the present case. The Respondent further relied upon the judgment of this Tribunal in the matter of DGAP v. Dange Enterprise, NAPA/16/PB/2025. 11.4 That no penalty is leviable, as the penalty provision under Section 171(3A) came into effect only on 01.01.2020, which is after the period of the alleged profiteering. 11.5 That the methodology adopted by the DGAP for computing profiteering is erroneous. 12. The Respondent further submitted that certain inadvertent errors had occurred in paragraph 14 of its written submissions dated 12.03.2026 and, accordingly, amended paragraphs 14 and 15 were filed on 04.05.2026 pursuant to the liberty granted by this Tribunal. It was contended that the post-GST receipts pertaining to the Marigold Building amounted to Rs. 41,64,808/- and that, on a revised computation, the profiteered amount, if any, worked out to Rs. 5,61,511/- instead of Rs. 10,00,084/- as computed by the DGAP. Without prejudice, the Respondent expressed its willingness to deposit Rs. 5,61,511/- under protest, without interest or penalty. 13. Pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the said judgment. 15.4 That the DGAP accordingly stood by its Investigation Report dated 11.12.2024 and prayed that appropriate orders may be passed by this Tribunal. 16. Subsequently, as per the direction of this Tribunal, the Respondent also filed a brief synopsis vide email dated 20.05.2026. On perusal of the clarification submitted by the DGAP and the synopsis submitted by the Respondent, it is found that the Occupancy Certificate was granted on 13.10.2017, whereas the period of investigation taken in the report was from 01.07.2017 to 31.03.2019. 16.1 Consequently, this Tribunal, vide its order dated 21.05.2026, directed the Respondent to submit the information/data of the total purchases made during the period from 01.07.2017 to 13.10.2017 and the amount of ITC availed during this period, duly certified by a Chartered Accountant, within two weeks. The Tribunal further directed the DGAP to, upon receipt of the aforesaid data, re-determine the quantum of profiteering and submit its supplementary report/clarification before this Tribunal. 17. Pursuant thereto, the DGAP undertook a fresh computation of the profiteered amount for the period from 01.07.2017 to 13....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rofiteering has been recovered, are not identifiable has been reiterated specifically, that certain homebuyers have not filed any complaints, are not currently traceable, or have already resold their flats, and therefore the amount cannot be returned to the recipient with interest under Rule 133(3)(b) of CGST Rule, 2017 hence, the provisions of Rule 133(3)(c) would be attracted. Without prejudice to the above legal objections, the Respondent offers to deposit the disputed amount in the Consumer Welfare Fund (Centre and State) under protest. 19. I have carefully examined the DGAP report dated 11.12.2024, revised report dated 30.06.2026 as well as the written and oral submissions advanced by both the Respondent and the Applicant and find that the following issues arise for consideration in the present matter. 20. Whether, for the purposes of Section 171 of the CGST Act, 2017, project completion is to be reckoned from the date of actual issuance of the Occupancy Certificate or date of filing of the application seeking such certificate? 20.1 The submission of the Respondent that the construction of the project 'Marigold' stood completed on 25.04.2017, merely on t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....makes it evident that the sale of units after the issuance of the Occupancy/Completion Certificate is treated as an exempt supply and falls outside the purview of taxable supply. Consequently, input tax credit attributable to such supplies is not available and is liable to be reversed in accordance with Section 17(2) & Section 17(3) of the Central Goods and Services Tax Act, 2017, which read as under: Section 17 (2) "Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies". Section 17 (3) "The value of exempt supply under sub-section (2) shall be such as may be prescribed and shall include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building". 21.4 Since the anti-pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reproduced hereinbelow: "128. There is no 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....able and fact-based determination of the benefit accrued on account of the implementation of GST. 22.5 Accordingly, this Tribunal holds that the methodology adopted by the DGAP is in conformity with Section 171 of the CGST Act, 2017 and the Rules framed thereunder and is also consistent with the principles enunciated by the Hon'ble Delhi High Court in Reckitt Benckiser India Pvt. Ltd. (supra). The revised methodology appropriately identifies and quantifies the additional ITC benefit that accrued to the Respondent in the post-GST period and determines the amount required to be passed on to the recipients by way of commensurate reduction in price. Consequently, no infirmity can be found in the methodology adopted by the DGAP or in the quantification of the profiteered amount arrived at thereunder. 23. Whether the Respondent's contention that the recipients/flat purchasers in respect of whom the alleged profiteering has occurred are unidentifiable is tenable and, consequently, whether the present case falls within the ambit of Rule 133(3)(c) or Rule 133(3)(b) of the CGST Rules, 2017? 23.1 The Respondent has contended that the recipients/flat purchasers fro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es maintenance of exhaustive records of each homebuyer, including the name and address of the purchaser, unit number, area of the flat, agreement value, amounts received and corresponding tax liabilities. Indeed, the Respondent itself has relied upon buyer-specific data and has categorised purchasers according to the stage and timing of payments received. Such a stand itself demolishes the contention that the recipients are unidentifiable. 23.6 The anti-profiteering provisions embodied in Section 171 of the CGST Act are fundamentally benevolent in nature. Their primary object is to ensure that the benefit arising from reduction in tax incidence or additional input tax credit reaches the ultimate consumers. The statutory intent is not merely to recover the profiteered amount from the supplier but to restore the economic benefit to the persons from whom such amount was collected. Therefore, Rule 133(3)(c), being an exception to the general rule of restitution, must receive a strict and narrow interpretation and can be invoked only in cases where identification of the recipients is genuinely impossible. 23.7 The Hon'ble Delhi High Court in Reckitt Benckiser India....
X X X X Extracts X X X X
X X X X Extracts X X X X
....atic records of all its homebuyers, including their contact details, Email Ids and transaction histories. The Respondent, therefore, cannot claim any inability or practical difficulty in identifying and locating the recipients of the impugned supplies. 23.10 In the instant case, the homebuyers are clearly identifiable and ascertainable from the records maintained by the Respondent itself. Consequently, the factual matrix of the present case falls squarely within the ambit and scope of clause (b) of sub-rule (3) of Rule 133 of the CGST Rules, 2017, which mandates the return of the profiteered amount to the affected recipients where they are identifiable. The Respondent, having collected excess consideration from the homebuyers in contravention of Section 171 of the CGST Act, 2017, cannot be permitted to retain the same. 23.11 Accordingly, the Respondent is directed to refund the profiteered amount to the respective homebuyers, individually and forthwith. Further, in terms of the provisions of Rule 133(3)(b) read with Section 171 of the Act, the Respondent shall also be liable to pay interest on the profiteered amount at the rate of 18% per annum, calculated from th....