TaxTMI 
TaxTMI 
2026 (7) TMI 1906
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....ferred to as "ITC") to the complainant by way of commensurate reduction in the price on purchase of a Flat No. 04 in the Respondent's project situated at 578, Lake Gardens, Kolkata-700045 on the introduction of GST w.e.f. 01.07.2017, in terms of Section 171 of the Central Goods and Services Tax Act, 2017. 3. The said complaint was examined by the Standing Committee on Anti-Profiteering was forwarded to the Directorate General of Anti-Profiteering (hereinafter referred to as "the DGAP") on 24.11.2020 for a detailed investigation in respect of the application filed under Rule 129(1) of the CGST Rules, 2017. 4. Accordingly, the investigation was conducted and the Report dated 08.12.2021 was prepared and submitted to the National Anti-Profiteering Authority (or CCI) under the Rule 129(1) of the Rules. 5. The report dated 08.12.2021 sent by the DGAP was pending for Orders by the erstwhile NAA (then Competition Commission of India (CCI)). Meanwhile, in the case of Reckitt Benckiser India Pvt. Ltd. v. Union of India & Ors., W.P. (C) No. 7743/2019 and other connected matters, the Hon'ble High Court of Delhi passed its judgement in order dated 29.01.2024 and gave its findings on th....
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.... H-G Rs. 10,83,190 Total Saleable Area (in sq.ft.) J 8,154 Sq. Ft. Total Sold Area upto issue of Occupancy Certificate (in sq.ft) K 5,504 Sq. Ft. Amount Profiteered per sq. ft. L= I/J Rs. 132.84 Total Amount Profiteered from the Total Sold Area of the Project situated at 578, Lake Gardens, Kolkata-700045 M= L*K Rs. 7,31,160 8.4. From Table-A above, it is evident that the Respondent was not eligible to avail any ITC in the pre-GST period, whereas it became eligible to avail ITC of GST paid on the inputs and input services in the post-GST period. Therefore, the ITC available in the post-GST regime constituted an additional benefit to the Respondent, which was required to be passed on to the homebuyers by way of commensurate reduction in prices in terms of Section 171 of the CGST Act, 2017. 8.5. As regards the allegation of profiteering, the DGAP observed that the Respondent had benefited from the additional ITC amounting to Rs. 7,31,160/-, on which GST @12%, amounting to Rs. 87,739/-, was also leviable. Accordingly, the total profiteered amount was computed at Rs. 8,18,899/-, which was required to be passed on to the eligible h....
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....d that the said observations are the subject matter of Special Leave Petitions before the Hon'ble Supreme Court. 11.5. The Respondent submitted that the Hon'ble Delhi High Court had acknowledged that no fixed formula could be laid down for determination of profiteering and that the real estate sector requires a different approach. It was contended that reduction in the agreement value after execution of sale agreements may lead to legal and commercial complications and that delivering additional works constituted a commercially reasonable mode of passing on the benefit. 11.6. The Respondent further submitted that the Hon'ble Delhi High Court had recognised that suppliers may raise prices based on commercial factors. It was contended that the expenditure incurred on additional structural fittings and upgrade works directly offset the ITC benefit and that the ITC savings had been utilised for the benefit of the purchasers. 11.7. The Respondent submitted that it had not retained the ITC benefit and, therefore, there was no unjust enrichment, as the benefit had been translated into additional construction works for the flat purchasers. 11.8. The Resp....
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....(+)/Shortfall (-) (Rs.) 1. Shyonee Roy 3 1,73,621.88 1,81,840.00 (+) 8,218.12 2. Mr. Pradyot Kumar Ghosh 4 1,08,928.80 4,75,000.00 (+) 3,66,071.20 3. Dr. Goutam Dutta & Brita Dutta 5 1,73,621.88 - (-) 1,73,621.88 4. Mr. Amit Kumar Singh 6 1,08,928.80 1,93,000.00 (+) 84,071.20 5. Mrs. Manika Chatterjee 7 1,66,050.00 1,64,986.00 (-) 1,064.00 Total 7,31,151.36 10,14,826.00 (+) 2,83,674.64 13.4. On the basis of the above computation, the Respondent submitted that no further amount remained payable to the homebuyers as the benefit computed by the DGAP had already been passed on through the additional works carried out for the homebuyers. 14. Hearings in the matter were held on 28.10.2025, 07.01.2026, 18.02.2026, 20.03.2026, 28.04.2026, 15.05.2026, 20.05.2026, 11.06.2026 and 14.07.2026. Shri Rahul Rao Gautam, Additional Assistant Director, Authorised Representative appeared on behalf of the DGAP. Shri Arup Das Gupta, learned Advocate appeared on behalf of the Respondent. 15. It is also pertinent to note that despite being duly notified of the proceeding....
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....n upon every registered supplier to ensure that the benefit arising from the availability of additional ITC is not retained by the supplier but is passed on to the recipients. 19. In the present case, it is not in dispute that prior to the implementation of GST, the Respondent was not eligible to avail CENVAT credit of Central Excise Duty or VAT credit in respect of the project under consideration. Upon the introduction of GST with effect from 01.07.2017, the Respondent became eligible to avail ITC of GST paid on the inputs and input services used in the construction of the project. The DGAP has also computed the additional ITC accruing to the Respondent after implementation of GST. 20. It is pertinent to note that the Respondent has not disputed either its entitlement to the additional ITC or the computation of such benefit by the DGAP. The Respondent's case is not that no additional ITC accrued to it; rather, its contention is that the benefit of such ITC has already been passed on to the homebuyers by carrying out additional structural works and fittings without charging any additional consideration. The said contention pertains to the mode and manner of passing on the ben....
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....d counsel for the Respondents, that the benefit of tax reduction has to be passed on at the level of each supply of SKU to each buyer and in case it is not passed on, the profiteered amount has to be calculated on each SKU. 134. The contention of the learned counsel for the Petitioners that it is legally impossible to pass on the benefits by reducing the price of goods in cases of low priced products is untenable in law. As pointed out by Mr. Zoheb Hossain, learned counsel for the Respondents, the provisions of the Legal Metrology (Packaged Commodities) Rules, 2011 are applicable. In cases for period prior to 31st December, 2017, the erstwhile Rule 2(m) of the Legal Metrology (Packaged Commodities) Rules, 2011 which provided detailed instructions for rounding off of the MRP would be applicable. Similarly, Rule 6(1)(e) of the above Rules as amended in 2017 with effect from 01st January, 2018 to 31st March, 2022 provides that the retail price of the package shall clearly indicate that it is the MRP inclusive of all taxes and the price in rupees and paise be rounded off to the nearest rupee or 50 paise would be applicable. Consequently, there would be no legal impossibility i....
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....nguish the observations of the Hon'ble Delhi High Court by contending that the judgment dealt with FMCG products, whereas the present case relates to a real estate project. We are unable to accept the said submission. The observations contained in paragraphs 131 to 135 of the judgment are an interpretation of Section 171(1) of the CGST Act, 2017, and are not confined to any particular sector. The statutory mandate remains the same irrespective of the nature of supply. Once the legislature has prescribed the manner in which the benefit is to be passed on, the same cannot be substituted by any alternate mode devised by the supplier. 27. We are, therefore, of the considered view that the additional structural works and fittings carried out by the Respondent, even if actually executed and even if their value exceeds the amount of additional ITC, cannot be treated as passing on the benefit in the manner contemplated under Section 171(1) of the CGST Act, 2017. Consequently, the Respondent's contention that the benefit stood passed on through such additional works cannot be accepted. 28. Accordingly, Issue No. (ii) is answered against the Respondent. We hold that the additional stru....
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....rned along with the corresponding GST component. 34. In this regard, reference may be made to the judgment of the Hon'ble Delhi High Court in Reckitt Benckiser India Pvt. Ltd. (supra), wherein the Hon'ble High Court, while dealing with the inclusion of GST in the profiteered amount, observed in paragraph 157 as under: 157. Both the Central as well as the State Government had no intent of collecting additional Goods and Services Tax on the higher price as they had sacrificed their revenue in favour of the buyer. By compelling the buyers to pay the additional Goods and Services Tax on a higher price, the supplier has not only defeated the intent of the Governments but has also acted against the interest of the consumer and therefore, the Goods and Services Tax collected by him on the additional realization has rightly been included in the profiteered amount. 35. In view of the above, we hold that the Respondent is liable to pass on the profiteered amount of Rs. 7,31,160/-, together with GST @12% amounting to Rs. 87,739/-, aggregating to Rs. 8,18,899/-, to the eligible homebuyers. Determination of Issue No (iv): Interest 36. The next issue for consideration is whe....
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....ect from 01.01.2020, which reads as under: 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." 41. In the present case, the period of investigation extends from 01.07.2017 to 02.01.2020. The material available on record shows that the construction of the project had been completed prior to the coming into force of Section 171(3A) on 01.01.2020 and the Respondent has also applied for the Occupation prior to this date. Thus, the profiteering determined in the present proceedings substantially pertains to a period prior to the enforcement of the penalty provision. 42. Although the proceedings have culminated just one day after the insertion of Section 171(3A), the conduct constituting the alleged contravention had already concluded prior to the coming into fo....