TaxTMI 
TaxTMI 
2026 (7) TMI 1995
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....nstruction Services supplied by M/s. Maata Rani Builders and Developers, Flat No. 604A, Shiv Subala Apartment, Chiragora, Hirapur, Dhanbad, Jharkhand-826 001 (hereinafter referred to as "the Respondent"). 2. The complainants alleged that the Respondent did not pass on the benefit of Input Tax Credit (hereafter referred to as "ITC") to the complainants by way of commensurate reduction in the prices in respect of the purchase of Flat No. 301 & 302 respectively at 2nd floor from the Respondent in its project "Anamika Apartment" situated at Koyla Nagar, Kusum Vihar, Dhanbad, Jharkhand-826 004 in terms of Section 171 of the Central Goods and Services Tax Act, 2017, (hereinafter referred to as "the CGST Act, 2017). 3. The said complaint was examined by the Standing Committee on Anti-Profiteering and was forwarded to the Directorate General of Anti-Profiteering (hereinafter referred to as "the DGAP") on 11.11.2020 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 18.03.2021 was prepared and submitted to the National Anti-Profiteering Authority (or CCI), u....
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....d other State taxes paid by the builders get adjusted against the output VAT liability on property sold by them. In the pre-GST regime, ITC was generally restricted and could be utilised only against the same category of taxes. As a result, the incidence of Central Excise duty, VAT, Entry Tax, etc., on construction materials formed part of the cost, which was ultimately passed on to the customers as part of the price. 8.4. In the post-GST regime, the Respondent became eligible to avail ITC of GST paid on all input goods and input services used in the construction of the project. Therefore, the benefit of additional ITC was accrued to the Respondent after the implementation of GST. 8.5. The calculation of the profiteered amount, based on the data submitted by the Respondent, has been computed as tabulated in Table-A below: Table- A (Amount in Rs.) (1) (2) (3) (4) S.No. Particulars Pre-GST Period Post-GST Period 1 Purchase Value of Goods and Services (Excluding Taxes and Duties) 36,12,591 52,17,956 2 Credit of Central Excise and Service Tax availed - - 3 Credit of VAT availed - - 4 Total Credit Availed in P....
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....t has not passed on such benefit to the buyer. Accordingly, in terms of Section 171 of the CGST Act, 2017, the Respondent has profiteered an amount of Rs. 4,67,805/-. After adding GST @12% amounting to 56,137/-, the total profiteered amount comes to Rs. 5,23,942/-, which is required to be passed on to the 6 eligible homebuyers. 9. With effect from 01.10.2024, the Central Government, on the recommendations of the GST Council, empowered the Principal Bench of the GST Appellate Tribunal (GSTAT), constituted under sub-section (3) of Section 109 of the CGST Act, 2017, to adjudicate anti-profiteering cases in terms of Notification No. 18/2024-Central Tax dated 30.09.2024. 10. The above Report was received in the Principal Bench, GSTAT, on 08.08.2025 for adjudication under Section 171 of the CGST Act, 2017. A Notice dated 25.08.2025 was issued to the Respondent directing it to file written submissions on the DGAP Report. 11. The Respondent, vide written submissions, affidavits and additional submissions dated 25.09.2025, 01.12.2025, 06.01.2026, 11.03.2026, 23.04.2026 and 05.05.2026, inter alia, contended as follows: 11.1. The Respondent submitted that the benefit arising....
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.... 4. Manju Sinha 26,74,560.00 2,86,560.00 29,61,120.00 26,74,560.00 5. Nisha Ambastha 23,96,250.00 42,455.40 24,38,705.40 23,96,255.00 6. Seema Singh 27,23,000.00 2,91,750.12 30,14,750.12 27,23,001.00 7. Total 1,60,97,370.00 12,83,289.96 1,73,80,659.96 1,60,97,377.00 11.5. The Respondent further furnished buyer-wise reconciliation statements demonstrating the agreed consideration, contractual GST liability, actual amount recovered and GST absorbed by it, which are reproduced below: S.No. Buyer (Flat) Agreed Price GST Due (Rs.) [Buyer's Liability per Agreement] Total contractually payable (Rs.) Actually charged (Rs.) GST Absorbed as discount (Rs.) 1 Sangita Devi (Flat 401) 31,92,000 3,42,000 35,34,000 31,92,000 3,42,000 2 Sangeeta Prasad (Flat 202) 24,25,800 32,763 24,58,563 24,25,800 32,763 3 Anjani Singh-Complainant I (Flat 302) 26,85,760 2,87,760 29,73,520 26,85,760 2,87,760 4 Manju Sinha (Flat 402) 26,85,760 2,86,560 29,61,120 26,85,760 2,86,560 5 Nisha Ambasta (201) 26,74,560 42,449 2....
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....ount / reduction in price under Section 171 of the CGST Act, 2017 was false and unreliable. It was additionally contended that the registered sale deed constituted the primary documentary evidence of the transaction. 12.3. The complainant submitted that the total sale consideration of the property is of the flat cost along with the proportionate land value/undivided share of land, and that no separate additional amount could be charged towards such land component. It was further alleged that GST had effectively been charged on the amount shown as proportionate land value. 12.4. The complainant prayed that the aforesaid submissions be considered during the course of hearing before this Hon'ble Tribunal. 13. The DGAP, vide clarification dated 15.10.2025 and 02.01.2026, contended as follows: 13.1. The DGAP submitted that the Respondent's claim regarding passing on of ITC benefit to the homebuyers could not be accepted as the Respondent had initially furnished only self-prepared calculations without sufficient corroborative documentary evidence. It was further contended that during investigation the Respondent was repeatedly directed to furnish supporting ....
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....fiteering amount passed on to the buyer of the flat during the post GST period, if any (in Rs.) Profiteering amount to be passed on to the homebuyers @ Rs. 61.61 per Sq. Ft. GST@2 (in Rs.) Total amount to be passed on to the homebuyers 1. Sangita Devi 342000 78553 9426 87979 2. Sangita Prasad 32763 77382 9286 86668 3. Anjani Singh 287760 77382 9286 86668 4. Manju Sinha 286560 77382 9286 86668 5. Nisha Ambastha 42449 78553 9426 87979 6. Seema Singh 291749.1 78553 9426 87979 7. Unsold NA Total 467805 56137 523942 15. Pursuant to the hearing held on 19.05.2026, the Respondent, vide written submissions dated 10.06.2026 and reply dated 22.06.2026, inter alia, contended as follows: 15.1. The Respondent submitted that the benefit of additional ITC had been validly passed on to the homebuyers of Flat Nos. 201 and 202 by providing additional construction work free of cost, without charging any additional consideration. It was contended that Section 171 of the CGST Act does not prescribe price r....
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....ded to these two homebuyers was taken into account, no profiteering remained payable. 15.7. On the above basis, the Respondent prayed that the additional construction work provided free of cost be recognised as a valid mode of passing on the benefit under Section 171 of the CGST Act, that the objections raised by the DGAP be rejected, and that the proceedings be dropped. 16. The DGAP, vide clarification dated 19.06.2026, furnished its comments on the additional submissions of the Respondent and, inter alia, submitted as follows: 16.1. The DGAP submitted that the Respondent's contention that the additional construction work provided to the homebuyers of Flat Nos. 201 and 202 constituted passing on of the benefit under Section 171 of the CGST Act was contrary to the judgment of the Hon'ble Delhi High Court in Reckitt Benckiser India Pvt. Ltd. (supra). According to the DGAP, the benefit of additional ITC is required to be passed on by way of commensurate reduction in prices and cannot be substituted by providing additional goods, services or construction work. 16.2. It was further submitted that the observations contained in paragraphs 131 to 135 of the j....
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....ning the rival contentions, it would be apposite to reproduce Section 171(1) of the CGST Act, 2017, which reads as under: 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." 19. A plain reading of the aforesaid provision leaves no manner of doubt that every registered person is under a statutory obligation to pass on the benefit arising from reduction in the rate of tax or from the availability of additional Input Tax Credit to the recipient by way of commensurate reduction in prices. The provision is mandatory in character and casts a corresponding obligation upon the supplier to ensure that the entire benefit of such additional ITC reaches each eligible recipient in the manner contemplated by the statute. Accordingly, while examining compliance with Section 171(1), the Tribunal is required to ascertain not merely whether additional ITC accrued to the supplier, but whether the entire benefit thereof has, in fact, been passed on to the eligible recipients. 20. In the present case, the DGAP, after conducting a detailed investigation, submitte....
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....ble homebuyers in the manner mandated under Section 171 of the CGST Act, 2017. The Respondent has, therefore, failed to pass on the differential profiteered amount of Rs. 99,435/- (Rupees Ninety-Nine Thousand Four Hundred and Thirty-Five only), as determined in the Supplementary Report, and has consequently contravened the provisions of Section 171 of the CGST Act, 2017. Issue No. I is answered accordingly. Determination of issue (II) Whether the provision of additional construction work free of cost to certain homebuyers constitutes valid compliance with the statutory requirement of passing on the benefit of additional ITC by way of commensurate reduction in prices under Section 171 of the CGST Act, 2017? 24. The principal contention advanced by the Respondent is that the benefit of additional ITC, though not passed on by way of reduction in the price payable by the concerned homebuyers, stood duly passed on by providing additional construction work free of cost in the flats of Ms. Sangita Prasad and Ms. Nisha Ambastha. According to the Respondent, the value of such additional construction work exceeded the differential amount computed by the DGAP and, therefore, the stat....
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....estly arbitrary. No fundamental or other rights of any of the petitioners are being affected in any manner by requiring that the benefit in reduction of tax rate or Input Tax Credits, be passed on to the recipients by way of commensurate reduction in prices. 133. This Court is in agreement with the submission of Mr. Zoheb Hossain, learned 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 ....
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....are confined only to the FMCG sector or promotional schemes and are, therefore, inapplicable to the present case. The interpretation rendered by the Hon'ble High Court is of Section 171 itself and not of any industry-specific practice. The principle enunciated therein flows from the statutory language and applies uniformly to all supplies governed by Section 171, including supplies in the real estate sector. Merely because the additional construction work was undertaken in favour of the concerned homebuyers or because the value thereof is claimed to exceed the differential profiteered amount cannot, by itself, satisfy the statutory requirement where the legislature has expressly stipulated that the benefit is to be passed on by way of commensurate reduction in prices. 29. The documentary evidence produced by the Respondent regarding execution of additional construction work, the acknowledgements furnished by the homebuyers and the valuation of such work may establish that certain additional facilities or improvements were provided without separate consideration. However, those documents do not alter the legal position emerging from Section 171 of the CGST Act, 2017. The question....
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....e rate of eighteen per cent per annum from the date of collection of the higher amount till the date of return of such amount. The said provision is mandatory in nature and leaves no discretion with the adjudicating authority regarding the levy of interest once profiteering is established. 34. The Hon'ble Delhi High Court in Reckitt Benckiser India Pvt. Ltd. (supra), while examining the validity of the anti-profiteering provisions, has also upheld the statutory scheme relating to interest. The relevant observations contained in paragraph 153 of the judgment are 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 Input ....