TaxTMI 
TaxTMI 
2026 (8) TMI 216
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....sh Saleraj Jain (on behalf of Mr. Jaya Prakash Madjraju) and Sh. Viraj Ingle (hereinafter referred to as the "2nd Applicant" and "3rd Applicant" respectively). 2. The Applicants alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to them by way of commensurate reduction in the price of flats on the introduction of GST w.e.f. 01.07.2017, thereby contravening the provisions of Section 171 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as "the CGST Act"). 3. The applications were examined by the Standing Committee on Anti-Profiteering, which, in its meeting, decided to forward the same to the Director General of Anti-Profiteering (hereinafter referred to as "the DGAP") for a detailed investigation under Rule 129(1) of the CGST Rules. 4. Pursuant to the reference, the DGAP conducted an investigation and submitted its first report dated 29.01.2021 to the erstwhile National Anti-Profiteering Authority (NAA). The DGAP, in its report, adopted the methodology of comparing the ratio of ITC to turnover in the pre-GST and post-GST periods. 5. The matter was argued before the NAA, and the Respondent filed detailed submissions....
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....vices (Excluding Taxes and Duties) 1,22,96,07,070 2,73,29,28,575 2. Credit of Service Tax availed 17,42,83,993 3. Total Credit Availed in Pre-GST Period 17,42,83,993 4. ITC of GST Availed 43,03,73,696 5. Ratio of Credit Availed to Purchase Value (in %) 14.17% 15.75% 6. Difference 1.57% 9. Based on the above, the DGAP concluded that the Respondent had benefited from an additional ITC of 1.57% in the post-GST period. The DGAP further computed the profiteering amount as under: Table - B: Computation of Profiteered Amount S. No. Particulars Amount (in Rs.) 1. Period July 2017 to October 2019 2. Increase in input tax credit availed Post-GST (%) 1.57% 3. Purchase Value of Goods and Services during Post-GST Period 2,73,29,29,575 4. Total Savings on account of additional ITC benefit (E = D*C/100) 4,30,09,540 5. Total Saleable Area (in Sq. Ft.) 13,06,607 6. Total Saving Per Sq. Ft. (G = E/F) 32.91 7. Total Sold Area (in Sq. Ft.) till the date of Completion Certificate 12,58,712 8. Base Profiteered Amount (I = G * H)....
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....ed that 74 units booked post-GST, with an alleged profiteering of Rs. 34,65,350.85, must be excluded from the ambit of the investigation. 12.3 The Respondent submitted that in terms of Rule 133(3)(c) of the CGST Rules, if the Tribunal holds that there is profiteering, the amount should be deposited into the Consumer Welfare Fund, as the 128 home buyers concerned have not claimed return of the amount and are not identifiable. It was submitted that only the three Applicants filed complaints, and they have already been passed on more benefit than they were entitled to. Furthermore, after the formation of the Infinity Cooperative Housing Society Limited and the transfer of the project, the Respondent is no longer involved in the day-to-day operations and cannot identify the original home buyers. 12.4 Further, in its Additional Written Submissions, the Respondent submitted that it had inadvertently passed on Rs. 12,53,99,053/- in excess to 1039 customers. It was contended that the Tribunal has the power to direct the customers to refund the excess amount or allow a set-off of the excess paid amount against the remaining liability of Rs. 40,99,916/-. 12.5 The R....
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....ST period. The builder is obligated to reduce the price commensurately and pass on the benefit. 13.3 The DGAP contended that the Respondent's argument for depositing the amount in the Consumer Welfare Fund is not tenable as the home buyers are identifiable in the present case. The profiteering amount is rightly to be transferred to the individual buyers of the home as per the provisions of Rule 133 of the CGST Rules. 13.4 The DGAP submitted that Section 171 requires the supplier to pass on the benefit by way of a commensurate reduction in the price, which includes both the base price and the tax paid on it. If a supplier has charged more tax from the recipients, the statutory provisions require that such amount be refunded. The Hon'ble Delhi High Court in Reckitt Benckiser (supra) has upheld the inclusion of GST in the profiteered amount. 13.5 The DGAP clarified that the total profiteering amount worked out in the Impugned Report is Rs. 4,64,04,940/- in respect of 1167 homebuyers. Out of the total claim of Rs. 16.77 crores claimed to have been passed on, the Respondent has passed on benefit in excess to what was worked out by DGAP in respect of 10....
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....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 the construction of the flat is started in the pre-G....
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.... is unsupported by any specific documentary evidence or calculations demonstrating that the prices were indeed commensurately reduced. The Respondent has failed to produce any evidence to show that the prices charged to post-June 2018 customers were calculated by subtracting the benefit of ITC that accrued to the Respondent. The Respondent's own submission that it separately showed the benefit of 3.97% for bookings made from July 2017 to June 2018 but failed to do so after June 2018, suggests that the benefit was not consistently and transparently passed on. The average price per square foot comparison provided by the Respondent in Annexure-7 does not conclusively prove that the benefit was passed on, as prices in the real estate sector are influenced by multiple factors such as the stage of construction, floor level, location, demand-supply dynamics, and negotiation skills of the buyer, etc. The Respondent has not demonstrated that the prices post-June 2018 were lower than the prices post-benefit in the preceding period. Mere maintenance of average prices does not establish that the ITC benefit was passed on; it only shows that prices did not increase, which could be attributa....
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....abilities. The fact that the Respondent may not have the current contact details of the homebuyers does not mean they are "not identifiable" in the eyes of the law. The records of the project contain the names and details of the original allottees. The primary objective of the anti-profiteering provisions under Section 171 is to ensure that the benefit of ITC or reduced tax rate is passed on to the recipient of the supply. The rule prioritizes the return of the profiteered amount to the recipient. It is only when the eligible person does not claim the return or is not identifiable that the amount is directed to be deposited into the Consumer Welfare Fund. 16.4 The Respondent's argument that the project has been transferred to the society is also not a valid ground, as the liability to pass on the benefit under Section 171 is that of the registered person who profiteered, and the same is not extinguished on transfer of the project. Therefore, the net profiteered amount of Rs. 40,99,917/- is not liable to be deposited in the Consumer Welfare Fund and must be returned to the individual homebuyers mentioned in Annexure-9 to the Impugned Report. 17. Issue (iii): Set-off ....
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....Kasinka Trading, applies to the exercise of sovereign or statutory power by the State in the context of exemptions and notifications, and cannot be extended to the rights of private parties under a fiscal statute. Therefore, the Respondent cannot use this as a ground to deny the legitimate claim of the remaining 128 customers. 17.4 The reliance on Kasinka Trading v. Union of India is misplaced. The said judgment pertains to the power of the State to withdraw an exemption notification and does not deal with the rights of individual consumers or the obligations of a supplier under a fiscal statute. In Kasinka Trading, the Hon'ble Supreme Court was concerned with the question of whether the Government could withdraw an exemption notification that had been issued in the public interest. The Court held that the power to grant exemption inherently includes the power to rescind, revoke, or withdraw the same, as such an exemption is susceptible to being modified or subjected to conditions in the public interest. The principle that "power to give includes the power to take back" applies to the exercise of sovereign or statutory power by the State, not to the rights of private p....
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....39;ble Delhi High Court, in Reckitt Benckiser (supra), has conclusively settled this issue in paragraph 157 of its judgment, which is reproduced below: "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." 18.4 The Hon'ble Delhi High Court's reasoning is clear and sound. The profiteered amount is the extra consideration extracted from the homebuyer. This extra consideration includes the GST component that was calculated on the inflated base price. The homebuyer paid this extra GST, which was deposited by the Respondent with the Government. The benefit of this extra GST, if the profiteering had not occurred, would not have been payable by the homebuyer. In economic term....
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.... to the mandate of Section 171. The relevant provision is reproduced below: "(b) return to the recipient, an amount equivalent to the amount not passed on by way of commensurate reduction in prices along with interest at the rate of eighteen percent. from the date of collection of the higher amount till the date of the return of such amount or recovery of the amount including interest not returned, as the case may be;" 19.4 The reliance on the Procter & Gamble order is not applicable to the present facts. The Procter & Gamble case pertained to the levy of interest under Rule 133(3)(c), which is a distinct provision dealing with deposits to the Consumer Welfare Fund and was amended by Notification No. 31/2019-Central Tax dated 28.06.2019. The levy of interest under Rule 133(3)(b), which deals with the return of the amount to the recipient, has existed in the rules since their inception. 19.5 However, this Tribunal acknowledges the practical difficulty in determining the exact date of "collection of the higher amount" when the benefit is computed on a project-completion basis. In the present case, the profiteering has been computed by comparing the total IT....
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....0.2019. Out of the total 1209 units in the project, 42 flats remained unsold after the receipt of the Occupancy Certificate. Therefore, the total 1167 homebuyers who purchased units up to the date of the Occupancy Certificate were considered for profiteering purposes. The entire period of contravention, i.e., the period during which the Respondent is alleged to have profiteered, stands fully completed on 30.10.2019, which is prior to the coming into force of Section 171(3A) on 01.01.2020. 20.4 Since the alleged contravention stands fully completed on 30.10.2019, prior to the enforcement of Section 171(3A) with effect from 01.01.2020, the said penalty provision has no application to the facts of the present case. The penal provision cannot be applied retrospectively to a period when it was not in force. Accordingly, the Respondent is not liable to pay any penalty under Section 171(3A) of the CGST Act, 2017. 21. In light of the foregoing discussions, the Impugned Report of the DGAP dated 22.01.2025 is hereby accepted. The Respondent, M/s Oxford Realty LLP, is found to have contravened the provisions of Section 171 of the CGST Act, 2017, by not fully passing on the benefit....