TaxTMI 
TaxTMI 
2026 (9) TMI 1994
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....einafter referred to as 'DGAP'] under Section 171 of the Central Goods and Services Tax Act, 2017 [hereinafter referred to as the 'CGST Act'], holding that the Petitioner had profiteered to the extent of Rs. 2,07,08,131/- and, after adding GST at the rate of 12%, directing payment of an aggregate amount of Rs. 2,31,93,107/- to the homebuyers, together with interest at the rate of 18%. 2. The controversy arises in the context of the Petitioner's residential project known as "Jeewan Anand" at Bhubaneswar, Odisha. The proceedings under Section 171 of the CGST Act had earlier culminated in an order of the erstwhile National Anti-Profiteering Authority [hereinafter referred to as 'NAPA'] dated 20.06.2022, whereby profiteering of Rs. 1,85,70,263/- had been determined against the Petitioner. The said order was challenged before this Court in W.P.(C) 12533/2022. 3. During the pendency of the aforesaid proceedings, this Court, in a batch of petitions including the Petitioner's case, rendered its judgment dated 29.01.2024 in Reckitt Benckiser India Pvt. Ltd. v. Union of India 2024 (82) G.S.T.L. 344 (Del.), wherein the methodology generally adopted by the anti-profiteering authorities f....
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....determination before this Court. The said challenge was considered along with the batch of petitions culminating in the judgment dated 29.01.2024 in Reckitt Benckiser (supra). This Court held that no fixed or uniform mathematical formula could be prescribed for determination of profiteering and that the methodology had to take into account the peculiar facts of each case. In relation to the real estate sector, this Court specifically found that the methodology based upon the difference between the ratio of ITC to turnover during the pre-GST and post-GST periods was flawed and directed that the total savings on account of introduction of GST for each project be calculated and divided by the total area to arrive at the per square feet benefit. 10. By order dated 25.04.2024 passed in the Petitioner's case, the matter was remanded for determination in accordance with the aforesaid judgment. The Competition Commission of India, vide communication dated 07.05.2024, consequently directed the DGAP to reinvestigate the matter. 11. The DGAP issued a notice dated 28.05.2024 seeking information from the Petitioner in relation to the project. The Petitioner furnished information and docum....
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.... 1,79,44,457/- during the pre-GST period. It further contended that, based upon the services procured for construction, CENVAT credit of approximately Rs. 2,38,25,609/- would have been available under the applicable law, but was not actually availed. The Petitioner consequently contended that the post-GST ITC on input services could not be treated as an additional benefit merely because such credit had not been availed during the pre-GST period. 16. The Petitioner also contended that the output tax incidence had increased after introduction of GST and that the higher ITC arising from the increased tax incidence could not, in its entirety, be treated as a benefit under Section 171 of the CGST Act. It was further contended that the ITC availed on inward goods was only Rs. 14,52,570/-whereas the balance ITC of Rs. 1,93,28,564/- related to input services. 17. The DGAP, in its clarification dated 21.11.2025, disputed the aforesaid submissions. It pointed out that the ST-3 returns filed by the Petitioner for the relevant pre-GST period reflected NIL CENVAT credit actually availed. According to the DGAP, the service tax paid on input services therefore constituted a cost to the Peti....
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.... 24. Learned counsel representing the Petitioner has made the following submissions: i. The Impugned DGAP Report and the Impugned Order are contrary to the judgment of this Court in Reckitt Benckiser (supra). Although this Court had rejected the methodology based upon comparison of ITC to turnover, the DGAP has merely substituted "purchase value" for "turnover" and has once again compared the pre-GST and post-GST ITC ratios. ii. The direction in Reckitt Benckiser (supra) required determination of the actual total savings arising on account of introduction of GST. Mere availability of ITC after introduction of GST cannot, by itself, establish the quantum of benefit required to be passed on under Section 171 of the CGST Act. iii. The Petitioner was legally entitled to CENVAT credit of service tax paid on input services during the pre-GST period. The fact that such credit was not actually availed due to an inadvertent error cannot result in the post-GST ITC on input services being treated as an additional benefit. iv. The Petitioner had paid service tax of Rs. 1,79,44,457/-during the pre-GST period and, on the basis of the input services procured,....
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....entitled to CENVAT credit in the pre-GST period cannot substitute actual availment of such credit. The ST-3 returns demonstrate that the Petitioner had actually availed NIL CENVAT credit. Consequently, the service tax paid on input services remained a cost to the Petitioner during the pre-GST period. iv. The benefit under Section 171 of the CGST Act extends to ITC on goods as well as services. There is no basis for restricting the benefit to Rs. 14,52,570/- merely because that amount represents the ITC on inward goods. v. The GSTAT has considered the Petitioner's submissions, including the contention regarding the service tax paid during the pre-GST period and the alternative computation of Rs. 1,39,93,358/-. The finding that the Petitioner had made an admission of profiteering is supported by the Petitioner's own written submissions before the erstwhile NAPA and this Court. 26. No other submissions have been made by the learned counsel representing the parties. ANALYSIS AND FINDINGS: 27. The Court has carefully considered the submissions advanced on behalf of the learned counsel representing the parties and perused the material placed on record. 28. A....
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....m throughout the life cycle of the project and the eligibility of credit depends on the nature of the construction activity undertaken during the particular period. As it is an admitted position that neither the advances received nor the construction activity is uniform throughout the life cycle of the project, the accrual of Input Tax Credit is not related to the amount collected from the buyers. This Court is in agreement with learned counsel of the petitioners that one needs to calculate the total savings on account of introduction of Goods and Services and Tax for each project and then divide the same by total area to arrive at the per square feet benefit to be passed on to each flat buyer. This would ensure that flat-buyers with equal square feet area received equal benefit. The Court, while hearing the present batch of matters on merits, shall take the aforesaid direction/interpretation into account. *** 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 Serv....
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....he relevant period. The resulting saving has thereafter been converted into a project-wide per square foot figure, precisely so that the benefit is distributed with reference to the area of the flats. This is materially different from the methodology considered and rejected by this Court in Reckitt Benckiser (supra). 34. The final step adopted by the DGAP is, in fact, directly aligned with the direction contained in Paragraph No. 129 of Reckitt Benckiser (supra). The total saving is first determined at the project level and is thereafter divided by the total area. The benefit relatable to each recipient is then determined by applying the per square foot figure to the area sold to that recipient. GSTAT specifically considered this aspect and found that the methodology adopted by the DGAP took into account the total area and the total sold area for determining the benefit. 35. It is, therefore, not possible to accept the submission that the DGAP has simply resurrected the earlier methodology by changing the denominator from "turnover" to "purchase value". The exercise undertaken after remand has a different operative basis. The question is not whether the methodology is the onl....
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....al post-GST benefit with a hypothetical pre-GST benefit. The anti-profiteering determination, however, has to proceed on the economic benefit which actually accrued under the respective tax regimes. 41. The submission that the post-GST ITC relating to services must nevertheless be excluded because CENVAT credit was legally available under the earlier regime also overlooks the specific factual finding that the Petitioner had not availed such credit. The DGAP expressly relied upon the ST-3 returns and treated the service tax paid on input services as a cost during the pre-GST period. GSTAT accepted this factual position. There is no material before this Court demonstrating that the finding regarding NIL actual CENVAT availment is factually incorrect. 42. The contention that only ITC of Rs. 14,52,570/- on inward goods can constitute the benefit is consequently not sustainable. The distinction between goods and services is not determinative where the question is the total additional ITC actually availed by the supplier after introduction of GST. The material placed before GSTAT demonstrated that the post-GST ITC comprised Rs. 14,52,570/- on inward goods and Rs. 1,93,28,564/- on i....
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....eafter upheld the determination of Rs. 2,07,08,131/-. 47. Thus, even assuming that the Petitioner's alternative submission should not have been described as a conclusive admission, the same would not undermine the substantive basis upon which the Impugned Order rests. The determination of profiteering is independently supported by the computation undertaken by the DGAP and considered by GSTAT. 48. The Petitioner has further relied upon the expenditure incurred towards installation of a sub-station and allied electrical infrastructure and has contended that the said expenditure was ultimately borne by the Petitioner and was not recovered from the homebuyers. The Petitioner seeks to rely upon the aforesaid expenditure as a factor which, according to it, should be taken into consideration while determining the benefit, if any, required to be passed on. 49. This Court does not consider it necessary to express any view on the aforesaid aspect in the present proceedings. The question as to whether such expenditure is liable to be recovered from the homebuyers or not will depend upon the agreements and other documents executed into between the parties. If permissible in law, the ....
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....ies of hearing. The GSTAT proceedings commenced on 26.09.2025 and hearings were thereafter held on several dates, including 13.10.2025, 17.12.2025, 06.01.2026, 29.01.2026, 11.02.2026 and 02.03.2026. The Petitioner filed written submissions and was specifically directed to place on record material regarding the rate of service tax applicable during the pre-GST period. The Petitioner thereafter filed its affidavit dated 09.02.2026. 55. The grievance of the Petitioner is thus not that it was denied an opportunity to present its case. On the contrary, the record demonstrates that its principal submissions regarding the applicability of Reckitt Benckiser (supra), pre-GST CENVAT credit, the distinction between goods and services, the increased tax incidence, the alternative computation and the project expenditure were placed before GSTAT. The disagreement is with the conclusions reached by GSTAT upon consideration of those submissions. 56. A distinction must be maintained between a case where the Tribunal fails to consider a material contention altogether and a case where the contention is considered but rejected. The former may, in an appropriate case, warrant judicial review. The....