Finding that the amount claimed by the complainants/ homebuyers has been duly paid to them by the developer (Respondent) which is duly acknowledged by them, and no other home buyer had raised any objection against the DGAP report canvassing no contravention of Section 171 of the CGST Act, 2017, the Goods and Service Tax Appellate Tribunal (GSTAT) has held that the developer having been already passed on input tax credit (ITC) benefits to homebuyers in excess of the amount required under the said provision of Section 171, there is no profiteering by the developer.
The Division Bench comprising Justice Mayank Kumar Jain (Judicial Member) and Anil Kumar Gupta (Technical Member) observed that the ratio of the credit availed to purchase value was 10.03% in the pre-GST period, which increased to 14.22% in the post-GST period. The difference of 4.19% implies that the Respondent benefited from additional Input Tax Credit during the post-GST period. Thus, the total amount of profiteering was computed as Rs. 5.88 crores and GST @12% Rs. 70.63 lakhs, totalling to Rs. 6.59 crores.
The DGAP however observed that a total benefit of ITC amounting to Rs. 16.45 crores were already passed on by the Respondent to its 935 home-buyers, and no benefit was to be passed on to 253 home-buyers since they purchased the units after the issuance of the Occupation Certificate. On this basis, the DGAP concluded that the Respondent has not contravened the provision of section 171 of the CGST Act, 2017.
During the hearing before the Principal Bench of the GST Appellate Tribunal (GSTAT), the Respondent submitted that an amount of Rs. 46,012/- had already been paid to Hitesh Kumar Chauhaun, and the Respondent was ready to pay the remaining amount of Rs. 16,665/- along with interest of Rs. 21,043/- totalling Rs. 37,698/- to him. Further, for Abha Tiwari, the Respondent was willing to pay the differential amount of Rs. 56,431/- and total interest of Rs. 71,298/- amounting to Rs. 1,27,729/-. Both complainants accepted the said calculation and sent individual emails acknowledging that the benefit of ITC had been received at their end.
Briefly, the proceedings arise from a complaint made by Abha Tiwari under Rule 128 of the Central Goods and Services Tax Rules, 2017, alleging profiteering in respect of construction services provided by Samridhi Realty Pvt Ltd. in their project “Samridhi Grand Avenue”. The complainant alleged that the Respondent did not pass on the benefit of Input Tax Credit (ITC) to her by way of commensurate reduction in the prices on purchase of a flat upon the introduction of GST with effect from July 01, 2017, in terms of section 171 of the Central Goods and Services Tax Act, 2017.
The matter was initially pending before the National Anti-Profiteering Authority (NAA), which received another complaint from Hitesh Kumar Chauhaun, who was subsequently impleaded as a complainant. The NAA directed the Director General of Anti-Profiteering (DGAP) to reinvestigate the matter.
Following the end of the NAA’s tenure, the Competition Commission of India (CCI) was empowered to examine anti-profiteering matters and remanded the matter to the DGAP under Rule 133(4) of the CGST Rules, 2017 to re-investigate, as the methodology adopted by DGAP was held to be flawed by the High Court of Delhi in Reckitt Benckiser India Pvt Ltd. vs. Union of India [(2024) 14 Centex 374 (Delhi)]. Pursuant to this, the DGAP submitted its report dated Dec 05, 2024.
