No Anti-Profiteering Liability Where Entire Project Executed Under GST

The Goods and Services Tax Appellate Tribunal (GSTAT), Principal Bench, New Delhi, has upheld the DGAP’s closure report and held that no profiteering was established against Arun Excello Constructions LLP in respect of its residential project “Compact Homes–Narmada”. Justice Mayank Kumar Jain, Judicial Member, rejected the objections raised by a homebuyer and accepted the DGAP’s findings that no additional Input Tax Credit (ITC) benefit had accrued to the developer after the introduction of GST.

The proceedings arose from a complaint filed by a homebuyer alleging that the developer had failed to pass on the benefit of ITC as mandated under Section 171 of the CGST Act, 2017. It was alleged that the developer had charged GST from buyers without extending any corresponding reduction in price and had thereby indulged in profiteering.

During investigation, the Directorate General of Anti-Profiteering (DGAP) examined the project “Compact Homes–Narmada”, comprising 336 residential units. The DGAP found that the ratio of credit availed to purchase value was 14.50% during the pre-GST period and declined marginally to 14.28% in the post-GST period. Since there was no increase in ITC benefit after the implementation of GST, the DGAP concluded that no benefit was required to be passed on to buyers.

Before the Tribunal, the applicant contended that substantial construction had already commenced before GST and that the developer had wrongly charged GST at a higher rate instead of adopting the concessional affordable housing rate. The applicant further disputed the quantum of ITC considered by the DGAP and alleged that the developer had derived substantial benefit through input tax credits.

The developer, however, submitted that the project had commenced entirely after the introduction of GST. It pointed out that the building permit was obtained on 17.07.2017 and the TNRERA registration was granted on 23.10.2017. The buyer had booked the flat and executed the construction agreement on 28.05.2018, well after GST came into force, and the entire consideration was paid during the GST regime.

“The price of the unit was determined after factoring the benefit of ITC which became available to the Respondent in post-GST regime and was not admissible under pre-GST regime.”

The Bench also rejected the applicant’s argument regarding the applicability of the 1% GST rate for affordable housing, noting that the concessional scheme was introduced only with effect from 01.04.2019 and therefore had no application to the transaction in question.

“The DGAP has rightly concluded that the ratio of credit availed to purchase value during the pre-GST period was 14.50%, whereas it reduced to 14.28% in the GST regime.”

The Tribunal further noted that the applicant had previously raised a similar grievance regarding refund of ITC before TNRERA, where the claim had already been rejected, but had not disclosed this fact during the present proceedings.

Holding that there was no increase in ITC benefit and consequently no profiteering, the GSTAT rejected the applicant’s objections and accepted the DGAP report dated 28.02.2025, thereby closing the anti-profiteering proceedings against the developer.