DGAP Vs Arkade Developers Pvt. Ltd. (GSTAT)
The proceedings arose from an investigation initiated by the Director General of Anti-Profiteering (DGAP) under Section 171 of the Central Goods and Services Tax Act, 2017, following a complaint alleging non-passing of input tax credit (ITC) benefits in a residential real estate project. The Standing Committee on Anti-Profiteering found a prima facie case and referred the matter to DGAP, which initially concluded that the statutory provisions had been contravened. However, pursuant to directions issued after the Delhi High Court’s judgment dated 29.01.2024 in Reckitt Benckiser India Pvt. Ltd. v. Union of India, the Competition Commission of India directed a re-investigation, requiring a revised methodology for computing profiteering in real estate cases.
The re-investigation was conducted in line with the High Court’s principles, which rejected a uniform ITC-to-turnover method and mandated a project-wise, area-based approach. Notices were issued to the developer and the landowner, and extensive documentary evidence was furnished, including GST returns, pre-GST tax records, project approvals, RERA filings, occupancy certificate, sale agreements, audited financial statements, and proof of passing on ITC benefits to buyers.
DGAP established that the project comprised 86 residential units, of which 59 belonged to the developer and 27 to the landowner. Only one unit was booked in the pre-GST period, while most others were booked post-GST. Units sold after the issuance of the occupancy certificate were held to be exempt supplies and outside the scope of Section 171. For the remaining eligible buyers, the sale agreements expressly recorded that prices were negotiated after factoring in ITC benefits, confirming that no additional benefit was due.
