DG Anti Profiteering Vs LIC HFL Care Homes Ltd (GSTAT)
The case arises under Section 171 of the Central Goods and Services Tax (CGST) Act, 2017 and concerns whether a real estate developer profiteered by not passing on the benefit of Input Tax Credit (ITC) to homebuyers through commensurate reduction in prices. The issues included determination of profiteering amount, liability to pay GST on such amount, and applicability of interest.
A homebuyer alleged that the developer failed to pass on ITC benefits after the introduction of GST and instead charged GST at 12% on demands raised post-GST. The complaint was examined and referred to the Directorate General of Anti-Profiteering (DGAP), which conducted an investigation for the period from July 2017 to September 2020 and initially computed profiteering. The erstwhile National Anti-Profiteering Authority (NAA) accepted the findings and directed payment to homebuyers. The developer challenged the order before the Delhi High Court, which remanded the matter for reinvestigation, holding that no uniform formula exists for determining profiteering and that methodology must be case-specific, particularly in real estate projects.
Pursuant to the remand, the DGAP reinvestigated the matter and recalculated the profiteered amount for July 2017 to November 2019 as ₹2,07,08,131, with GST of ₹24,84,976, aggregating to ₹2,31,93,107. The recalculation was based on comparing ITC availability before and after GST. It was found that ITC as a percentage of purchase value increased from 0% in the pre-GST period to 17.99% in the post-GST period, resulting in additional savings. These savings were computed project-wise and distributed on a per square foot basis across sold units.
