DG Anti Profiteering Vs IJM Raintree Park Pvt. Ltd. & Ors. (GSTAT)
The proceedings arose from a complaint alleging profiteering under Section 171 of the CGST Act, 2017, in relation to a real estate project. The complainant contended that the developer failed to pass on the benefit of Input Tax Credit (ITC) after the introduction of GST with effect from 01.07.2017, thereby violating anti-profiteering provisions.
The complaint was examined and referred for investigation. Initially, the Director General of Anti-Profiteering (DGAP) submitted a report in 2020 concluding that the developer had profiteered. However, this finding was later reconsidered following judicial developments. The National Anti-Profiteering Authority (NAA) directed reinvestigation, and subsequent changes in law transferred jurisdiction to the Competition Commission of India (CCI) and later to the GST Appellate Tribunal (GSTAT).
A key turning point was the judgment of the Delhi High Court in Reckitt Benckiser India Pvt. Ltd., which held that there is no fixed formula for determining profiteering and rejected the earlier methodology based on ITC-to-turnover ratio. It emphasized that, particularly in real estate, ITC must be evaluated based on total project cost and area, as expenses and credit accrual are not uniform throughout the project lifecycle.
In light of this judgment, the DGAP conducted a fresh investigation and adopted a revised methodology comparing the ratio of ITC to purchase value in pre-GST and post-GST periods. The analysis showed that the ratio declined from 6.81% in the pre-GST period to 3.34% in the GST period, reflecting a negative difference of 3.47%. Based on this, the DGAP concluded that no additional ITC benefit accrued to the developer post-GST and therefore there was no requirement to pass on any benefit to buyers.
