DGAP Vs IREO Pvt. Ltd. And IREO Residence Company Pvt. Ltd. (GSTAT)
The proceedings before the Goods and Services Tax Appellate Tribunal (GSTAT) concern an anti-profiteering investigation against IREO Pvt. Ltd. and IREO Residence Company Pvt. Ltd. regarding two real estate projects: “Gurgaon Hills” and “Grand Hyatt Gurgaon Residences.” The investigation, initially initiated by the National Anti-Profiteering Authority (NAA) and conducted by the Directorate General of Anti-Profiteering (DGAP), was subject to re-investigation following the significant Delhi High Court judgment in Reckitt Benckiser India Pvt. Ltd. v. Union of India & Ors. (2024).
The Delhi High Court’s ruling, which reviewed the methodology for real estate anti-profiteering cases, established that no single, fixed mathematical formula could be applied across all cases. Specifically, the court found the NAA’s initial methodology, based on the ratio of Input Tax Credit (ITC) to Turnover, to be flawed for the real estate sector. The court directed that the appropriate methodology must instead focus on calculating the total savings on account of GST introduction for each project and dividing that by the total area to arrive at the per-square-foot benefit to be passed on to the flat-buyer.
Pursuant to these judicial directions, the DGAP adopted a revised project-wise methodology for the re-investigation, comparing the ratio of ITC to the total purchase value (cost of goods and services) during the pre-GST period (CENVAT credit) versus the post-GST period (ITC).
