The case confirms that an increase in ITC must result in price reduction for buyers. The Tribunal found profiteering where such benefit was not passed on, directing refund with interest.
GSTAT accepted the DGAP investigation finding that the developer retained additional ITC benefit after GST introduction. The amount must be passed on to buyers with interest.
GSTAT directed the DGAP to re-examine the profiteering computation after questions were raised about ignored cost increases, negative values, and supply channel considerations.
GSTAT concluded that elimination of entertainment tax and other levies reduced the effective tax incidence, requiring suppliers to pass on the benefit to subscribers.
The Tribunal found merit in the respondent’s argument that ITC comparison should be based on identical goods and services and directed DGAP to re-investigate.
GSTAT held that although profiteering of ₹1.70 crore was computed, the developer had passed on ₹2.02 crore to home-buyers. With compliance under Section 171 CGST established, no penalty was imposed, though interest must be paid.
The Tribunal accepted the DGAP report finding no extra ITC benefit after GST implementation and held that Section 171 was not violated.
The GST Appellate Tribunal held that Section 171 does not apply where the housing project began and was executed fully after GST implementation. It accepted the DGAPs finding of no profiteering and closed proceedings.
The Tribunal accepted the DGAP report after verifying that the developer passed on ITC benefits exceeding the computed liability. With the balance amount paid, no further action was required under Section 171 of the CGST Act.
The Tribunal held that additional ITC benefits under GST were not passed on to homebuyers across three projects. The builder must refund ₹98.72 lakh with interest under Section 171 of the CGST Act.
