DGAP Vs SVP Builder (GSTAT)
The matter concerned an investigation conducted by the Director General of Anti-Profiteering (DGAP) against the respondent regarding alleged profiteering in relation to construction services supplied in a residential project. The investigation was initiated following a complaint made by Dr. Rahul Bamal and recommendations of the Standing Committee.
During the investigation, the DGAP examined relevant records and documents. It was found that the respondent had opted for the new taxation scheme after 31.03.2019 under Notification No. 3/2019–Central Tax (Rates) dated 29.03.2019, under which GST was payable at the rate of 5% without input tax credit (ITC). The DGAP calculated the alleged profiteering up to the period of 29.03.2019.
The DGAP adopted a methodology to determine profiteering based on the availability and utilization of ITC. According to this methodology, if ITC available in the post-GST period increased compared to the pre-GST period, it could lead to a reduction in cost for the supplier. Such benefit, under Section 171 of the CGST Act, must be passed on to the recipients of the service. The calculation involved determining the difference in ITC availability between pre-GST and post-GST periods, applying it to the value of purchases made in the post-GST period, and attributing the benefit across the total constructed area to determine profiteering per square foot for the homebuyers.
