DG Anti Profiteering Vs Sobha Limited (GSTAT)
The matter arose from an anti-profiteering application filed by homebuyers alleging that the developer had failed to pass on the benefit of input tax credit (ITC) following the introduction of GST from 01.07.2017, as required under Section 171 of the CGST Act. The allegation pertained to construction services in a residential project in Gurugram.
The Standing Committee on Anti-Profiteering, upon prima facie satisfaction, referred the matter to the Director General of Anti-Profiteering (DGAP) for investigation. The DGAP initiated proceedings and called upon the Respondent to justify whether ITC benefits had been passed on to buyers through commensurate price reductions.
After investigation, the DGAP, in its report dated 21.08.2025, concluded that the ratio of credit availed to purchase value decreased from 12.26% in the pre-GST period to 11.02% in the post-GST period, showing a negative difference of 1.24%. This indicated that no additional ITC benefit accrued to the Respondent after GST implementation. Consequently, there was no requirement to pass on any benefit, and no violation of Section 171 of the CGST Act was established.
During proceedings before the GST Appellate Tribunal (GSTAT), the Complainants did not directly challenge the DGAP findings but sought access to investigation records. The Respondent raised preliminary objections regarding the maintainability of the proceedings, arguing that:
- The agreement between parties was executed post-GST.
- Prices were determined after factoring in GST and ITC.
- Entire construction, payment, and transaction occurred in the GST regime.
- The Complainants had accepted the pricing and payment structure.
- The case was covered by the Delhi High Court ruling in Reckitt Benckiser India Pvt. Ltd. v. Union of India.
The Complainants contended that:
- The property was under construction and not a completed unit.
- Section 171 applies irrespective of agreement timing.
- ITC benefits were not passed on and required adjudication.
- The Respondent misinterpreted legal precedents.
The Tribunal examined the applicability of paragraph 128(d) of the Delhi High Court judgment, which clarifies that no ITC benefit is required to be passed on where both construction and purchase occur entirely in the post-GST period, as prices would already factor in ITC.
