DG Anti Profiteering Vs Townpark Buildcon Pvt. Ltd. (GSTAT)
The proceedings arose from an application under Rule 128 of the Central Goods and Services Tax Rules, 2017 alleging that the respondent builder had failed to pass on the benefit of Input Tax Credit (ITC) by way of a commensurate reduction in the price of a flat following the introduction of GST from 1 July 2017, in contravention of Section 171 of the CGST Act, 2017. The Standing Committee on Anti-Profiteering referred the matter to the Director General of Anti-Profiteering (DGAP) for investigation under Rule 129 of the CGST Rules, 2017. The investigation was conducted in accordance with the directions of the Delhi High Court in Reckitt Benckiser India Private Limited v. Union of India, which required project-wise computation of total GST savings and allocation of the benefit on a per square foot basis rather than by comparing ITC-to-turnover ratios.
The project received its Occupancy Certificate on 22 November 2019. Accordingly, although the investigation period extended until 31 March 2024, the DGAP restricted the computation of the profiteered amount to the period from 1 July 2017 to 22 November 2019, holding that the obligation to pass on ITC benefits ceased upon issuance of the Occupancy Certificate. After examining GST returns, VAT returns, CA-certified annexures and other records, the DGAP found that the pre-GST credit-to-purchase ratio was 13.70%, while the post-GST ratio increased to 14.34%, resulting in an additional ITC benefit of 0.64%. This translated into total savings of ₹32,47,736, or ₹5.27 per square foot. Applying this methodology to the relevant saleable area, the DGAP computed a total profiteered amount of ₹31,68,907 including GST. It further found that while the respondent had already passed on ITC benefits to several homebuyers, a balance amount of ₹11,13,155 inclusive of GST remained payable to 149 eligible homebuyers.
