DGAP Vs Pan Realtors Pvt. Ltd (GSTAT)
The proceedings arose from an investigation initiated under Section 171 of the Central Goods and Services Tax Act, 2017, following a complaint alleging that the benefit of input tax credit (ITC) was not passed on through commensurate reduction in prices in a real estate project. The Standing Committee on Anti-Profiteering examined the complaint and referred the matter for investigation. An initial investigation report was submitted to the erstwhile National Anti-Profiteering Authority (NAA), which subsequently ordered re-investigation. After re-investigation, another report was submitted.
Subsequently, following the judgment of the Delhi High Court dated 29.01.2024 in Reckitt Benckiser India Pvt. Ltd. v. Union of India & Ors., which reviewed the methodology for determining profiteering in real estate cases, the Competition Commission of India directed a fresh re-investigation in light of the principles laid down by the High Court. The High Court clarified that no fixed or uniform formula could be applied to determine profiteering, identified four scenarios governing entitlement to ITC benefits depending on the stage of construction and sale, and rejected the ITC-to-turnover ratio in favour of an area-based computation to ensure equal per-square-foot benefit to buyers.
Pursuant to these directions, the Director General of Anti-Profiteering conducted a fresh re-investigation and issued notice to the respondent. In the final report dated 10.01.2025, the DGAP examined project records and documents furnished under the Real Estate (Regulation and Development) Act, 2016. It was found that the project comprised 2,084 units, including 2,051 residential flats and 33 commercial shops, with a total saleable area of 30,80,033 square feet. The Occupancy Certificate was issued on 17.01.2018. Of the total units, 1,865 units with a saleable area of 27,22,093 square feet were sold prior to issuance of the Occupancy Certificate, while 219 units with a saleable area of 3,57,940 square feet were sold thereafter.
