2026-VIL-75-GSTAT-DEL-NAPA
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SGST Tribunal

GST - Anti-profiteering – Benefit of input tax credit – Cost escalation in construction materials – Offset of ITC benefit – Applicant consumer filed complaint under Section 171 of CGST Act alleging that Respondent builder had not passed on benefit of ITC available post-GST for residential project - Respondent contended that budgeted construction cost exceeded actual expenditure - Whether genuine commercial factor of cost escalation in construction materials can offset benefit of additional ITC and whether substantial increase in input costs during project execution negates profiteering allegation - HELD - After detailed verification of CA certificate and supporting sample invoices DGAP accepted Respondent's claim of cost escalation and revised its computation deducting cost escalation from total savings on account of additional ITC benefit resulting in negative net savings - Respondent has not profiteered at all in respect of project as benefit of additional ITC was entirely offset by substantial increase in cost of construction materials. Hon'ble Delhi High Court in Reckitt Benckiser India Pvt. Ltd. v. Union of India has clarified that manufacturer or supplier despite reduction on rate of tax or benefit of ITC can raise prices based on commercial factors as long as same is not pretense and that in some cases commercial factors might necessitate increase in price despite reduction in rate of tax or increase in availability of benefit of ITC - The anti-profiteering orders could be set aside on merits if they fail to consider genuine variations in other factors such as cost escalations on account of which the reduction stands offset. Respondent has established genuine and substantial escalation in cost of major construction materials accepted by DGAP. Revised methodology adopted by DGAP deducting proven cost escalation from total savings is legally sound and appropriate and aligns with observations of Hon'ble Delhi High Court - Increase in input costs has tangible impact on project's economics effectively offsetting benefit that might have accrued from additional ITC after introduction of GST – Respondent is not found to have contravened provisions of Section 171 of CGST Act – The matter is disposed of
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