2026-VIL-82-GSTAT-DEL-NAPA
  1. Home
  2. 2026-VIL-82-GSTAT-DEL-NAPA

SGST Tribunal

GST - Anti-Profiteering – Construction of flats under joint venture with different pricing categories – Applicability of anti-profiteering provisions to Lower Income Group and Middle Income Group units where prices are fixed under State Government Notification – Whether the Respondent has contravened the anti-profiteering provisions of Section 171 of the CGST Act in respect of Lower Income Group and Middle Income Group units where prices were statutorily capped by Government notification limiting recovery to direct costs only – HELD – Upon introduction of GST the Respondent became entitled to avail Input Tax Credit on goods and input services unlike the pre-GST regime where credit was restricted. The comparison of ITC in pre-GST and post-GST periods shows that additional benefit accrued to the Respondent. Such benefit is required to be passed on to homebuyers by way of commensurate reduction in prices. However the statutory restriction governing pricing of Lower Income Group and Middle Income Group units assumes material significance - The West Bengal Housing Department issued a notification fixing the maximum sale rate per square foot for LIG and MIG categories and specifically stipulating that only direct costs and no overhead or administrative costs were to be charged. Unlike in the case of Higher Income Group units the Respondent had no commercial discretion to load overheads administrative expenses or other indirect costs including the taxes attributable thereto into the sale price of LIG and MIG units - The pricing mechanism applicable to Lower Income Group and Middle Income Group units was materially different from that applicable to Higher Income Group units. Accordingly no profiteering can be attributed to the Respondent in respect of Lower Income Group and Middle Income Group units and any computation of profiteering if warranted ought to be restricted to Higher Income Group units alone – The Respondent has not contravened Section 171 in respect of Lower Income Group and Middle Income Group categories. No profiteering is attributable to these categories on account of the statutory restriction governing their pricing – The matter is disposed of - Anti-Profiteering – Comparison of Input Tax Credit availed in pre-GST and post-GST periods and passing of benefit to homebuyers – The Respondent constructed Higher Income Group flats entitled to avail additional Input Tax Credit post-GST compared to the pre-GST regime – Whether the Respondent derived additional Input Tax Credit benefit for Higher Income Group units – HELD – The statutory obligation to pass on benefit of reduction in tax rate or additional Input Tax Credit arises at the time of supply by way of commensurate reduction in prices. The Court has recognised genuine commercial cost escalations. Upon re-examination the Authority accepted the Respondent's Cost Escalation submission along with the CA Certificate - The Respondent had provided sufficient evidentiary support to establish passing on of Input Tax Credit benefit through issuance of credit notes and reduction in prices - The profiteered amount determined for Higher Income Group category was restricted to the residual shortfall requiring to be passed on to eligible recipients. – The Respondent derived additional Input Tax Credit benefit amounting to a specified sum inclusive of GST for Higher Income Group category and is liable to pass on such benefit to eligible recipients. The amount previously passed on must be duly verified and credited against the total demand - Anti-Profiteering – Liability to pay Interest on Unpassed Input Tax Credit Benefit – CGST Act Section 171, Rule 133(3)(b) – Whether interest is payable on the profiteered amount determined not to have been passed on and at what rate and for what period – HELD – Interest on unpassed Input Tax Credit benefit is compensatory in nature and intended to ensure restitution of the time value of money that rightfully belongs to the recipients. Section 171 casts statutory obligation to pass on benefit of reduction in tax rate or availability of additional Input Tax Credit by way of commensurate reduction in prices at the time of supply. Rule 133(3)(b) provides that amount not so passed on shall be returned to recipients along with interest at the rate of eighteen percent per annum calculated from the date of collection of the higher amount till the date of its actual return. The Delhi High Court in Reckitt Benckiser judgment held that Section 171 is broad enough to empower authorities to prescribe interest to deter registered persons from pocketing benefits meant for consumers. No special circumstances warrant deviation from the principled approach of awarding interest at eighteen percent in anti-profiteering cases – Respondent is liable to pay interest at the rate of eighteen percent per annum from the respective dates of collection of excess amount until the date of refund to eligible homebuyers - Penalty of ten percent of the profiteered amount is leviable under Section 171(3A) of CGST Act. However penalty shall stand waived if the Respondent deposits the entire profiteered amount with eligible homebuyers within thirty days from the date of the anti-profiteering authority's order.
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Weekly Summary

VIL Video

GST Critical issues: ITC on...
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Security-Code
New Code?

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Security-Code
New Code?

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?