2026-VIL-50-GSTAT-DEL-NAPA
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  2. 2026-VIL-50-GSTAT-DEL-NAPA

SGST Tribunal

GST - Anti-Profiteering - Inclusion of GST in quantification of profiteered amount - Appellant contended that GST component should not be included in profiteered amount as GST was only collected tentatively and deposited with government and does not represent benefit retained by appellant - Whether GST component calculated on inflated base price constitutes part of profiteered amount to be refunded to homebuyers - HELD – The profiteered amount represents total extra consideration extracted from homebuyer unlawfully. When homebuyer was charged GST on inflated base price resulting from non-passing of ITC benefit, the homebuyer bore the entire burden of such extra GST which was deposited by developer with government. To restore homebuyer to position that would have existed if benefit was passed on, homebuyer must be refunded entire extra amount paid including GST component on that extra amount - GST collected by supplier on additional realization has rightly been included in profiteered amount. Economic reality is that homebuyer bore additional cost including GST component - GST component at 12% is correctly included in profiteered amount and total profiteered amount – Ordered accordingly - Anti-Profiteering - Determination of recipient for restitution of profiteered amount - Appellant contended that net profiteered amount should be deposited into Consumer Welfare Fund under Rule 133(3)(c) of CGST Rules on ground that eligible persons (homebuyers) have not claimed return and are not identifiable particularly after formation of cooperative housing society and transfer of project - Whether rule providing for deposit in Consumer Welfare Fund applies when recipients are alleged to be unidentifiable despite records showing buyer-wise details - HELD - The Rule 133(3)(c) is residuary provision and is attracted only in those cases where eligible recipients are genuinely unidentified despite exercise of due diligence. Expression not identifiable cannot be interpreted to mean that recipient has not filed complaint, is not presently available or that computation has not initially been made. Identification of recipient is factual determination based on transaction records and not procedural one dependent on filing of complaint or claim. DGAP has clearly stated that consumers are identifiable to investigation report contains buyer-wise details of profiteering amount for 128 units - Real estate developer is expected to maintain exhaustive records of each homebuyer including name, address, unit number, area of flat, agreement value and amounts received. Fact that developer may not have current contact details does not mean they are not identifiable in eyes of law. Records of project contain names and details of original allottees - Net profiteered amount is not liable to be deposited in Consumer Welfare Fund and must be returned to individual homebuyers - Anti-Profiteering - Set-off of excess benefits passed to some customers against profiteering liability owed to other customers - Whether Tribunal possesses power to direct set-off and recovery of excess amounts from consumers or whether statutory obligation is owed to distinct entities separately - HELD - Section 171 of CGST Act mandates benefit of ITC shall be passed on to recipient by way of commensurate reduction in prices. Statutory obligation is to recipient of supply and recipient is person entitled to benefit. Appellant cannot claim set-off of excess payment made to some customers against liability owed to other customers as obligations are owed to distinct and separate legal entities - Tribunal does not possess any power to direct customers to refund excess amount as provision of Section 171 does not contemplate such direction. Power of tribunal under CGST Act is circumscribed by statutory framework and is limited to ensuring that benefit of ITC is passed on by way of commensurate reduction in prices. Act does not confer power on tribunal to order recovery of amounts from consumers or permit set-off of such amounts against liability of supplier to other consumers – The plea for set-off is rejected and appellant cannot deny legitimate claims of remaining 128 customers by seeking adjustment against overcompensation of others - Anti-Profiteering - Interest on profiteered amount - Whether interest at eighteen percent per annum is payable from date of collection of higher amount till actual refund and from which date should interest be computed - HELD - The Delhi High Court in Reckitt Benckiser case explicitly held that Rule 133(3)(b) of CGST Rules providing for interest at 18% per annum is valid enabling provision. Section 171 is broad enough to empower central government to prescribe penalty and interest to ensure that suppliers are deterred from pocketing benefits meant for consumers - However in practical application where profiteering is computed on project-completion basis with per-square-feet benefit determined on project-wide basis it is not possible to determine exact date each homebuyer paid higher amount for each square foot. Therefore interest shall be computed from date of payment of last instalment by each homebuyer which represents date on which final consideration was collected and serves as reasonable and justifiable benchmark for commencement of interest liability - Interest is payable at 18% per annum from date of payment of last instalment by each homebuyer till date of actual refund - Anti-Profiteering - Imposition of penalty for contravention of Section 171 - Appellant contended that Section 171(3A) providing for ten percent penalty was inserted with effect from 01.01.2020 and cannot be applied retrospectively to period when provision was not in force - Whether penalty under Section 171(3A) can be imposed where entire period of alleged contravention was completed prior to date on which penalty provision came into force - HELD - Section 171(3A) of CGST Act was inserted vide Section 112 of Finance (No.2) Act 2019 with effect from 01.01.2020 - Upon examination of facts period of contravention during which appellant is alleged to have profiteered is from 01.07.2017 to 30.10.2019 which is evident from investigation report wherein profiteering is computed for period from July 2017 to October 2019. Appellant received Occupancy Certificate for project on 30.10.2019. Entire period of contravention stands fully completed on 30.10.2019 which is prior to coming into force of Section 171(3A) on 01.01.2020. Since alleged contravention stands fully completed on 30.10.2019 prior to enforcement of Section 171(3A) with effect from 01.01.2020 the said penalty provision has no application to facts of present case. Penal provision cannot be applied retrospectively to period when it was not in force - Appellant is not liable to pay any penalty under Section 171(3A).
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