GSTAT Rules Section 171 Inapplicable to Fully Post-GST Works Contract

The GST Appellate Tribunal (GSTAT), Principal Bench, on 5 May held that no anti-profiteering liability arises where the entire procurement and execution of a works contract project took place after the implementation of GST. The Tribunal, in the case of DG Anti-Profiteering vs. Belhekar & Kale Associates, accepted the findings of the Directorate General of Anti-Profiteering (DGAP) and closed the proceedings under Section 171 of the CGST Act, 2017.

The proceedings originated from an application filed by Mumbai Port Trust Authority alleging profiteering by Belhekar & Kale Associates in relation to the works contract for “Modernization of MICT.” The matter was referred to the DGAP for detailed investigation under Rule 129 of the CGST Rules, 2017.

The DGAP, in its report dated 21.01.2026, observed that the case did not involve construction of flats or residential units by a builder, but related to a works contract executed for a Government agency pursuant to a detailed tender process. Although the tender had been floated on 25.05.2017 during the pre-GST regime, the Letter of Acceptance was issued on 08.08.2017 and the actual work commenced only on 03.02.2018, both after GST came into force on 01.07.2017.

The investigation further noted that no procurement of inputs or execution activity had taken place during the pre-GST period. As a result, comparison of pre-GST and post-GST Input Tax Credit (ITC) benefits was not possible. The DGAP also recorded that the Applicant had withheld an amount of Rs. 22.66 crore from the Respondent’s bills on allegations of profiteering. However, the DGAP concluded that there was no contravention of Section 171 of the CGST Act. The Tribulnal held that :

“It is evident that the entire procurement and execution of the project occurred in the post-GST period.”

During the proceedings before the Tribunal, multiple opportunities were granted to the Applicant to file written objections to the DGAP report. However, despite repeated notices and hearings, no appearance or submissions were made on behalf of the Applicant. The Respondent urged the Tribunal to accept the DGAP report and conclude the proceedings, while the DGAP also supported acceptance of its findings.

The Tribunal observed that since the entire execution of the project had taken place after GST implementation, the contract price was deemed to have been fixed considering the post-GST tax regime itself. Relying upon paragraph 128(d) of the Delhi High Court judgment in Reckitt Benckiser India Private Limited v. Union of India, the Tribunal held that no additional ITC benefit was required to be passed on in such circumstances.

“No benefit of Input Tax Credit is required to be passed on, as the contract price is deemed to have been fixed taking into account the post-GST tax structure.”

Thus, the GSTAT accepted the DGAP report dated 21.01.2026 and held that the provisions of Section 171 of the CGST Act, 2017 had not been violated by Belhekar & Kale Associates. The proceedings were consequently closed.

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