GSTAT Upholds Anti-Profiteering Demand Against Siddha Infradev Over Unpassed ITC Benefits

The Principal Bench of the Goods and Services Tax Appellate Tribunal (GSTAT), Delhi, has upheld anti-profiteering proceedings against Siddha Infradev LLP and directed the developer to refund Rs 63.93 lakh, along with 18% interest, to eligible homebuyers after finding that the benefit of additional Input Tax Credit (ITC) under the GST regime was not passed on through a commensurate reduction in prices.

The single-member bench comprising Technical Member Anil Kumar Gupta accepted the DGAP’s investigation report and held that the respondent had contravened Section 171 of the CGST Act by retaining the benefit of additional ITC in respect of the “Siddha Sky” residential project in Kolkata.

The tribunal observed that the anti-profiteering provisions under the CGST Act are beneficial in nature and procedural delays cannot defeat substantive consumer rights. “Procedural delays by a statutory authority, in the absence of any prescribed consequence for lapse of such timeline, cannot be allowed to defeat the substantive rights of consumers.”

The proceedings originated from a complaint filed by two homebuyers alleging that, despite charging GST at the effective rate of 12%, the developer failed to pass on the benefit of ITC by reducing the price of the flat purchased in the project. Following the investigation, the Director General of Anti-Profiteering (DGAP) initially determined profiteering at Rs 1.88 crore. However, after remand proceedings and reconsideration in light of the Delhi High Court’s ruling in Reckitt Benckiser India Pvt. Ltd. v. Union of India, the methodology for computation was revised.

The DGAP thereafter adopted the purchase value-based methodology and concluded that the respondent had derived an additional ITC benefit of 8.69% during the post-GST period. Out of 340 units in the project, only 9 pre-GST buyers were held eligible for the benefit. Accordingly, the profiteered amount was recomputed at Rs 57.08 lakh, and after adding GST at 12%, the total amount payable came to Rs 63.93 lakh.

Rejecting the objections, the tribunal held that timelines prescribed under Rule 128 are directory and not mandatory. Relying on the Delhi High Court’s decision in Reckitt Benckiser, the bench held that anti-profiteering provisions are intended to protect consumer welfare and must receive liberal interpretation.

On the inclusion of GST in the profiteered amount, the tribunal held that the GST component collected on the inflated consideration also forms part of the benefit denied to homebuyers. “By not passing on the benefit of additional ITC, the Respondent has effectively retained this GST component as well, which rightfully belongs to the recipients.”

The bench also held that penalty proceedings under Section 171(3A) of the CGST Act were attracted for the period commencing. However, the tribunal noted that the respondent could avoid a penalty if the profit amount was deposited within 30 days from the date of the order.

Thus, the GSTAT directed Siddha Infradev LLP to refund Rs 63.93 lakh along with 18% interest to the 9 eligible homebuyers and file a compliance report before the jurisdictional authorities within three months.

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