GSTAT Closes Anti-Profiteering Case Against Pacifica Developers; No GST Benefit Withheld

An appeal before the GST Appellate Tribunal arose from an investigation by the Director General of Anti-Profiteering (DGAP) against Pacifica Developers Pvt. Ltd. relating its residential project “Reflections”. The proceedings were initiated after a 2019 complaint challenging that the developer failed to pass on the benefit of additional Input Tax Credit (ITC) to buyers after the implementation of GST from 01.07.2017, as mandated under Section 171 of the CGST Act, 2017.

The DGAP initially submitted a report, following the judgment of the High Court concerning anti-profiteering methodology in real estate cases, the matter was remitted for re-investigation. The DGAP concluded that the ITC-to-turnover ratio decreased from 7.09% (pre-GST) to 6.44% (post-GST), resulting in a negative differential of 0.65%, and thus no additional ITC benefit accrued.

Issue Before Tribunal: Whether Pacifica Developers Pvt. Ltd. had contravened Section 171 of the CGST Act by not passing on the benefit of additional input tax credit to homebuyers after implementation of GST.

Tribunal’s Ruling: The Tribunal examined the re-investigation report and noted that the ITC ratio in the post-GST period was lower than in the pre-GST period. Since there was no increase in ITC benefit after the introduction of GST, there was no requirement to pass on any additional benefit to buyers.

The Tribunal accepted the DGAP report. Thus, it was held that there was no contravention of Section 171 of the CGST Act, 2017, and the matter was disposed of as a Closure Report.

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