GSTAT Dismisses Profiteering Allegation Against Mantri Castles in “Mantri Serenity” Project

Proceedings arose from a complaint alleging profiteering in the “Mantri Serenity” residential project at Kanakpura Main Road, Bangalore, against M/s Mantri Castles Pvt. Ltd. (now M/s Castle Vista Pvt. Ltd.) for allegedly not passing on additional ITC benefits post-GST in violation of Section 171 of the CGST Act.

The DGAP initially submitted a report before the erstwhile NAA, but pursuant to the High Court’s judgment dated 29.01.2024 in connected real estate matters, the case was remanded for fresh investigation. Upon reinvestigation for the period 01.07.2017 to 31.03.2024, the DGAP found that the ITC-to-turnover ratio decreased from 13.57% (pre-GST) to 11.04% (post-GST), showing a negative differential of (-2.53%).

Main Issue: Whether the Respondent had failed to pass on additional ITC benefits to homebuyers in contravention of Section 171 of the CGST Act, 2017.

GSTAT’s Decision: The Principal Bench of the GST Appellate Tribunal accepted the DGAP’s reinvestigation report and held that there was no contravention of Section 171.

The Tribunal observed that the comparative ITC analysis showed no incremental benefit accrued to the Respondent post-GST. Since the post-GST ITC ratio was lower than the pre-GST ratio, the essential requirement of profiteering was not satisfied. The Tribunal concluded that no profiteering had occurred and disposed of the matter accordingly.

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