GSTAT: No “Profiteering” Possible Where Project Commenced After GST Implementation

The Director General of Anti-Profiteering (DGAP) conducted an investigation into the project “AVIDIPTA-II” developed by M/s. Bengal Peerless Housing Development Company Ltd. The probe was initiated to determine if the developer had failed to pass on the benefit of Input Tax Credit (ITC) to homebuyers under Section 171 of the CGST Act.

The DGAP’s report noted that the project was registered with RERA on February 8, 2019, and all marketing, booking, allotment, and construction, took place entirely within the post-GST regime (after July 1, 2017).

Main Issue: Whether the anti-profiteering provisions of Section 171 of the CGST Act apply to real estate projects that were conceived, launched, and constructed entirely after the implementation of the GST regime.

GSTAT Held: The GST Appellate Tribunal (GSTAT) accepted the DGAP report and held that there was “NIL” profiteering by the respondent. The Tribunal clarified that Section 171 is designed to ensure that benefits arising from a reduction in tax rates or an increase in ITC are passed on to consumers.

As the project “AVIDIPTA-II” commenced entirely in the post-GST period, there was no “transition” or change in tax structure to trigger the anti-profiteering clause. The Tribunal relied on the Delhi High Court’s precedent, which established that no ITC benefit is required to be passed on under Section 171 when the construction and sale of the housing unit occur exclusively post-GST.

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