GSTAT Orders LLP to Pass Rs. 5.80 Lakh ITC Benefit to 13 Homebuyers in Residences Project

The Director General of Anti-Profiteering (DGAP) initiated an investigation against M/s. Nahar Homes LLP following a complaint regarding the project “Xrbia Hinjewadi Road.” The investigation was done to determine if the Respondent had passed on the benefit of the Input Tax Credit (ITC) to the homebuyers after the implementation of GST.

The DGAP’s report concluded that the Respondent had benefited from additional ITC but failed to reduce the prices of the housing units commensurately, leading to “profiteering” as defined under Section 171 of the CGST Act.

Issue Raised: Whether the Respondent is liable to refund the profiteered amount to homebuyers with interest, and whether the 10% penalty under Section 171(3A) is applicable given the timeline of the contravention.

GST Appellate Tribunal’s Ruling: The GST Appellate Tribunal (GSTAT) upheld the DGAP’s findings and ordered the Respondent to refund the remaining profiteered amount of Rs. 5,80,280 to 13 eligible buyers. The refund must include applicable interest and be completed within 30 days. The Tribunal ruled that since the period of contravention extended up to January 29, 2020, the penalty provisions under Section 171(3A) are applicable.

Thus, the Respondent is liable to pay a penalty equivalent to 10% of the profiteered amount. However, the Tribunal clarified that the penalty would be waived if the entire profiteered amount is deposited within 30 days of the order.

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