No Anti-Profiteering Where Flat Was Booked Post-GST with ITC Factored In

A complaint was filed alleging profiteering by Shrivision Towers Pvt. Ltd.  aka Shriram Greenfield project, claiming that the benefit of input tax credit (ITC) arising from the introduction of GST w.e.f. 01.07.2017 was not passed on by way of a commensurate reduction in the price of a flat booked by the complainant in Phase-I of the project. The matter was examined by the DGAP after referred by the Standing Committee. Competition Commission of India directed a reinvestigation due to the judgment in Reckitt Benckiser India Pvt. Ltd.

The DGAP compared pre-GST and post-GST purchase values and ITC availed for Phase-I and concluded that the ITC-to-cost ratio had actually reduced post-GST, resulting in no cost savings to the respondent. The DGAP held that there was no contravention of Section 171 of the CGST Act. The complainant filed objections, which were opposed by the respondent.

Issue Before Tribunal: Whether the respondent builder had profiteered by not passing on the benefit of ITC to the homebuyer under Section 171 of the CGST Act, 2017.

GST Tribunal Held: The GST Appellate Tribunal accepted the DGAP’s report and rejected the complaint. It held that the investigation correctly confined itself to Phase-I of the project and followed the methodology laid down by the High Court in Reckitt Benckiser India Pvt. Ltd.

The Tribunal noted that the ITC ratio decreased from 15.25% in the pre-GST period to 14.57% in the post-GST period, showing that no additional benefit accrued to the respondent on account of GST. Since the flat was booked in the post-GST period and prices were fixed after factoring in available ITC, no benefit was required to be passed on to the buyer. Thus, no violation of Section 171 was established.

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