Builder Fails to Pass GST ITC Benefit to 9 Homebuyers: GSTAT Directs Refund of ₹63.93 Lakh Profiteered Amount [Read Order]

In a recent ruling, the Principal Bench of the Goods and Services Tax Appellate Tribunal (GSTAT) at New Delhi held that Siddha Infradev LLP failed to pass on GST input tax credit (ITC) benefit to 9 eligible homebuyers in its residential project “Siddha Sky” in Kolkata.

The case was under Section 171 of the Central Goods and Services Tax Act, 2017, which deals with anti-profiteering. The complaint was filed by Hemant Kejriwal and Vishnu Kumar Kejriwal, who had purchased Flat No. 904, Block-3, in the project.

The complainants argued that after GST was introduced, the builder received additional ITC benefit but did not reduce the price for homebuyers. They said the builder charged GST at the effective rate of 12% but failed to pass the ITC benefit.

TheDirectorate General of Anti-Profiteering (DGAP) investigated the matter. In its final report dated 18 December 2024, DGAP found that Siddha Infradev LLP had received additional ITC benefit of 8.69% in the post-GST period. The investigation period was from 1 July 2017 to 31 March 2024.

DGAP found that out of 340 units in the project, only 9 pre-GST homebuyers were eligible for the benefit. These buyers had total area of 18,627 sq. ft. DGAP calculated the base profiteered amount at Rs. 57,08,244. After adding GST at 12% of Rs. 6,84,989, the total profiteered amount came to Rs. 63,93,233.

The Siddha Infradev LLP (builder) argued that the case was time-barred because the Standing Committee referred the complaint to DGAP after the time limit under Rule 128 of the CGST Rules. It also argued that GST amount should not be included in the profiteered amount as it was already deposited with the government.

The builder further argued that interest was not payable because Section 171 does not provide for interest. It also challenged the penalty under Section 171(3A).

Anil Kumar Gupta (Technical Member) rejected these arguments. He observed that the time limit under Rule 128 is directory and not mandatory. He explained that anti-profiteering provisions are meant to protect consumers and procedural delay by authority cannot defeat the rights of homebuyers.

On the GST component, the tribunal observed that the builder collected GST on a higher price because it did not pass on the ITC benefit. Hence, GST collected on the excess price was rightly included in the profiteered amount.

The tribunal also held that Siddha Infradev LLP must pay interest at 18% per annum. The interest will run from the date of collection of the higher amount from each buyer till the date of actual refund.

The tribunal further held that penalty under Section 171(3A) is attracted. However, no penalty will be levied if the profiteered amount is deposited within thirty days from the date of the order.

The tribunal accepted the DGAP report and directed Siddha Infradev LLP to refund Rs. 63,93,233 to the 9 eligible homebuyers along with 18% interest. It also directed the builder to file a compliance report before the jurisdictional CGST or SGST Commissioner, with a copy to DGAP, within three months.

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