Builder got no Additional ITC Benefit Despite Occupancy Certificate Issued Post-GST Rollout: GSTAT Clears IREO Victory Valley [Read Order]

The Principal Bench of the GST Appellate Tribunal (GSTAT) at New Delhi recently accepted a closure report issued by the Directorate General of Anti-Profiteering’s (DGAP) and held that the builder did not accrue any additional Input Tax Credit (ITC) benefit following the implementation of GST despite the allied occupancy certificates having been issued in September 2017.

The proceedings originated from a recommendation by the erstwhile National Anti-Profiteering Authority (NAA) in the Ireo Grace Residency matter, which directed DGAP to investigate other IREO projects for alleged profiteering.

DGAP covered the period 31 July 2017 to 31 December 2020 in their probe and examined multiple phases of the Victory Valley projects among other IREO projects.

The respondent informed investigators that the IREO brand comprised several legal entities and specifically stated that no claim for additional ITC had been made in respect of Victory Valley, while admitting accrual of additional ITC only in two distinct projects belonging to two other distinct legal entities under the same group.

The DGAP investigation recorded that part occupancy for Victory Valley was certified on 25 July 2016 and the balance on 28 September 2017. Accordingly, the Directorate concluded that the project was substantially completed in the time preceding GST regime implementation, with only residual construction finishing immediately after GST implementation.

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Geetanjali appeared on behalf of the DGAP and submitted that the matter was investigated and examined a number of times by DGAP and no contravention of the provision under section171(1) of the CGST Act, 2017 was found on the part of the respondent.

The NAA, through its order dated August 22, 2022, directed the DGAP to conduct a re-investigation on specific aspects, noting discrepancies in the number of EWS units declared by the builder - 147 as per submissions against 168 reflected in the occupancy certificates.

Consequently, the matter was taken up by the Competition Commission of India (CCI), who also directed the DGAP to conduct re-investigation.

The NAA also noted that the DGAP had not included retail turnover in the computation table and that several details regarding reversal of ITC upon receipt of the occupancy certificates were missing.

When the matter came up before the GSTAT, a Single-Member Bench headed by Justice (Retd.) Mayank Kumar Jain, Member (Judicial) observed that the DGAP consistently found no accrual of additional ITC to the respondent in the post-GST period and that the issues raised by the NAA and CCI had been examined in subsequent reports.

Accordingly, it was concluded that there was no contravention of Section 171(1) of the CGST, Act, 2017. The Tribunal thus accepted the DGAP report as a closure report and directed that the order be supplied to the respondent and concerned Commissionerates.

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