Builder Required to Pass on GST ITC Benefits to Homebuyers: GSTAT Directs Buyer-Wise Refund of ₹1 Cr Profiteered Amount [Read Order]

The Principal Bench of the Goods and Services Tax Appellate Tribunal (GSTAT) at Delhi directed a residential property construction company to pass on the GST Input Tax Credit (ITC) benefits of ₹1,00,67,677 to its homebuyers after observing that the constructor had contravened anti-profiteering provisions.

The ruling was made by the GSTAT on an appeal filed by the Director General of Anti-Profiteering (DGAP) against the Respondent Transcon Sheth Creators Pvt. Ltd. (Transcon).

The facts originate from applications filed by two homebuyers to the Standing Committee on Anti-Profiteering that the Respondent had failed to pass on the benefit of additional ITC by way of commensurate reduction in prices in respect of construction services supplied in its project “Auris Serenity Tower-2” situated at Malad West, Mumbai.

The Standing Committee, upon being certain that a prima facie case existed, referred the matter for investigation to the DGAP

The DGAP concluded that Transcon had benefited from additional ITC post the implementation of GST, and had not passed on the corresponding benefit to homebuyers, thereby engaging in profiteering. The DGAP computed ₹1,00,67,677 as the total profiteered amount, which were in fact, to be passed down to 340 eligible homebuyers of the project.

The DGAP placed its findings before the GSTAT. During the proceedings, the Respondent acknowledged the findings recorded in the DGAP report and agreed to pass on the profiteered amount to the eligible buyers.

The Bench of Anil Kumar Gupta, Member (Technical), noted that the DGAP’s investigation was conducted in accordance with the statutory provisions and that the Respondent had accepted the determination of profiteering. The Tribunal accordingly accepted the DGAP report and confirmed the contravention of Section 171 of the CGST Act by the Respondent.

Accordingly, the GSTAT directed the Respondent to refund the entire profiteered amount of ₹1,00,67,677 along with applicable interest to the 340 eligible buyers within 30 days from the date of the order as per Rule 133(3)(b) of the CGST Rules.

Transcon was further directed to file a compliance report before the DGAP and the jurisdictional GST authorities once the refund distribution proc