IREO had No Accrued ITC Benefit after Opting GST @5% Scheme: CCI Drops Anti-Profiteering Proceedings [Read Order]

The Competition Commission of India (CCI) recently dropped anti-profiteering proceedings against M/s Ireo Waterfront Pvt. Ltd., observing that the builder did not accrue any additional Input Tax Credit (ITC) benefit following its transition to the GST@5% scheme without ITC.

Before the implementation of Goods and Services Tax (GST) from 1 July 2017, Ireo Waterfront had accumulated Central Value Added Tax (CENVAT) credit under the erstwhile tax regime, part of which was carried forward through TRAN-1 filings into the GST period.

The investigation undertaken by the DGAP primarily examined whether the transitional ITC, or any subsequent credit under GST resulted in undue benefit that should have ideally been passed on to homebuyers.

The DGAP had initially filed its investigation report on 15 December 2021 before the erstwhile National Anti-profiteering Authority (NAA). However, with effect from 1 December 2022, the mandate to examine profiteering was vested in the CCI as per Notification No. 23/2022-Central Tax.

Thereafter, CCI perused the investigation report prepared by the DGAP and directed that the scope of investigation be expanded beyond December 2020, all the way up to the issuance of occupation certificates and to collect evidence necessary to determine whether the benefit of ITC had been passed on to the recipients in respect of construction services supplied by the Respondent.

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At this juncture, it was noted that the Ireo Waterfront had opted for the 5% GST rate without ITC under Notification No. 03/2019-Central Tax (Rate) thus limiting the relevant investigation period from 1 July 2017 to 31 March 2019.

Ireo Waterfront was directed to submit comprehensive records including GSTR-1 and GSTR-3B returns (April 2019 - October 2023), summaries and sample invoices for Financial Years 2022-23 and 2023-24 showing them availing the GST@5% scheme; details and DRC-03 forms of ITC reversals under Notification No. 03/2019, summaries of GSTR-3B for FY 2017-18 and 2018-19, and its electronic credit ledger for April 2017-June 2024.

Consequently, the builder reversed transitional credits of ₹53.62 lakh carried forward from the pre-GST regime through DRC-03 filings, along with further reversals exceeding ₹1.34 crore in later years to comply with Notification No. 03/2019.

The four-member Bench comprising Ravneet Kaur (Chairperson), Anil Agrawal (Member), Sweta Kakkad (Member) and Deepak Anurag (Member) noted that Ireo Waterfront’s net ITC position as of 31 March 2019 was negative, based on verified GSTR-3B filings and there was no ITC benefit accrued in the post-GST period that would constitute profiteering.

Accordingly, the CCI concluded that no ITC-related benefit was derived or required to be passed on to homebuyers and that the anti-profiteering provisions did not apply to the project, which was limited to construction activities in Punjab and dropped the proceedings in the present case.

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