No Anti-Profiteering Contravened in Post-GST Construction Projects

1. The Core Dispute: Alleged Profiteering on Post-GST Bookings

An applicant (homebuyer) who booked a flat in 2019 in the residential project ‘Urban-67A’, Gurugram, alleged that the developer failed to pass on the benefit of Input Tax Credit (ITC). The buyer contended that under Section 171, the developer was obligated to reduce the flat’s price to reflect the “additional” credit available under the GST regime.

Applicant’s Argument: Section 171 mandates a commensurate reduction in price whenever there is an increase in ITC benefit.
Developer’s Stand: The project started and the prices were fixed entirely in the post-GST era. Therefore, no “transitional” or “additional” benefit accrued that wasn’t already factored into the base price.

2. The Investigation Findings (DGAP Report)

The Director General of Anti-Profiteering (DGAP) conducted a detailed investigation and concluded that there was nil profiteering. The key findings were:

Wholly Post-GST Project: The project commenced in 2019, well after the rollout of GST in July 2017.
No Comparative Benefit: Anti-profiteering measures are designed to capture tax savings when a project “straddles” the pre-GST (VAT/Service Tax) and post-GST periods. For projects launched after July 2017, the builder sets the price based on the known post-GST cost structure, including available ITC.
ITC Ratio: The investigation found that the ITC-to-Turnover ratio did not show any windfall gain for the developer that would require a price reduction.

3. Legal Ruling: The “Post-GST” Principle

The Tribunal accepted the DGAP report, relying on judicial precedents (including the Delhi High Court judgment in Reckitt Benckiser).

I. Scope of Section 171

Section 171 is triggered only in two specific scenarios:

Reduction in Tax Rate: When the government lowers the GST rate on a supply.
Benefit of ITC: When more credit becomes available compared to the previous tax regime.

II. Exemption for Entirely Post-GST Supply

The court held that if both the construction and the supply (booking/payment) take place entirely after July 1, 2017, the provisions of Section 171 are generally not attracted. Since there is no “pre-GST” baseline to compare against, there is no “additional” benefit to be passed on.

4. Final Verdict

The Tribunal held that the developer had not contravened the law. The project was launched in a regime where the tax rules were already established, and the developer had validly exercised the option for GST rates (e.g., 5% or 1% without ITC for affordable housing).

Outcome: The proceedings against the developer were dropped.
Result: The applicant’s request for a price reduction was rejected.

Key Takeaways for Homebuyers & Developers

For Homebuyers: Be aware that “commensurate reduction” usually refers to the change in tax benefit. If you book a flat in a project that started in 2019 or later, you are unlikely to win a profiteering case based on “transitional” ITC.
For Developers: Maintain project-wise cost sheets and ITC records. The current judicial trend focuses on project-specific savings rather than broad mathematical ratios.
Sunset Clause: Note that the government has notified April 1, 2025, as the sunset date for new anti-profiteering complaints.

GOODS AND SERVICE TAX APPELLATE AUTHORITY, NEW DELHI

DGAP

Pyramid Infratech (P.) Ltd.

A. Venu Prasad, Technical Member

NAPA/119/PB/2025

JANUARY 15, 2026

ORDER

1. The matter was taken up for hearing in a physical mode. The present proceedings arise out of a reference received from the Standing Committee on Anti-profiteering on 23.08.2025, recommending a detailed investigation under Rule 128 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as “the Rules”) in respect of an application filed by Shri Narendra Singh, House No. 73, Sundriya Mohalla, Kondal, Palwal, Haryana-121103 (hereinafter referred to as “the Applicant”).

2. The allegation pertains to profiteering in respect of construction services supplied by M/s Pyramid Infratech Pvt. Ltd., Unit No. 505, 5th Floor, Unitech Trade Centre, Sector-43, Gurugram, Haryana-122002 (hereinafter referred to as “the Respondent”) in its project “Urban-67A”, situated at Sector-67A, Gurugram, Haryana.

3. The Applicant submitted that he had booked Flat No. 106 (Tower-8) in the aforesaid project in the year 2019, and alleged that the benefit of Input Tax Credit (ITC) was not passed on to him by way of commensurate reduction in price, in contravention of Section 171 of the CGST Act, 2017.

4. Upon receipt of the reference, the Director General of Anti-Profiteering (DGAP) issued a Notice dated 30.08.2024 under Rule 129 of the Rules, calling upon the Respondent to submit its reply, including whether the benefit of ITC had been passed on and, if not, to suo moto determine the quantum thereof along with supporting documents. The Respondent was also afforded an opportunity to inspect non-confidential documents furnished by the Applicant during 17.09.2024 to 18.09.2024, which opportunity was not availed.

5. The DGAP, after conducting the investigation, submitted its report dated 12.02.2025, concluding that no additional benefit of ITC had accrued to the Respondent, as the impugned project commenced entirely in the post-GST regime.

6. Thereafter, a Notice dated 03.11.2025 was issued to the Applicant inviting objections to the DGAP report. No objections were received.

7. The matter was listed for hearing on 03.12.2025 and 15.01.2026. None appeared on behalf of the Applicant. Ms. Nutan, Additional Assistant Director, assisted by Shri Anurag Gupta, Inspector, appeared on behalf of the DGAP. Shri Deepak Lohia, Chartered Accountant, appeared on behalf of the Respondent.

8. The Respondent submitted an event chart of the project and placed on record a copy of the declaration opting for old GST rates under Notification No. 03/2019-Central Tax dated 29.03.2019, in respect of Project “Urban-67A”.

9. The DGAP reiterated the findings of nil profiteering, stating that:

1. The project “Urban-67A” commenced entirely after implementation of GST; and

2. The Respondent had validly exercised the option to adopt old GST rates under Notification No. 03/2019-Central Tax.

10. It is observed that Section 171 of the CGST Act, 2017 applies only in cases involving reduction in tax rate or increase in ITC, particularly in projects spanning pre-GST and postGST periods. Since the impugned project commenced wholly in the post-GST regime, there is no comparative ITC benefit arising for passing on.

11. Reliance is placed on paragraph 128(d) of the judgment dated 29.01.2024 of the Hon’ble Delhi High Court, wherein it has been held that no benefit of ITC is required to be passed on where both construction and supply take place entirely in the post-GST period.

12. In view of the foregoing facts, findings, and legal position, the DGAP report dated 12.02.2025 is accepted, and it is held that the provisions of Section 171 of the CGST Act, 2017 have not been contravened by the Respondent.

13. A copy of this Order shall be forwarded to all concerned parties, including the Applicant, Respondent, Director General of Anti-Profiteering, and the jurisdictional GST Commissioner(s) for information and necessary action.

14. The proceedings are accordingly closed.