Anti-Profiteering: Builder Directed to Pass Benefit of Rs. 20.21 Lakhs to Remaining 21 Homebuyers; DGAP Report Accepted Unopposed

Anti-Profiteering: Builder Directed to Pass Benefit of Rs. 20.21 Lakhs to Remaining 21 Homebuyers; DGAP Report Accepted Unopposed

ISSUE

Whether a real estate developer, having passed on the benefit of additional Input Tax Credit (ITC) to the majority of homebuyers (1177), is still liable under Section 171 to pass on the pending benefit to the remaining 21 homebuyers as identified by the Director General of Anti-Profiteering (DGAP).

FACTS

• The Transition: The case involves the transition of a real estate project from the pre-GST regime to the GST regime. The respondent (builder) accrued additional ITC benefits due to this transition.

• DGAP Investigation: The DGAP concluded that the respondent had successfully passed on the ITC benefit to 1,177 eligible buyers.

• The Deficit: However, the investigation found that no benefit had been passed on to a specific group of 21 homebuyers.

• The Amount: The report quantified the pending ITC benefit required to be passed on to these 21 buyers at Rs. 20,21,440.

• Admission: The respondent accepted the findings of the DGAP report without any objection and expressed readiness to pass on the benefit to the remaining buyers.

HELD

• Report Accepted: The Authority accepted the DGAP’s report, noting the respondent’s admission of liability.

• Mandatory Compliance: Under Section 171, the benefit of tax reduction or ITC must be passed on to the recipient by way of a commensurate reduction in prices. Partial compliance (paying some buyers but not others) is not sufficient to discharge this liability.

• Direction: The respondent was ordered to pass on the benefit of Rs. 20,21,440 to the 21 identified homebuyers.

• Verdict: [In Favour of Revenue / Consumers]

KEY TAKEAWAYS

1. 100% Compliance Required: In anti-profiteering cases, you cannot argue “substantial compliance.” Even if you have paid 98% of your customers (1177 out of 1198), the Authority will still pursue you for the remaining 2%.

2. Acceptance Saves Penalty: By accepting the DGAP report without objection, the respondent likely avoided protracted litigation and potentially harsher penalties under Section 171(3A).

3. Transition Benefit: For ongoing projects (started before July 2017), builders must calculate the additional ITC available under GST compared to the Service Tax/VAT regime and pass it to buyers.