DGAP vs Candeur Constructions
- Court
- GST Appellate Tribunal
GSTAT
Principal Bench at Delhi
Court No. Court II
NAPA/106A/PB/2025
DGAP, DG ANTI PROFITEERING, DIRECTOR GENERAL OF
ANTI-PROFITEERING .............Appellant
Versus
CANDEUR CONSTRUCTIONS .............Respondent
Quorum
Hon’ble Justice Sh. Mayank Kumar Jain, Member (Judicial)
Hon’ble Sh. A. Venu Prasad, Member (Technical)
Counsel for Appellant Counsel for Respondent
Form GST APL-04A
[See rules 113(1) & 115]
Summary of the order and demand after issue of order by the GST Appellate Tribunal
whether remand order : No
Order reference no. : ZA070011026000188H Date of order : 23/10/2026
1. GSTIN/Temporary ID/UIN - 29AAKFC8006A1ZQ
2. Appeal Case Reference no. - NAPA/106A/PB/2025 Date - 18/06/2025
3. Name of the appellant - DGAP , [email protected] , 011-23741544
Name of the respondent -
4.
1. Candeur Constructions , [email protected] , 919620313813
5. Order appealed against -
Page 1 of 36
(5.1) Order Type -
(5.2) Ref Number - Date -
Personal Hearing - 23/10/2026 24/09/2026 10/09/2026 24/08/2026 19/08/2026
13/07/2026 04/06/2026 29/05/2026 05/05/2026 01/04/2026 12/02/2026 07/01/2026
02/12/2025 14/10/2025
6.
7. Status of Order under Appeal - Confirmed – Order under Appeal is confirmed
Order in brief - The revised computation of profiteering furnished by the DGAP vide
8.
its supplementary report/clarifications dated 08.09.2026 is accepted.
Summary of Order
9. Type of order : Return to Recipient of Amount not passed on, along with interest
CORAM:
Hon’ble Justice Sh. Mayank Kumar Jain, Member (Judicial)
Hon’ble Sh. A. Venu Prasad, Member (Technical)
ORDER
1. The present proceedings arise from an application filed by Sh. Pramod
Kumar and Smt. Parveen Kumari, residents of Flat No.- T1B701, Candeur
Carlisle, TTPL Main Road, Mahadevapura, Bengaluru– 560048 (hereinafter
referred to as “the Complainants”), under Rule 128 of the Central Goods and
Services Tax Rules, 2017 (hereinafter referred to as “the CGST Rules”),
alleging profiteering in respect of construction services supplied by M/s
Candeur Constructions, No. 157, Devine, 3rd Floor, Kacharakanahalli, St.
Thomas Post Office, Hennur Main Road, Near Cherna Kesava Swamy
Temple, Bengaluru – 560084 (hereinafter referred to as “the Respondent”).
Page 2 of 36
2. The Complainants alleged that the Respondent had failed to pass on the
benefit of Input Tax Credit (hereinafter referred to as ‘ITC’) by way of
commensurate reduction in the price of Flat No. B-701 in the Respondent’s
project ‘Candeur Carlisle ’upon introduction of GST w.e.f. 01.07.2017, in
terms of Section 171 of the CGST Act, 2017.
3. The application was examined by the Standing Committee on Anti-
Profiteering, which forwarded the matter to the Directorate General of Anti-
Profiteering (hereinafter referred to as “the DGAP”) for detailed
investigation. Accordingly, an investigation was initiated to collect the
necessary evidence and determine whether the benefit of ITC had been
passed on by the Respondent. The Investigation Report was submitted to the
Authority on 17.01.2024.
4. Subsequently, the Authority remanded the matter to the DGAP for re-
investigation vide letter F. No. M/AP/43/Candeur/2024-Sectt./312 dated
21.03.2024, in light of the judgment of the Hon’ble High Court of Delhi
dated 29.01.2024, insofar as it pertained to the real estate sector.
5. In view of the above, a Notice dated 09.04.2024 was issued under Rule 129
of the CGST Rules calling upon the Respondent and the Co-Respondent to
state whether they admitted that the benefit of ITC had not been passed on
to their customers by way of commensurate reduction in prices and, if so, to
suo motu determine the quantum thereof and indicate the same in their reply
to the Notice, along with all supporting documents.
6. In response to the aforesaid Notice, the Respondent and the Co-Respondent
submitted the requisite documents/information through e-mails/letters.
7. Upon completion of the investigation, the DGAP submitted its Report dated
05.06.2025 to the Principal Bench, GSTAT, which has been examined and
is summarised below:
7.1.The project “Candeur Carlisle” was being developed pursuant to a Joint
Development Agreement dated 30.11.2016 entered into between M/s
Page 3 of 36
Kamani Tubes Limited, 32, Kamani Chambers, Ramjibhai Kamani
Marg, Ballard Estate, Mumbai – 400038, the landowner (hereinafter
referred to as “the Co-Respondent”), and the Respondent, i.e. M/s
Candeur Constructions, the developer. Under the said arrangement, the
project was to be developed in the ratio of 42:58, pursuant to which 176
units pertained to the Respondent and 128 units pertained to the Co-
Respondent.
7.2.The DGAP conducted the investigation in respect of the project
“Candeur Carlisle” for the period from 01.07.2017 to 31.03.2023 . The
project comprises 304 units having a total saleable area of 3,93,856 sq.
ft.
7.3.The DGAP examined the Occupancy Certificate dated 09.12.2020 and
observed that, prior to its issuance, 175 of the Respondent’s 176 units
and 13 of the Co-Respondent’s 128 units had been booked. The
remaining 01 unit of the Respondent and 115 units of the Co-
Respondent, which were unsold on the date of the Occupancy
Certificate, were excluded from the investigation in view of the
provisions relating to ITC attributable to unsold units. Accordingly, the
investigation covered 188 booked flats.
7.4.The DGAP also examined the Joint Development Agreement, which
provided that the entire cost of construction, including the area falling
to the share of the Owner, was to be borne by the Developer.
Accordingly, the DGAP observed that the Respondent had borne the
entire construction cost and availed the entire ITC in respect of the
project “Candeur Carlisle” and was therefore liable to pass on the
benefit of such ITC to the customers, including those pertaining to the
Co-Respondent’s share.
7.5.The DGAP observed that, prior to GST, the Respondent was eligible for
credit of Service Tax and VAT, whereas under GST it became eligible
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for ITC of GST on inputs and input services. Accordingly, the DGAP
compared the ratio of credit availed to purchase value during the pre-
GST and post-GST periods.
7.6.Based on the data furnished by the Respondent, the ratio of credit availed
to purchase value was worked out as under:
Table- A
S. No. Particulars Pre- GST Period Post-GST Period
1 . Purchase Value of Goods and
8,63,55,956 1,37,58,11,645
Services (Excluding Taxes and
Duties) (A)
2 . Credit of Service Tax availed
19,33,174 -
(B)
3 . Credit of VAT availed (C) 38,21,532 -
4 . Total Credit availed in Pre-
57,54,706 -
GST Period (D)= B+C
5 . Net ITC of GST Availed (E) - 11,50,74,530
6 . Ratio of Credit Availed to
6.66 8.36
Purchase Value (in %) F=
D/A or E/A
Difference between post-GST
1.7
and pre-GST ratios
7.7.From Table-A, the DGAP observed that the ratio of ITC availed to
purchase value increased from 6.66% in the pre-GST period to 8.36%
in the post-GST period, resulting in an increase of 1.70 % , which was
treated as the additional ITC benefit arising from the introduction of
GST.
Page 5 of 36
7.8.The DGAP further observed that the Central Government, on the
recommendation of the GST Council, had levied 18% GST, with the
effective rate being 12% in view of 1/3rd abatement for land value on
construction service, vide Notification No. 11/2017-Central Tax (Rate)
dated 28.06.2017. The effective GST rate for flats was accordingly
taken as 12%. Based on the figures contained in Table-A, the
recalculated base price and the excess realisation/profiteering during
the post-GST period were worked out as under:
Table-B
Particulars Post GST
S. No Period A
1 Ratio of Credit availed to Purchase
B 6.66/8.36
Value as per Table - A above (%)
2 Increase in input tax credit availed
C 1.70
post-GST (%)
3 Purchase Value of Goods and
D 1,37,58,11,645
Services (Excluding Taxes and
Duties) during Post-GST Period
4 Total Savings on account of
E=D*C/
2,33,88,798
additional ITC benefit
100
5 Total Area (in Sq. Ft.) of the project F 3,93,856
6 Total Saving Per Sq. Ft. G=E/F 59.38
7 Total Sold Area before OC (in Sq.
H 2,44,370
Ft.)
8 Base Profiteered Amount (in Rs.) I=G*H 1,45,10,691
Page 6 of 36
The DGAP accordingly considered the additional ITC benefit to
require commensurate reduction in the base price and cum-tax price
under Section 171 of the CGST Act, 2017.
7.9. Accordingly, the DGAP concluded that the Respondent had
contravened the provisions of Section 171 of the CGST Act, 2017,
insofar as the Respondent had saved/profiteered an amount of Rs.
1,45,10,691/- plus GST @ 12%, i.e. Rs. 17,41,283/-, totaling to Rs.
1,62,51,974/-, which was required to be passed on to the eligible
recipients in respect of the project “Candeur Carlisle”. The DGAP
further recorded that the Respondent had supplied construction services
in the State of Karnataka only.
8. The above Report was received in the Principal Bench, GSTAT, on
18.06.2025 for adjudication under Section 171 of the CGST Act, 2017. A
Notice was issued to the Complainants and the Respondent directing them
to file written submissions on the DGAP Report.
9. The Respondent, vide its written submission dated 15.05.2026, submitted
that it had no objection to the findings contained in the DGAP Report dated
05.06.2025. However, it submitted that a rectification was required in the
computation of profiteering, as the DGAP had considered the total area of
the project as 3,93,856 sq. ft., whereas, according to the Occupancy
Certificate dated 09.12.2020, the total area of the project was 49,878.81 sq.
metres, equivalent to 5,36,891 sq. ft. The Respondent accordingly furnished
a copy of the Occupancy Certificate and requested that the profiteering
computation be reworked on the basis of the said area so that the benefit of
ITC could be accurately determined and passed on to the eligible recipients.
10. The Complainants vide their submissions dated 16.05.2026 contended that:
10.1.The Complainants submitted that, as per the DGAP’s communication
dated 23.10.2025, the calculated profiteered amount of Rs.
Page 7 of 36
1,62,51,974/- was required to be passed on to the 188 eligible flats out
of the total 304 flats in the project.
10.2.The Complainants further submitted that, since all 304 units had
proportionated Undivided Share (UDS) in the project, the eligible
amount in respect of each of the 188 flats should be determined with
reference to the respective proportionate flat area and the applicable
ITC benefit. They sought clarification as to how the revised total
project area furnished by the Respondent would affect the computation
and distribution of the profiteered amount among the eligible flat
buyers.
10.3.The Complainants further submitted that the Respondent had initially
agreed to pass on the ITC benefit vide e-mail dated 22.01.2020, but the
matter was subsequently not acted upon despite repeated
communications, including after issuance of the Occupancy Certificate
dated 09.12.2020. They stated that the relevant e-mail communications
with the Respondent had already been submitted to the NAA as part of
the complaint.
11. The DGAP, vide its clarification dated 26.05.2026, stated that the project
area of 3,93,856 sq. ft. considered in the Report dated 05.06.2025 was based
on the data and certified Annexures furnished by the Respondent during the
investigation. The DGAP, therefore, found no sufficient ground to modify
the computation and reiterated the findings in its Report dated 05.06.2025.
12. Vide order dated 04.06.2026, this Tribunal, after considering the
submissions of the parties regarding the total area of the project, noted that
the Respondent had relied upon the total area of 5,36,891 sq. ft. mentioned
in the Occupancy Certificate, whereas the DGAP had adopted 3,93,856 sq.
ft. on the basis of the area disclosed by the Respondent in its earlier
submissions. The Tribunal accordingly directed as under:
Page 8 of 36
10. Further, the Authorised Representative of the DGAP
submitted that he requires some time to examine the annexure
in which the area of 3,93,856 Sq. ft. was disclosed to the DGAP
by the Respondent.
11. Accordingly, learned Chartered Accountant is directed to
file comparative table mentioning therein the entire area 304
units which is commensurate to the area mentioned in the
Occupation Certificate within one week from today. A copy of
such submission be made available to the DGAP as well as the
Applicant.
12. The DGAP and the Applicant may also file their
submissions/clarifications, if any, within two weeks thereafter.
13. The Respondent, vide its submissions dated 22.06.2026 stated as follows:
(a) The comparative area reconciliation directed by the Tribunal could not
be prepared within the stipulated period, as the project had been
completed several years earlier, the Respondent had since ceased its
operations, and the requisite historical records and detailed break-up
were not available.
(b) The Occupancy Certificate dated 09.12.2020 certified the final total
constructed area at 49,878.81 sq. metres, equivalent to 5,36,891 sq. ft.,
and the Respondent requested that the said area be considered for
determining the project area and the consequential computation.
14. The Complainants vide submissions dated 23.06.2026, in response to the
submissions of the Respondent dated 22.06.2026, stated that:
14.1.The Respondent had failed to furnish the detailed break-
up/reconciliation between the area considered by the DGAP in its
Investigation Report and the area of 5,36,891 sq. ft. reflected in the
Occupancy Certificate. The Complainants also submitted that the
Respondent had not reconciled the unit-level built-up area, car parking
Page 9 of 36
area and common-area share of the sold units with the total area
reflected in the Occupancy Certificate. The Complainants, therefore,
contended that the revised area ought not to be adopted without such
reconciliation.
14.2.The entire eligible ITC benefit should be apportioned over the total
super built-up area of the eligible units and passed on to the respective
eligible flat owners. The Complainants further requested that statutory
interest on the eligible ITC benefit be calculated from the date of the
Occupancy Certificate and/or receipt of the amount, as applicable.
15. The Respondent vide submissions dated 19.08.2026 submitted that:
15.1.The Respondent submitted that the facts of the present case did not
squarely fall within any of the four situations contemplated under
paragraph 128(a) to (d) of the judgment in Reckitt Benckiser India
Pvt. Ltd. v. Union of India, 2024 (82) G.S.T.L. 344 (Del.) . The
Respondent, in support of its contention, furnished the following
comparative position:
Para 128 Situation contemplated
Position in the present
Whether
under the respective
case
applicable
paragraph
Para 128(a) Flat completely
Construction did not
Not
constructed before GST
commence before GST.
applicable
and buyer made full
Commencement
payment before GST
Certificate is dated
04.09.2017. Further,
consideration was
received partly before
GST and partly after
GST.
Page 10 of 36
Para 128(b) Construction started before
Construction
Not
GST and continued after
commenced only after
applicable
GST, and buyer made full
GST. Further, buyer did
payment after GST
not make full payment
after GST; only the
balance consideration
was received after GST.
Para 128(c) Construction started before
Construction
Not
GST and continued after
commenced only after
applicable
GST, and buyer made full
GST. Further, buyer did
payment before GST
not make full payment
before GST; only part
consideration was
received before GST.
Para 128(d) Flat constructed after GST,
Although construction
Not
purchased after
commenced after GST,
applicable
completion, with full
the buyer had already
payment made upfront
paid part consideration
after completion
before GST. The balance
was paid after GST.
Therefore, there was no
full upfront payment
after completion.
15.2.Relying upon the decision of the Principal Bench of GSTAT in DG
Anti-Profiteering v. Arun Excello Constructions LLP
NAPA/116/PB/2025, Final Order dated 04.06.2026 , the Respondent
submitted that an actual and measurable incremental ITC benefit
attributable to introduction of GST was required to be established and
that the methodology adopted by the DGAP could not be mechanically
applied without considering the actual facts of the project.
Page 11 of 36
16. The DGAP vide its clarifications dated 08.09.2026 and 18.09.2026
submitted that:
16.1.The DGAP, vide its clarification dated 08.09.2026, submitted that, on
examination of the material furnished by the Respondent and
comparison with the figures contained in the Investigation Report dated
05.06.2025, it had revised the computation by adopting the total project
area of 5,36,891 sq. ft. and the total area sold before issuance of the
Occupancy Certificate as 3,34,570 sq. ft. Consequently, the saving per
sq. ft. was revised from Rs. 59.38 to Rs. 43.56, the base profiteered
amount from Rs. 1,45,10,691/- to Rs. 1,45,73,861/-, and the total
profiteered amount including GST @ 12% from Rs. 1,62,51,974/- to
Rs. 1,63,22,724/-. Thus, although the adoption of the larger project area
reduced the saving per sq. ft., the corresponding increase in the eligible
sold area resulted in a net increase of Rs. 70,750/- in the base
profiteered amount. The DGAP also furnished the buyer-wise
computation.
16.2.With regard to the Respondent’s contention that the project
commenced only after introduction of GST, the DGAP submitted that
the certified ST-3 returns, VAT returns and purchase values furnished
by the Respondent during investigation had been considered for
determining the pre-GST credit and purchase value. According to the
DGAP, these records demonstrated procurement and utilisation of
inputs and services relating to the project and, therefore, provided the
basis for comparison between pre- GST with the post-GST ITC and
purchase value.
16.3.With regard to the applicability of paragraphs 128(a) to (d) of the
judgment dated 29.01.2024 of the Hon’ble High Court of Delhi , the
DGAP examined the homebuyer details furnished by the Respondent
and noted that Sh. Pravin Kumar, Unit No. 2B503, having a saleable
Page 12 of 36
area of 1135 sq. ft., had booked the unit on 24.08.2016, while the date
of agreement in respect of Sh. Pramod Kumar, the Complainant, was
03.01.2017. On this basis, the DGAP submitted that the factual matrix
was covered by paragraphs 128(b) and 128(c) of the said judgment. The
DGAP accordingly submitted that the Respondent’s contentions were
not sustainable and reiterated the findings contained in its Investigation
Report dated 05.06.2025
16.4.The DGAP further submitted that issuance of the Commencement
Certificate after 01.07.2017 did not, by itself, determine the
applicability of Section 171, which was required to be examined with
reference to the actual pre-GST and post-GST ITC position and
corresponding supplies.
16.5.Regarding the Respondent’s reliance upon the Final Order dated
04.06.2026 in Arun Excello Constructions LLP (supra) , the DGAP
submitted that the said decision was distinguishable on facts, as the
ratios of tax credit availed to purchase value for the respective periods
in that case were negative, whereas the relevant ratios in the present
case were positive. The DGAP accordingly submitted that the said
decision could not be mechanically applied to the present case. With
regard to the methodology, the DGAP submitted that the methodology
adopted was correct, reasonable and in conformity with the principles
laid down in Reckitt Benckiser (supra) , wherein the Hon’ble High
Court had held that no fixed or uniform mathematical formula could be
prescribed and that the methodology had to be evolved having regard
to the facts and circumstances of each case/industry. The DGAP
submitted that the methodology adopted in the present case was
rational and case-specific and had also been adopted in other real-estate
cases and upheld by the Hon’ble GSTAT.
Page 13 of 36
17. The Respondent vide submissions dated 21.09.2026 and 24.09.2026
contended that:
17.1.The Respondent reiterated that the DGAP had not established an actual,
identifiable and quantifiable incremental ITC benefit arising solely on
account of introduction of GST. It was submitted that the differential
of 1.70 % between the pre-GST ITC-to-purchase ratio of 6.66% and
the post-GST ratio of 8.36% could not, by itself, establish such benefit.
17.2.The Respondent further submitted that the revised computation by the
DGAP, whereby the saving per sq. ft. and the resultant profiteering
amount changed upon revision of the project area, demonstrated the
sensitivity of the computation to the underlying factual inputs. It was
accordingly contended that, even if Section 171 were held applicable,
the matter required determination on the basis of the actual project-
specific incremental ITC benefit, verified project area and eligible sold
area.
Oral Submissions of the Parties:
18. Submissions on behalf of the Complainant:
18.1.The Complainant submitted that construction activity had commenced
before the introduction of GST on 01.07.2017. It was contended that
excavation and foundation work had already been undertaken before
the issuance of the Commencement Certificate dated 04.09.2017 and,
therefore, the date of issuance of the certificate could not be treated as
conclusive of the commencement of construction activity.
18.2.The Complainant further submitted that, prior to the introduction of
GST, VAT was being charged at the rate of approximately 10.8%,
whereas, after the introduction of GST, the applicable rate was reduced
to 5% in the relevant category. Despite such reduction, the Respondent
was alleged to have charged GST at the rate of 12% instead of passing
Page 14 of 36
on the benefit of the reduction to the customers by way of a
commensurate reduction in prices.
18.3.He also referred to a statement concerning CREDAI’s response to GST
rate reductions on construction materials, wherein the reduction in GST
on materials such as cement, granite, marble and sand-lime bricks was
stated to be capable of reducing overall project costs by approximately
3–5%.
18.4.The Complainant further contended that the computation undertaken
by the State Screening Committee had not been duly considered by the
DGAP. It was submitted that the said computation was relevant for
determining the benefit arising from the introduction of GST and that
the report furnished by the DGAP could be accepted only after
considering the objections raised regarding the methodology and the
project-area calculation.
19. Submissions on behalf of the Respondent
19.1.The learned Counsel appearing on behalf of the Respondent relied upon
Section 171 of the CGST Act, 2017, and the judgment of the Hon’ble
Delhi High Court in Reckitt Benckiser India Pvt. Ltd. (supra) ,
particularly paragraph 128 thereof. It was submitted that the Hon’ble
High Court had considered different factual situations concerning the
stage of construction and the timing of payment by the buyers for
determining the applicability and extent of the benefit of Input Tax
Credit.
19.2.The learned Counsel further questioned the area adopted for the
computation of profiteering and submitted that the difference between
the area of 3,93,856 sq. ft. considered in the original DGAP report and
the revised area of 5,36,891 sq. ft. had a direct bearing on the benefit
calculated per square foot and the resultant profiteering amount. It was
submitted that the revised computation and the material relied upon
Page 15 of 36
for determining the total project area and eligible sold area required
scrutiny before the amount of profiteering could be accepted.
20. Several hearings in the present matter were held on various dates, including
14.10.2025, 04.06.2026, 13.07.2026, 10.09.2026 and 24.09.2026. During
these proceedings, Shri Ajay Kumar Tehlan, learned Authorised
Representative, appeared on behalf of the DGAP, while Shri B. Veeresh,
learned Chartered Accountant, appeared on behalf of the Respondent. Shri
Pramod Kumar, the Complainant, appeared through virtual mode.
Issues for determination:
21. In view of the rival submissions, the following issues arise for
determination:
(i) Whether the methodology adopted by the DGAP for determining the
additional ITC benefit arising from introduction of GST, on the basis
of the pre-GST and post-GST credit and purchase data, is legally and
factually sustainable?
(ii) Whether having regard to the Commencement Certificate dated
04.09.2017 and the Respondent’s contention that construction
commenced only after introduction of GST, the pre-GST credit and
purchase data can validly be taken into account for determining the
additional ITC benefit under Section 171 of the CGST Act?
(iii) Whether the revised computation of profiteering furnished by the
DGAP, including the determination of the total project area, eligible
sold area, per-square-foot benefit and consequential profiteering
amount, is factually and legally sustainable?
Determination of issue (i)
Whether the methodology adopted by the DGAP for determining the
additional ITC benefit arising from introduction of GST, on the basis of the
Page 16 of 36
pre-GST and post-GST credit and purchase data, is legally and factually
sustainable?
22. We have considered the submissions of the Respondent, the Report of the
DGAP dated 05.06.2025, the subsequent clarifications furnished by the
DGAP, the documents placed on record and the judgments relied upon by
both sides. The principal objection of the Respondent is that the DGAP has
mechanically compared the ratio of credit availed during the pre-GST period
with the ratio of GST ITC availed during the post-GST period and has
treated the resultant difference as the additional ITC benefit arising on
account of introduction of GST. It is submitted that such comparison does
not establish any actual, identifiable or project-specific benefit.
23. The DGAP, on the basis of the data furnished by the Respondent, examined
the credit of Service Tax and VAT availed during the pre-GST period and
the GST ITC availed during the post-GST period, along with the
corresponding purchase value of goods and services. The pre-GST credit
comprised Service Tax credit of Rs. 19,33,174/- and VAT credit of Rs.
38,21,532/-, aggregating to Rs. 57,54,706/-, against a purchase value of Rs.
8,63,55,956/-. During the post-GST period, the Respondent had availed net
GST ITC of Rs. 11,50,74,530/- against a purchase value of Rs.
1,37,58,11,645/-. On this basis, the DGAP determined the ratio of credit to
purchase value at 6.66% during the pre-GST period and 8.36% during the
post-GST period, resulting in a difference of 1.70%.
24. The Respondent has relied upon the judgment of the Hon’ble Delhi High
Court in Reckitt Benckiser India Pvt. Ltd.(supra) , wherein the Hon’ble
High Court observed:
“ 124. This Court is of the view that no fixed/uniform method or
mathematical formula can be laid down for determining
profiteering as the facts of each case and each industry may be
different. The determination of the profiteered amount has to
Page 17 of 36
be computed by taking into account the relevant and peculiar
facts of each case. There is ‘no one size that fits all ‘formula or
method that can be prescribed in the present batch of matters.
Consequently, NAA has to determine the appropriate
methodology on a case to case basis keeping in view the
peculiar facts and circumstances of each case.”
25. The aforesaid principle makes it clear that the determination of profiteering
cannot be governed by a universally applicable mathematical formula and
that the methodology must take into account the peculiar facts and
circumstances of the project. However, paragraph 124 cannot be read as
prohibiting mathematical computation altogether. What is required is that
the methodology adopted should have a rational nexus with the benefit
sought to be quantified.
26. The Respondent has also placed reliance upon paragraph 129 of Reckitt
Benckiser (supra) . The Hon’ble High Court therein held:
“ 129. However, this Court finds that the methodology adopted
by NAA and DGAP to arrive at the profiteering amount of the real
estate industry was generally based on the difference between the
ratio of Input Tax Credit to turnover under the pre- Goods and
Services and Tax and post- Goods and Services and Tax period.
This Court is in agreement with the contention of the learned
counsel for the petitioners representing the real estate companies
that the methodology adopted by NAA is flawed as in the real
estate sector, there is no direct correlation between the turnover
and the Input Tax Credit availed for a particular period. The
expenses in a real estate project are not uniform throughout the
life cycle of the project and the eligibility of credit depends on the
nature of the construction activity undertaken during the
particular period. As it is an admitted position that neither the
Page 18 of 36
advances received nor the construction activity is uniform
throughout the life cycle of the project, the accrual of Input Tax
Credit is not related to the amount collected from the buyers. This
Court is in agreement with learned counsel of the petitioners that
one needs to calculate the total savings on account of introduction
of Goods and Services and Tax for each project and then divide
the same by total area to arrive at the per square feet benefit to be
passed on to each flat buyer. This would ensure that flat-buyers
with equal square feet area received equal benefit. The Court,
while hearing the present batch of matters on merits, shall take
the aforesaid direction/interpretation into account”
27. Thus, the specific methodology found to be flawed in Reckitt Benckiser
(supra) was the determination of the benefit in the real-estate sector by
comparing the ITC-to-turnover ratios of the pre-GST and post-GST periods.
The rationale for rejecting such methodology was that turnover, advances,
construction activity and ITC do not necessarily move in tandem during the
life cycle of a real-estate project. The judgment, however, did not hold that
every comparison between pre-GST and post-GST data is impermissible.
28. This distinction has subsequently been expressly considered by the Hon’ble
Delhi High Court in LICHFL Care Homes Ltd. vs. Director General of
Anti- Profiteering, Central Board of Indirect Taxation and Customs &
Ors. W.P. (C) 13665/2026. The Court held:
“ 31. The contention, however, proceeds on an
incomplete reading of Paragraph No.129 of Reckitt Benckiser
(supra). This Court did not hold that every comparison between
the pre-GST and post-GST period was impermissible. What
was found to be flawed was the methodology which sought to
determine the benefit in the real estate sector merely by
Page 19 of 36
comparing the ratio of ITC to turnover, on the premise that ITC
accrual and turnover move in a corresponding manner.
32. In the present case, the DGAP did not apply the earlier ITC-
to-turnover ratio to determine the benefit. The revised exercise
was undertaken by examining the purchase value of goods and
services, determining the ITC actually availed during the post-
GST period, calculating the resultant additional ITC benefit
and thereafter dividing the project-level saving by the total
project area.
33. The distinction is significant. The purchase value has not
been used as a proxy for turnover for the purpose of
determining a benefit relatable to the amounts realised from
individual buyers. It has been used as the denominator for
quantifying the proportion of ITC available against the project
expenditure during the relevant period. The resulting saving
has thereafter been converted into a project-wide per square
foot figure, precisely so that the benefit is distributed with
reference to the area of the flats. This is materially different
from the methodology considered and rejected by this Court in
Reckitt Benckiser (supra).
34. The final step adopted by the DGAP is, in fact, directly
aligned with the direction contained in Paragraph No.129 of
Reckitt Benckiser (supra). The total saving is first determined
at the project level and is thereafter divided by the total area.
The benefit relatable to each recipient is then determined by
applying the per square foot figure to the area sold to that
recipient.
35. It is, therefore, not possible to accept the submission that
the DGAP has simply resurrected the earlier methodology by
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changing the denominator from ‘turnover ’to ‘purchase
value’.”
29. The aforesaid distinction is applicable to the methodology adopted in the
present case. The DGAP has not used the amounts realised from the flat
buyers or the turnover of the project as the denominator. It has considered
the actual Service Tax and VAT credit availed during the pre-GST period
and the actual GST ITC availed during the post-GST period against the
corresponding purchase value of goods and services. The purchase value has
thus been used to determine the proportion of credit attributable to project
expenditure and not as a substitute for turnover. The resulting project-level
saving has thereafter been converted into a per-square-foot benefit for
distribution among eligible recipients. The methodology, therefore, has a
rational nexus with the project expenditure and the benefit sought to be
quantified.
30. The Respondent has nevertheless contended that the difference between
6.66% and 8.36% represents merely a mathematical differential and does
not establish an actual benefit arising from GST. In this regard, it is
necessary to appreciate the nature of the change brought about by the GST
regime in the construction sector. The availability of ITC under GST was
intended to remove the cascading effect of taxes embedded in goods and
services used for construction. The contemporaneous communication of the
Central Government dated 15.06.2017, dealing with the reduced tax burden
on construction under GST, recorded:
“ 5. This will change under GST. Under GST, full input
credit would be available for offsetting the headline rate of
12%. As a result, the input taxes embedded in the flat will not
(& should not) form a part of the cost of the flat.
6. The builders are expected to pass on the benefits of lower tax
burden under the GST regime to the buyers of property by way
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of reduced prices/ installments. It is, therefore, advised to all
builders / construction companies that in the flats under
construction, they should not ask customers to pay higher tax
rate on instalments to be received after imposition of GST.
7. Despite this clarity on law position, if any builder resorts to
such practice, the same can be deemed to be profiteering under
section 171 of GST law.”
These observations provide the policy and statutory context in which the
additional ITC benefit under Section 171 was required to be examined.
31. Furthermore, the Hon’ble Delhi High Court, in Reckitt Benckiser India Pvt.
Ltd (supra) , while examining the object of the GST regime and the statutory
mandate under Section 171 of the CGST Act, 2017, observed as follows:
93. The Goods and Service Tax is a destination-based tax and
is levied at the point of consumption. Accordingly, the taxes get
accumulated with the original price and due to the effect of
Input Tax Credit, the cascading effect i.e. tax on tax is removed.
This is best illustrated by the following example: -
32. From the above illustration, it is evident that the introduction of GST results
in a tax benefit of Rs. 3,000/-, arising from the removal of the cascading
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effect of taxation. The spirit of Section 171 of the CGST Act, 2017, is to
ensure that such a benefit is passed on to the recipient by way of a
commensurate reduction in price. Similarly, in the real estate sector, any
benefit arising from the additional availability of ITC under the GST regime
is required to be passed on by the developers to the eligible homebuyers.
Similar in Reckitt Benckiser India Pvt. Ltd (supra) judgment the Hon’ble
Court observed:
99….. Consequently, the word ‘commensurate ’in Section 171
of the Act, 2017 means that whatever actual saving arises due
to the reduction in rates of tax or the benefit of the Input Tax
Credit, in rupee and paisa terms, must be reflected as equal or
near about reduction in price. In other words, tax foregone by
the authorities has to be passed on to the consumer as
commensurate reduction in price.
33. In the present case, therefore, the DGAP has not relied upon an industry-
wide estimate or an assumed percentage of reduction in construction cost.
The computation has been made from the Respondent’s own figures of pre-
GST credit, post-GST ITC and corresponding purchase values. This is
significant because the determination under Section 171 has to be project-
specific and cannot be based merely upon a general industry estimate.
34. The DGAP has determined that the additional benefit arising from the
availability of Input Tax Credit (ITC) under the GST regime amounts to
1.70% of the purchase value of the project. The Respondent has challenged
the methodology adopted by the DGAP and sought rejection of the
investigation report, contending that no additional benefit has accrued which
is liable to be passed on to the homebuyers. Conversely, the Complainant
has contended that the benefit ought to be higher, relying upon the CREDAI
estimate that reductions in GST rates on certain construction materials could
result in an overall reduction in project costs of approximately 3% to 5%.
Page 23 of 36
35. We have considered the rival contentions. The estimate referred to by
CREDAI is a general estimate of the possible reduction in construction costs
and cannot, by itself, determine the additional ITC benefit available in the
present project. The benefit has to be determined on the basis of the relevant
project-specific data. In the present case, the DGAP has determined the
additional ITC benefit at 1.70% on the basis of the pre-GST and post-GST
credit and purchase-value figures. We find no sufficient ground to reject this
computation merely on the basis of the general estimate referred to by the
Complainant. Accordingly, the DGAP’s computation of the additional ITC
benefit at 1.70% is accepted, subject to the findings regarding the relevance
of the underlying pre-GST transactions recorded under Issue No. (ii).
36. Accordingly, we hold that the methodology adopted by the DGAP, based on
the actual pre-GST credit and post-GST ITC availed against the
corresponding purchase value of goods and services, is correct, reasonable
and appropriate for determining the additional ITC benefit in the present
case. This interpretation is reinforced by the subsequent judgment in
LICHFL Care Homes (supra) .
37. We therefore answer Issue No. (i) in favour of the DGAP to the extent of the
legal sustainability of the methodology adopted.
Determination of Issue No. (ii):
Whether having regard to the Commencement Certificate dated 04.09.2017
and the Respondent’s contention that construction commenced only after
introduction of GST, the pre-GST Input Tax credit and purchase data can
validly be taken into account for determining the additional ITC benefit
under Section 171 of the CGST Act?
38. Having held under Issue No. (i) that the methodology of examining the pre-
GST credit and post-GST ITC with reference to the corresponding purchase
value is legally permissible, the next question is whether such methodology
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can appropriately be applied to the facts of the present project, particularly
when the Respondent contends that construction commenced only after
introduction of GST. The Respondent has relied upon the Commencement
Certificate dated 04.09.2017 and submitted that no construction activity
could have commenced prior to that date. It has consequently been
contended that the pre-GST purchases, CENVAT/VAT credit and advances
received from customers cannot, by themselves, be treated as evidence of
construction activity during the pre-GST period.
39. The Respondent has also relied upon paragraph 128 of Reckitt Benckiser
(supra) , wherein the Hon’ble Delhi High Court considered four different
factual situations relating to construction and payment in the real-estate
sector. The relevant paragraph reads as under:
“ 128. There is no dispute with regard to the methodology to be
adopted in the following four scenarios: -
a. If the flat was completely constructed in the pre-Goods and
Services Tax period i.e. before 01st July, 2017 and if it was
purchased by making upfront payment of the whole price in
the pre-Goods and Services Tax period no benefit of Input Tax
Credit would be required to be passed on as the price will
include the cost of taxes on which Input Tax Credit was not
available in the pre-Goods and Services Tax period viz.
Central Excise Duty, Entry Tax etc.
b. If the construction of the flat had started in the pre-Goods and
Services Tax period and continued/completed in the post-
Goods and Services Tax period and a buyer purchased the flat
by making full upfront payment in the post-Goods and Services
Tax period he is entitled to the benefit of Input Tax Credit on
the material which has been purchased in respect of this flat
during the post-Goods and Services Tax period and on which
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benefit of Input Tax Credit has been availed by the builder.
The builder has to reduce the price commensurately and pass
on the benefit.
c. If the construction of the flat is started in the pre-Goods and
Services Tax period and its construction was continued in the
post-Goods and Services Tax period and it was purchased by
the consumer by paying the full amount of price upfront in the
pre-Goods and Services Tax period, the buyer is entitled to
claim benefit of Input Tax Credit on the taxes paid on the
construction material purchased by the builder in the post-
Goods and Services Tax period during which he has been
given benefit of Input Tax Credit on the taxes on which Input
Tax Credit was not available in the pre-Goods and Services
Tax and cost of such taxes has been built in the price of the flat
by the builder.
d. If the flat is constructed in the post-Goods and Services Tax
period and it is purchased after construction being complete
by making upfront payment of the full price, no benefit of Input
Tax Credit would be available as the price of the flat would
have been fixed after taking into account the Input Tax Credit
which has become available to the builder in the post-Goods
and Services Tax period and which was not available to him
in the pre-Goods and Services Tax.”
40. The Respondent has submitted that the present case does not fall within any
of the four situations contemplated in paragraph 128. According to the
Respondent, construction commenced only after 01.07.2017, and that no
construction activity was undertaken during the pre-GST period, rather only
a part of the consideration was received from the buyers before introduction
of GST, with the balance being received thereafter. It is therefore contended
Page 26 of 36
that none of the illustrations in paragraph 128 can be mechanically applied
to the present project.
41. We find that the facts of the present case do not squarely fall within any of
the four situations mentioned in paragraph 128 of Reckitt Benckiser (supra) .
The present case is neither one where the flats were completed and full
payment was made before 01.07.2017, nor one where a completed flat was
purchased after GST against full upfront payment. Since the consideration
was received partly before and partly after the introduction of GST, the case
requires examination on its own facts. Therefore, merely because the case
does not fall within any of the four situations, the inquiry under Section 171
cannot be concluded. The actual project-related purchases, ITC availed and
the additional benefit arising therefrom have to be examined on the basis of
the material available on record.
42. We now turn to the Commencement Certificate dated 04.09.2017. The said
certificate is relevant for determining the date on which construction of the
project was formally authorised to commence. However, the date of formal
commencement of construction and the existence of project-related
purchases and tax-credit transactions are distinct factual matters. The
issuance of the Commencement Certificate on 04.09.2017 does not, by itself,
establish that no goods or services relating to the project were procured prior
to 01.07.2017 or that no eligible CENVAT/VAT credit was availed in
respect of project-related purchases during the pre-GST period.
43. The fundamental question that arises here is whether the pre-GST credit and
purchase data relied upon by the DGAP constitute actual project-related
transactions and provide a reasonable basis for determining the change in
the availability of ITC after introduction of GST. Section 171 requires the
benefit arising from the additional availability of ITC to be identified and
passed on. Where the Respondent’s own records disclose actual pre-GST
credit attributable to project-related purchases and actual post-GST ITC
Page 27 of 36
against project expenditure, such records cannot be disregarded solely
because the formal commencement of construction occurred after
01.07.2017.
44. In the present case, the pre-GST credit comprises Service Tax credit of Rs.
19,33,174/- and VAT credit of Rs. 38,21,532/-, aggregating to Rs.
57,54,706/-, against a pre-GST purchase value of Rs. 8,63,55,956/-. As
stated by the DGAP in its clarification dated 08.09.2026, the aforesaid
figures were derived from the certified ST-3 returns, VAT returns and
purchase data furnished by the Respondent during the investigation. The
DGAP has relied upon these records to determine the pre-GST credit and
the corresponding purchase value for comparison with the post-GST
position. The relevance of these figures depends upon their connection with
the project under investigation. The Respondent has not placed any material
before us to establish that the purchases and credits relied upon by the DGAP
pertain to another project. The said records, therefore, have to be considered
along with the DGAP’s clarification and the other material available on
record while determining the relevance of the pre-GST figures to the present
project
45. The subsequent judgment in LICHFL Care Homes (supra) also does not
support the proposition that the mere existence of a post-GST
commencement date renders pre-GST data legally irrelevant. That judgment
recognised the use of purchase value and actual ITC for determining project-
level savings, while emphasising that the methodology has to be fair,
reasonable and responsive to the peculiarities of the particular project.
46. We therefore find that the Commencement Certificate dated 04.09.2017 has
significance, but not the consequence suggested by the Respondent. It
establishes that the formal commencement of construction was after the
introduction of GST. However, it does not, in isolation, establish the
absence of all project-related expenditure or eligible tax credit during the
Page 28 of 36
pre-GST period. Nor does it render the Respondent’s statutory records
relating to pre-GST purchases and credit irrelevant for the purposes of
determining the change in the availability of input tax credit.
47. Accordingly, on the material placed before us, the existence of the
Commencement Certificate dated 04.09.2017 does not invalidate the
DGAP’s consideration of the pre-GST credit and purchase data. The
relevant pre-GST figures were derived from the Respondent’s own records
and statutory returns furnished during the investigation, and the Respondent
has not established that the purchases and credits relied upon by the DGAP
were unrelated to Candeur Carlisle. The pre-GST data therefore provides a
reasonable project-level benchmark for comparison with the post-GST ITC
position.
48. We therefore hold that the Commencement Certificate dated 04.09.2017
does not preclude consideration of the pre-GST credit and purchase data for
the purposes of Section 171 in the facts of the present case. The relevant pre-
GST transactions having been furnished by the Respondent himself and
considered from its statutory records, and no material having been placed
before us to establish that such transactions were unrelated to the project,
the pre-GST figures constitute a permissible basis for determining the
change in the availability of ITC after introduction of GST.
49. Issue No. (ii) is accordingly answered by holding that the post-GST date of
formal commencement of construction, evidenced by the Commencement
Certificate dated 04.09.2017, does not by itself render the pre-GST purchase
and credit data inadmissible or irrelevant.
Determination of Issue (iii)
Whether the revised computation of profiteering furnished by the DGAP,
including the determination of the total project area, eligible sold area, per-
Page 29 of 36
square-foot benefit and consequential profiteering amount, is factually and
legally sustainable?
50. Having considered the methodology adopted by the DGAP and the
relevance of the pre-GST and post-GST data under Issues Nos. (i) and (ii),
we now proceed to examine the revised computation furnished by the DGAP
and whether the same is sustainable.
51. In its original Report dated 05.06.2025, the DGAP had considered the total
project area as 3,93,856 sq. ft. and the area sold before issuance of the
Occupancy Certificate as 2,44,370 sq. ft. On this basis, the saving was
calculated atRs. 59.38 per sq. ft., resulting in a base profiteered amount of
Rs. 1,45,10,691/- and a total profiteered amount of Rs. 1,62,51,974/-,
including GST at 12%. Subsequently, the Respondent, vide its submission
dated 15.05.2026, pointed out that the Occupancy Certificate dated
09.12.2020 recorded the total project area as 49,878.81 sq. metres,
equivalent to approximately 5,36,891 sq. ft. The Respondent requested that
the computation be revised by taking the said area into consideration.
52. The difference in the project-area figures was considered by this Tribunal in
its interim orders. Vide order dated 05.05.2026, the DGAP was directed to
clarify the basis on which the project area of 3,93,856 sq. ft. had been
adopted in the original Report. Thereafter, vide order dated 04.06.2026, this
Tribunal directed the Respondent to furnish a comparative statement
showing the area of all 304 units corresponding to the area mentioned in the
Occupancy Certificate. The relevant direction reads as follows:
“ Accordingly, learned Chartered Accountant is directed to file
comparative table mentioning therein the entire area 304 units
which is commensurate to the area mentioned in the
Occupation Certificate within one week from today. A copy of
such submission be made available to the DGAP as well as the
Applicant.”
Page 30 of 36
The DGAP and the Applicant were also permitted to file their respective
submissions or clarifications. It is, therefore, clear that the revised
computation was undertaken to examine the discrepancy in the project-area
figures pursuant to the directions of this Tribunal.
53. The Respondent, in its submission dated 22.06.2026, stated that the area of
3,93,856 sq. ft. furnished during the investigation had been prepared for a
specific purpose and did not represent the final total construction area of the
project. The Respondent relied upon the Occupancy Certificate, which
recorded the total built-up area as 5,36,891 sq. ft. However, the Respondent
could not furnish the detailed reconciliation between the area considered in
the original investigation and the area recorded in the Occupancy Certificate.
The Complainants also objected to the adoption of the revised area without
such reconciliation, particularly because the Occupancy Certificate included
car parking and common areas.
54. The DGAP, vide its clarifications dated 08.09.2026 and 18.09.2026,
reconsidered the computation and adopted the total project area of 5,36,891
sq. ft. and the eligible sold area before issuance of the Occupancy Certificate
as 3,34,570 sq. ft. As per the material on record, 188 flats had been booked
before the issuance of the Occupancy Certificate, comprising 175 flats in the
share of the Respondent and 13 flats in the share of the landowner.
Accordingly, the eligible sold area of 3,34,570 sq. ft. was considered for the
revised computation. Consequently, the saving per sq. ft. was revised from
Rs. 59.38 to Rs. 43.56, and the base profiteered amount was revised from
Rs. 1,45,10,691/- to Rs. 1,45,73,861/-. The total profiteered amount,
including GST at 12%, was revised to Rs. 1,63,22,724/-. Thus, although the
saving per square foot decreased on account of the revised project area, the
corresponding increase in the eligible sold area resulted in an increase of Rs.
70,750/- in the base profiteered amount.
Page 31 of 36
55. We have also considered the Occupancy Certificate dated 09.12.2020, which
records the total built-up area of the completed project as 49,878.81 sq.
metres, equivalent to approximately 5,36,891 sq. ft. The floor-wise
statement forming part of the certificate includes residential units, car
parking, lobbies, lifts, staircases and common amenities. The Occupancy
Certificate is relevant for determining the total built-up area of the
completed project. However, the total built-up area cannot automatically be
treated as the saleable area of individual flats. The Respondent did not
furnish the detailed reconciliation directed by this Tribunal between the area
considered in the original investigation and the area recorded in the
Occupancy Certificate. The revised computation must, therefore, be
examined with reference to the Occupancy Certificate, the material
furnished by the Respondent and the clarifications submitted by the DGAP.
The area adopted for calculating the benefit per square foot and the area used
for determining the benefit payable to eligible recipients must be applied
consistently.
56. The Respondent has questioned whether the difference between the pre-GST
credit-to-purchase-value ratio of 6.66% and the post-GST ratio of 8.36%,
resulting in a difference of 1.70%, establishes an additional ITC benefit. The
Respondent has contended that the difference between these ratios does not,
by itself, establish that any additional benefit has accrued which is required
to be passed on to the homebuyers. On the other hand, the Complainants
have contended that the benefit should be higher, relying upon the CREDAI
estimate that reductions in GST rates on certain construction materials could
result in an overall reduction in project costs of approximately 3% to 5%.
57. We have considered the rival contentions. The estimate referred to by
CREDAI indicates the possible reduction in construction costs generally and
cannot, by itself, determine the additional ITC benefit available in the
present project. The DGAP has calculated the difference of 1.70% on the
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basis of the pre-GST and post-GST credit and purchase-value figures
relating to the project. We find no sufficient ground to reject this
computation merely on the basis of the general estimate referred to by the
Complainants or to enhance the quantified benefit on that basis.
Accordingly, the difference of 1.70% is accepted for the revised
computation, subject to the finding under Issue No. (ii) regarding the
connection of the underlying pre-GST transactions with the project.
58. For the revised computation, the DGAP has adopted the total project area of
5,36,891 sq. ft. and the eligible sold area of 3,34,570 sq. ft. By determining
the project-level saving on the basis of the difference of 1.70% and dividing
it by the total project area, the saving has been calculated at Rs. 43.56 per
sq. ft. Applying this saving to the eligible sold area, the DGAP has
determined the base profiteered amount at Rs. 1,45,73,861/-. After including
GST at 12%, the total profiteered amount has been determined at Rs.
1,63,22,724/-. We accordingly accept the revised computation furnished by
the DGAP, subject to the findings recorded under Issues Nos. (i) and (ii).
59. In view of the foregoing discussion, we hold that the revised computation
was undertaken pursuant to the directions of this Tribunal and after
examination of the project-area figures by the DGAP. Issue No. (iii) is
accordingly answered, subject to the findings recorded under Issues Nos. (i)
and (ii).
Conclusion
60. In view of the foregoing discussion and the findings recorded under Issues
Nos. (i) to (iii), we hold that the Respondent was required to pass on the
benefit arising from the additional availability of ITC under the GST regime
by way of commensurate reduction in prices, in terms of Section 171 of the
CGST Act, 2017. We further hold that the methodology adopted by the
DGAP, based on the pre-GST credit and post-GST ITC with reference to the
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corresponding purchase values, is legally sustainable in the facts of the
present case. The Commencement Certificate dated 04.09.2017 does not, by
itself, render the pre-GST purchase and credit data irrelevant, subject to the
project-specific nexus of the underlying transactions. The revised
computation determines the benefit at Rs. 43.56 per sq. ft. and the total
profiteered amount at Rs. 1,63,22,724/-, inclusive of GST at 12%.
61. The DGAP has computed the base profiteered amount by applying the
differential in the credit-to-purchase-value ratio to the corresponding post-
GST purchase value, exclusive of GST. Since the amount realised by the
Respondent from the homebuyers included GST, the GST component is also
required to be considered while determining the total amount to be passed
on. In this regard, the Hon’ble High Court of Delhi, in Reckitt Benckiser
India Pvt. Ltd. (supra) , observed as follows:
“ 157. Both the Central as well as the State Government had no
intent of collecting additional Goods and Services Tax on the
higher price as they had sacrificed their revenue in favour of
the buyer. By compelling the buyers to pay the additional
Goods and Services Tax on a higher price, the supplier has not
only defeated the intent of the Governments but has also acted
against the interest of the consumer and therefore, the Goods
and Services Tax collected by him on the additional realization
has rightly been included in the profiteered amount.”
The aforesaid observation clarifies that the GST collected on the additional
realisation arising from profiteering is also includible in the profiteered
amount. Accordingly, in the present case, the GST component has been
included in determining the total profiteered amount.
62. Accordingly, the revised computation furnished by the DGAP vide its
clarifications dated 08.09.2026 and 18.09.2026, determining profiteering of
Page 34 of 36
Rs. 1,45,73,861/- before GST and Rs. 1,63,22,724/- inclusive of GST, is
accepted.
63. Further, insofar as the imposition of penalty under Section 171(3A) of the
CGST Act, 2017 is concerned, the said provision came into force with effect
from 01.01.2020. The period of investigation in the present case extends
from 01.07.2017 to 31.03.2023 and, therefore, includes the period
subsequent to the coming into force of the said provision. Accordingly, the
applicability of the penalty provision is required to be examined in light of
the period of contravention and the legal position governing its application.
The relevant provision reads as under:
“ Where the Authority referred to in sub-section (2) after
holding examination as required under the said sub-section
comes to the conclusion that any registered person has
profiteered under sub-section (1), such person shall be liable
to pay penalty equivalent to ten per cent of the amount so
profiteered:
PROVIDED that no penalty shall be leviable if the profiteered
amount is deposited within thirty days of the date of passing of
the order by the Authority.”
ORDER
64. The revised computation of profiteering furnished by the DGAP vide its
clarifications dated 08.09.2026 and 18.09.2026 is accepted.
65. Accordingly, in terms of Section 171 of the CGST Act, 2017 read with Rule
133(3)(b) of the CGST Rules, 2017, the Respondent is directed to pass on
the profiteered amount of Rs. 1,63,22,724/- (Rupees One Crore Sixty-Three
Lakh Twenty-Two Thousand Seven Hundred Twenty-Four only), inclusive
of GST @ 12%, to the 188 eligible homebuyers, in proportion to the benefit
Page 35 of 36
attributable to their respective units, as per the buyer-wise computation
furnished by the DGAP.
66. The Respondent shall pass on the aforesaid benefit to the eligible recipients
along with interest @ 18%, as applicable under Rule 133(3)(b) of the CGST
Rules, 2017, from the date of collection of the higher amount from the
respective recipients till the date of actual passing on of the corresponding
benefit.
67. The Respondent is further liable to penalty under Section 171(3A) of the
CGST Act, 2017. However, no penalty shall be leviable if the profiteered
amount is deposited within thirty days from the date of passing of this Order.
68. A copy of this Order shall be supplied to the DGAP, the Respondent, the
Complainants and the jurisdictional Commissioner(s) for information and
necessary action.
69. Order pronounced in the open court.
(Justice Mayank Kumar Jain)
(Sh. A. Venu Prasad)
Dated: 23.10.2026
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