Dg Anti-Profiteering, Director General Of Anti-Profiteering, Dgap vs. Alton Buildtech PVT. LTD

Facts

The Director General of Anti-Profiteering (DGAP) investigated M/s Alton Buildtech Pvt. Ltd. (Respondent) for allegedly failing to pass on the benefit of additional Input Tax Credit (ITC) to home buyers of the "Aangan Phase-I" project after GST implementation. An earlier report led to a profiteering determination of Rs. 6,24,48,008/-. Following a Delhi High Court judgment in WP (C) 7743/2019, the matter was remanded for re-investigation. The DGAP's re-investigation found an incremental ITC benefit of 0.92% in the post-GST period. The profiteered amount for July 2017 to March 2019 was determined at Rs. 44,18,355/-, with applicable GST of Rs. 3,53,468/-, totaling Rs. 47,71,823/-. The Respondent accepted the DGAP's findings and agreed to pass on the amount with interest. The DGAP report was accepted by the Tribunal.

Held

The Tribunal held that the Respondent had indeed derived an additional ITC benefit of 0.92% during the post-GST period and failed to pass it on to home buyers, thereby contravening Section 171(1) of the CGST Act, 2017. The DGAP's report dated 26.03.2025, which quantified the profiteered amount at Rs. 47,71,823/- (including GST) for the period July 2017 to March 2019, was accepted. The Respondent was directed to pass on this amount along with applicable interest to eligible home buyers within 30 days, as per Rule 133(3)(b) of the CGST Rules, 2017, and submit a compliance report. Regarding the penalty under Section 171(3A), the Tribunal held that it could not be applied retrospectively as the contravention period (01.07.2017 to 31.03.2019) preceded the provision's effective date (01.01.2020). Therefore, no penalty was attracted. The ratio decidendi is that any additional ITC benefit derived by a developer under GST must be passed on to recipients via price reduction, and penalty provisions cannot be applied retrospectively to periods before their enactment.

Key Issues

1. Whether the Respondent derived an additional ITC benefit under the GST regime and was liable to pass it on to eligible home buyers under Section 171(1) of the CGST Act, 2017? The Petitioner (DGAP) argued that the DGAP's report correctly determined an incremental ITC benefit of 0.92% by comparing pre-GST and post-GST ITC to purchase value ratios, indicating a contravention of Section 171(1). The Respondent accepted these findings. 2. Whether the profiteered amount of Rs. 44,18,355/-, along with applicable GST of Rs. 3,53,468/-, totaling Rs. 47,71,823/-, was correctly computed and required to be passed on to eligible home buyers with applicable interest? The Petitioner (DGAP) contended that the computation based on the differential ITC benefit was accurate. The Respondent agreed to pass on this amount with interest as per Rule 133(3)(b) of the CGST Rules, 2017. The Tribunal also considered whether penalty under Section 171(3A) was applicable, noting the period of contravention preceded the provision's enforcement.