Dg Anti-Profiteering, Director General Of Anti-Profiteering, Dgap vs. Sobha Limited

Facts

The Director General of Anti-Profiteering (DGAP) investigated M/s Sobha Limited (Respondent) based on a complaint alleging that the benefit of input tax credit (ITC) was not passed on to home buyers. The complainants alleged that the Respondent failed to reduce prices for villas in their project after the introduction of GST. The DGAP's investigation found that the ratio of credit availed to purchase value declined from 12.26% in the pre-GST period to 11.02% in the post-GST period, indicating no incremental ITC benefit accrued to the Respondent. The Respondent argued that the entire transaction, including booking, allotment, agreement, construction, and payment, occurred in the post-GST period, and the price was fixed factoring in available ITC. The DGAP report dated 21.08.2025 was accepted by the Tribunal.

Held

The Court held that the Complainants lacked locus standi to challenge the DGAP report because the entire transaction, including booking, allotment, agreement execution, construction activities, and receipt of payments, occurred in the post-GST era. The price was fixed after factoring in the ITC available in the GST regime. The Court found that the case was fully covered by paragraph 128(d) of the Delhi High Court's judgment in Reckitt Benckiser India Pvt. Ltd. v. Union of India. Regarding the second issue, the Court held that Section 171 of the CGST Act, 2017, applies to situations involving tax rate reductions or ITC increases, especially in projects spanning pre and post-GST periods. As the impugned project commenced wholly in the post-GST regime, there was no comparative ITC benefit to pass on. The DGAP's finding that the ratio of credit availed to purchase value declined by 1.24% indicated no incremental benefit accrued to the Respondent, thus no profiteering occurred. The DGAP report dated 21.08.2025 was accepted.

Key Issues

1. Whether the Complainants have locus standi to challenge the DGAP report where the entire activity was undertaken in the post-GST regime? The Petitioner argued that the entire transaction, from booking to payment and construction, occurred post-GST, and the price was fixed considering the ITC benefit available in the GST regime. Therefore, no benefit was available to be passed on, and the Complainants had no locus standi to contest the DGAP report. The Revenue did not explicitly argue this point separately but supported the DGAP's findings. 2. Whether the benefit of ITC is required to be passed on where both construction and supply take place entirely in the post-GST period? The Petitioner contended that Section 171 of the CGST Act, 2017, applies to situations involving tax rate reductions or ITC increases, particularly in projects spanning pre and post-GST periods. Since the project commenced wholly in the post-GST regime, there was no comparative ITC benefit to pass on. The Petitioner relied on the Delhi High Court's decision in Reckitt Benckiser India Pvt. Ltd. v. Union of India, specifically paragraph 128(d), which held that no ITC benefit needs to be passed on when construction and supply occur entirely post-GST. The Revenue supported this contention.