GSTAT Directs Anuhar Homes to Refund Rs. 95.13 Lakh Profiteered Amount with Interest for GST ITC Non-Pass Through

The Principal Bench of the Goods and Services Tax Appellate Tribunal (GSTAT) has ruled that Anuhar Homes Pvt. Ltd. contravened Section 171(1) of the Central Goods and Services Tax Act, 2017 by failing to pass on the benefit of additional input tax credit (ITC) to homebuyers in its “Morning Raaga” residential project. The Tribunal directed the developer to refund the profiteered amount of Rs. 95,13,829, along with 18% interest, to eligible homebuyers.

Background and Core Issue

The proceedings originated from a complaint by a homebuyer alleging that Anuhar Homes charged full 12% GST on a flat purchase in 2017 but did not reduce the price to reflect the benefit of ITC available under the GST regime. The Directorate General of Anti-Profiteering (DGAP) investigated the matter and found that the developer had not passed on the ITC benefit as required by law.

The DGAP’s investigation covered the period from 1 July 2017 to 8 August 2018, corresponding to the introduction of GST and up to the project’s occupancy certificate. The investigation revealed that, while no eligible CENVAT or VAT credit was available in the pre-GST period, the developer availed ITC of Rs. 1,73,84,508 in the post-GST period, representing 10.63% of the purchase value of goods and services used in the project.

DGAP Findings and Computation

Applying the additional ITC benefit to the post-GST purchase value and allocating it based on the saleable area, the DGAP calculated the base profiteered amount at Rs. 84,94,491. After adding GST at 12%, the total profiteered amount was determined to be Rs. 95,13,829. The DGAP concluded that Anuhar Homes had not passed on this benefit to homebuyers as mandated by Section 171 of the CGST Act.

Respondent’s Objections and Tribunal’s Analysis

Anuhar Homes argued that, following Notification No. 19/2024-Central Tax dated 30 September 2024, no anti-profiteering proceedings could continue after 1 April 2025, as the notification lacked a saving clause. The developer also cited pending Supreme Court proceedings challenging the anti-profiteering provisions and requested that the case be kept in abeyance.

The Tribunal rejected these objections, holding that the notification only barred new requests after 1 April 2025 and did not affect pending proceedings. The Tribunal further noted that the pendency of constitutional challenges before the Supreme Court did not automatically stay ongoing proceedings unless a specific stay order was in place, which was not the case here.

Final Directions and Relief

After considering the DGAP’s revised report, the developer’s submissions, and the absence of any evidence rebutting the DGAP’s findings, the Tribunal concluded that Anuhar Homes had indeed profiteered by not passing on the ITC benefit. The Tribunal affirmed the DGAP’s computation and directed the developer to refund the profiteered amount of Rs. 95,13,829, inclusive of GST, to eligible homebuyers, along with 18% interest from the date of collection until the date of return.

The Tribunal clarified that, since the contravention period did not extend beyond 1 January 2020 (the date from which penalty provisions under Section 171(3A) became effective), no penalty was imposed. Compliance with the order is to be completed within three months, and the jurisdictional CGST Commissioner has been directed to monitor the process.

Legal Takeaway

This decision reinforces the statutory obligation under Section 171 of the CGST Act for developers to pass on GST-related ITC benefits to homebuyers through commensurate price reductions. The Tribunal’s ruling also clarifies that pending anti-profiteering proceedings are not abated by subsequent notifications restricting new cases, nor are they stayed merely due to pending constitutional challenges unless a specific stay is granted.