GSTAT Principal Bench Holds No Anti-Profiteering Violation Where Entire Works Contract Executed Post-GST and Contract Price Reflects GST Regime

Background and Proceedings
The proceedings before the Goods and Services Tax Appellate Tribunal (GSTAT) Principal Bench arose from an application filed by the Mumbai Port Trust Authority, alleging that Belhekar & Kale Associates had violated Section 171 of the Central Goods and Services Tax Act, 2017, in relation to a works contract for the modernization of MICT. The matter was referred to the Directorate General of Anti-Profiteering (DGAP) for investigation under Rule 129 of the CGST Rules, 2017.

DGAP Investigation and Findings
The DGAP, in its report dated 21.01.2026, concluded that the case did not pertain to the construction of flats or homes by a builder, but rather to a works contract executed by a private firm for a government agency under a comprehensive tender. Although the tender was floated before the GST regime, the Letter of Acceptance and commencement of work both occurred after GST came into force on 01.07.2017. The DGAP found that all procurement and execution activities took place in the post-GST period, making any comparison of Input Tax Credit (ITC) between pre- and post-GST periods impossible. The DGAP also noted that the Applicant had withheld Rs. 22.66 crores from the Respondent’s bills on grounds of alleged profiteering, but found no legal authority for such withholding under Section 171.

Tribunal Hearings and Applicant’s Non-Participation
The matter was listed for multiple hearings, but the Applicant failed to appear or file any written submissions despite being given several opportunities. The Tribunal, in the interest of natural justice, repeatedly granted extensions for the Applicant to present its case or objections to the DGAP report. However, no response was received from the Applicant at any stage.

Court’s Reasoning and Legal Principle
Given the Applicant’s consistent default and absence of objections, the Tribunal proceeded to decide the matter based on the DGAP report and the documents on record. The Tribunal emphasized that the entire procurement and execution of the project occurred after the implementation of GST. Referring to Paragraph 128(d) of the Delhi High Court’s decision in Reckitt Benckiser India Private Limited v. Union of India [2024 SCC OnLine Del 588], the Tribunal held that no benefit of Input Tax Credit is required to be passed on in such circumstances, as the contract price is deemed to have been fixed with the post-GST tax structure in mind.

Final Decision
Accepting the DGAP report, the Tribunal held that there was no contravention of Section 171 of the CGST Act, 2017, by the Respondent. The proceedings were accordingly closed. The order was directed to be communicated to all relevant parties and authorities.

This decision clarifies that in cases where the entire works contract is executed in the post-GST regime and the contract price reflects the GST structure, anti-profiteering provisions regarding the passing on of ITC benefits do not apply.