GSTAT Principal Bench Holds PRL Developers Passed Excess ITC Benefit, No Profiteering Under Section 171 CGST Act

The Goods and Services Tax Appellate Tribunal (GSTAT), Principal Bench, has ruled that PRL Developers did not contravene Section 171 of the Central Goods and Services Tax Act, 2017, in relation to anti-profiteering allegations. The Tribunal found that the developer passed on an Input Tax Credit (ITC) benefit to eligible homebuyers in excess of the amount required by law, thereby fully complying with the statutory mandate.

Background of the Proceedings

The proceedings originated from a complaint filed by a homebuyer alleging that PRL Developers failed to pass on the benefit of additional ITC, as required under Section 171 of the CGST Act, following the introduction of GST on 1 July 2017. The complaint was investigated by the Directorate General of Anti-Profiteering (DGAP), which examined the construction project “Piramal Revanta Tower – 1” in Mumbai.

The DGAP’s initial investigation compared the ratio of credit availed to purchase value in the pre-GST and post-GST periods. It found that the ratio increased from 14.00% to 16.10%, resulting in an additional ITC benefit of 2.10%. The DGAP calculated the base profiteered amount required to be passed on to recipients as Rs. 39,00,226 (excluding GST). Upon reviewing the documentary evidence, the DGAP observed that PRL Developers had already passed on ITC benefits exceeding the required amount to eligible homebuyers.

Tribunal’s Directions and Revised DGAP Report

During the hearing, the Tribunal noted that the DGAP’s computation did not include the value of goods in the pre-GST purchase value. The Tribunal directed the DGAP to recalculate the profiteered amount after incorporating the goods component. In compliance, the DGAP submitted a revised report, increasing the pre-GST purchase value to Rs. 22,28,20,724 and recalculating the ratio of ITC to purchase value at 11.87% for the pre-GST period and 16.10% for the post-GST period. This resulted in an additional ITC benefit of 4.23% and a recomputed profiteered amount of Rs. 87,98,766 (inclusive of GST).

The revised DGAP report confirmed that PRL Developers had passed on Rs. 99,67,875 to the 31 eligible homebuyers who booked units during the pre-GST period, exceeding the required benefit by Rs. 11,68,109. The DGAP did not dispute the documentary evidence provided by the developer and accepted that the benefit had been passed on in excess of the statutory requirement.

Tribunal’s Analysis and Final Ruling

The Tribunal observed that Section 171(1) of the CGST Act requires any benefit from a reduction in tax rate or additional ITC to be passed on to recipients through a commensurate reduction in prices. The Tribunal held that once the supplier has passed on the entire benefit, and in fact an amount exceeding the determined benefit, the requirements of Section 171 are fully satisfied. The Tribunal further clarified that no allegation of profiteering can be sustained merely because the computation methodology was revised during the proceedings.

Accordingly, the Tribunal accepted the revised DGAP report dated 29 June 2026 and held that PRL Developers had not contravened Section 171 of the CGST Act. The proceedings were disposed of, and the order was directed to be communicated to all relevant parties for information and record.

Legal Takeaway

This decision clarifies that where a supplier has demonstrably passed on the full benefit of additional ITC, and even exceeded the required amount, no contravention of anti-profiteering provisions under Section 171 of the CGST Act arises. The ruling underscores the importance of accurate computation and documentary evidence in anti-profiteering investigations under GST law.