GSTAT Delhi Upholds Anti-Profiteering Order Against Builder, Directs ₹63.93 Lakh Refund

The Goods and Services Tax Appellate Tribunal (GSTAT) at Delhi has upheld anti-profiteering proceedings against Siddha Infradev LLP and directed the builder to refund ₹63.93 lakh, along with 18% interest, to nine eligible homebuyers after finding that it failed to pass on the benefit of additional input tax credit in its Kolkata housing project.

A single-member bench of Technical Member Anil Kumar Gupta, ruled, “Procedural delays by a statutory authority, in the absence of any prescribed consequence for lapse of such timeline, cannot be allowed to defeat the substantive rights of consumers.”

The proceedings arose from a complaint by two homebuyers who alleged that the builder had charged GST at the effective rate of 12% but failed to pass on the benefit of additional input tax credit in the “Siddha Sky” residential project in Kolkata.

The DGAP had initially computed the profiteered amount at ₹1.88 crore. However, after remand proceedings and reconsideration following the Delhi High Court's ruling in Reckitt Benckiser India Pvt Ltd v Union of India, the methodology was revised from the earlier ITC-to-turnover approach to comparing the ratio of credit availed to the purchase value of goods and services.

Applying the revised methodology, the DGAP concluded that Siddha Infradev had obtained an additional ITC benefit of 8.69% in the post-GST period and profiteered ₹57.08 lakh. With GST at 12%, the total amount payable came to ₹63.93 lakh for nine eligible pre-GST homebuyers.

The builder argued that the reference made by the Standing Committee to the DGAP was barred by limitation because it was made beyond the prescribed two-month period.

Rejecting the contention, the tribunal held that the timeline was directory and not mandatory.

The builder also argued that GST collected on the alleged profiteered amount could not be included in the refund because the tax had already been deposited with the government.

Rejecting this argument, the tribunal relied on the Delhi High Court's ruling in Reckitt Benckiser.

“By compelling the buyers to pay the additional Goods and Services Tax on a higher price, the supplier has not only defeated the intent of the Governments but has also acted against the interest of the consumer,” the tribunal quoted from the High Court judgment.

The builder further challenged the levy of interest, contending that the parent law did not expressly provide for it and that the rules could not go beyond the statute.

Rejecting the submission, the tribunal held that the provision mandating 18% interest was valid and enforceable.

The tribunal also held that penalty proceedings were attracted for the period from January 1, 2020 onwards, though the builder could avoid the 10% penalty by depositing the profiteered amount within 30 days of the order.

The tribunal directed Siddha Infradev LLP to file a compliance report evidencing the refund of the profiteered amount along with interest within three months before the jurisdictional CGST/SGST commissioner.