Facts of the Case:

In this case, the complainants alleged that the respondent builder had indulged in profiteering under Section 171 of the CGST Act by not passing on the benefit of Input Tax Credit (ITC) in respect of a residential project. The matter was referred to the Director General of Anti-Profiteering (DGAP), who, after investigation, found that the ITC ratio actually declined post-GST (12.26% pre-GST vs. 11.02% post-GST), indicating no additional benefit accrued to the builder.

The complainants challenged the DGAP report before the GST Appellate Tribunal (GSTAT), while the respondent raised preliminary objections contending that the entire transaction, booking, agreement, construction, and payment took place entirely in the post-GST regime, and therefore, no ITC benefit was required to be passed on.

Issue:

Whether the provisions of Section 171 (anti-profiteering) apply where the entire project and transaction occur in the post-GST regime, and no incremental ITC benefit arises post-GST for passing on to buyers. 

Held That:

The Tribunal held that the provisions of anti-profiteering under Section 171 of the CGST Act were not attracted in the present case, as the entire transaction, including booking, agreement, construction, and payment was executed exclusively in the post-GST regime. The Tribunal relied on paragraph 128(d) of the Delhi High Court judgment in Reckitt Benckiser India Pvt. Ltd., the Tribunal clarified that where a flat is constructed and supplied entirely in the post-GST period, the price is presumed to have been fixed after factoring in the benefit of Input Tax Credit, and therefore, no separate obligation arises to pass on such benefit.

The Tribunal rejected the contention that the property must be fully constructed at the time of agreement to fall within this category, holding that even in construction-linked payment plans, what is material is that the entire lifecycle of the project falls within the GST regime. It further noted that the complainants had entered into the Builder-Buyer Agreement with full knowledge of GST implications and agreed pricing, which already accounted for ITC availability.

Additionally, the Tribunal accepted the DGAP’s findings that there was no incremental ITC benefit, as the credit-to-turnover ratio had actually declined post-GST by 1.24%. In such circumstances, the question of profiteering or passing on any benefit did not arise. The Tribunal also held that the complainants lacked locus standi to challenge the DGAP report in absence of any demonstrable benefit being denied.

Accordingly, the Tribunal upheld the DGAP report, accepted the preliminary objections of the respondent, and concluded that there was no violation of Section 171, thereby dismissing the complaint.

Case Name: DG Anti Profiteering, Director General of Anti-Profiteering, DGAP Versus Sobha Limited. dated 02.04.2026