GSTAT Orders Refund of Profiteered Amount with 18% Interest for Failure to Pass ITC Benefit to Homebuyers — DG Anti Profiteering Vs Unnathi Associates
Background and Origin of the Case
The GST Appellate Tribunal (GSTAT) recently adjudicated a significant anti-profiteering matter arising from a complaint filed against a real estate developer involved in a residential construction project in Thane, Maharashtra. The proceedings were triggered by an investigation report dated 07.01.2025, submitted by the Director General of Anti-Profiteering (DGAP) under Section 171 of the Central Goods and Services Tax Act, 2017, read alongside Rule 129 of the Central Goods and Services Tax Rules, 2017.
The original complaint was lodged by a homebuyer, Shri Rahul Kesarwani, residing at H-3, 705 Raunak Heights, Ghodbundar Road, Thane — 400615, alleging that the Respondent — Ms. Unnathi Associates, Raunak Group — had unlawfully retained the benefit of enhanced Input Tax Credit (ITC) accruing under the GST regime without making any corresponding downward revision in the prices charged to buyers of flats in the "Raunak Heights" project located at Parshwanath College, Owala Village, Ghodbundar Road, Thane (W), Maharashtra — 400607.
Re-Investigation Pursuant to Delhi High Court Directions
The DGAP had initially submitted an investigation report on 31.01.2023 to the Competition Commission of India (CCI). However, the trajectory of the proceedings changed significantly when, in Writ Petition No. 7743/2019 and connected matters, the Hon'ble Delhi High Court, vide its judgment dated 29.01.2024, laid down a revised methodology for computing profiteering specifically in the real estate sector.
Acting upon this judicial direction, the CCI issued a communication dated 21.03.2024, directing the DGAP to conduct a fresh investigation in the matter under Rule 129 of the CGST Rules, 2017. Accordingly, the DGAP re-examined the financial data pertaining to the project for the period April 2016 to December 2019, spanning both pre-GST and post-GST phases.
DGAP's Analytical Findings: ITC Ratio Comparison
Pre-GST vs Post-GST ITC Analysis
The methodological cornerstone of the re-investigation was a comparative analysis of the ratio of input tax credit availed by the Respondent relative to the total purchase value of goods and services consumed in the project. The DGAP's findings are captured in Table-A below:
Table-A (Amount in Rs.)
| Sr. No. | Particulars | Pre-GST Period | Post-GST Period |
|---|---|---|---|
| 1. | Purchase Value of Goods and Services (Excluding Taxes and Duties) | 1,69,98,202 | 45,02,08,931 |
| 2. | Credit of Service Tax Availed | 13,03,738 | — |
| 3. | Credit of VAT Availed | — | — |
| 4. | Total Credit Availed in Pre-GST Period | 13,03,738 | — |
| 5. | ITC of GST Availed | — | 5,43,96,003 |
| 6. | Ratio of Credit Availed to Purchase Value (in %) | 7.67 | 12.08 |
The data clearly revealed that the ITC-to-purchase-value ratio surged from 7.67% in the pre-GST period (April 2016 to June 2017) to 12.08% in the post-GST period (July 2017 to December 2019), resulting in an additional ITC benefit of 4.41 percentage points accruing to the Respondent under the GST framework.
Computation of Profiteered Amount
GST Rate Applicable to Construction Services
The DGAP noted that the Central Government, following recommendations of the GST Council, had levied GST at 18% on construction services vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. However, since one-third of the total consideration was treated as the value of land and thereby exempt, the effective GST rate on the project flats worked out to 12%.