(2026) 1 GSTAT E- Journal 209 (Principal Bench)Anti-ProfiteeringDecision: In Favour of DGAP / Revenue
GSTAT on Real Estate Anti-Profiteering: Revised ITC-to-Purchase Methodology Upheld and Penalty Held Prospective
The GSTAT Principal Bench accepted the DGAP's revised computation under Reckitt Benckiser reducing profiteering from ₹6.24 Cr to ₹47.71 Lakhs based on a 0.92% incremental ITC ratio. The Tribunal held that Section 171(3A) penalty cannot apply retrospectively to pre-2020 projects.
Case Name / Parties
DG Anti-Profiteering, DGAP v. Alton Buildtech Pvt. Ltd
Appeal Number
NAPA/113/PB/2025
Tribunal Bench
Principal Bench
Date of Judgment / Order
17/02/2026
Coram
Hon’ble Shri A. Venu Prasad (Technical Member)
For Appellant: Shri Sunil Kumar, Additional Assistant Director, assisted by Shri Ravi Passi, Inspector
For Respondent: Shri Ashish Chaudhary, learned Advocate
Facts of the Case
The Respondent developed a residential affordable housing project titled 'Aangan Phase-I' in Gurugram, Haryana. Homebuyers filed complaints alleging that the builder failed to pass on the benefit of additional Input Tax Credit accrued under the GST regime w.e.f. 01.07.2017. The erstwhile National Anti-Profiteering Authority (NAA) had originally passed Order No. 65/2020 dated 16.10.2020 determining a massive profiteered amount of ₹6,24,48,008/-. On challenge, the Delhi High Court in Reckitt Benckiser set aside the flawed turnover-based methodology and remanded real estate matters for fresh investigation. The DGAP re-investigated by comparing the ratio of ITC to purchase value: pre-GST ratio was 13.80%, while post-GST ratio was 14.72%, demonstrating an incremental benefit of 0.92%. For the period July 2017 to March 2019, the net profiteered amount was recomputed at ₹44,18,355/- plus GST of ₹3,53,468/-, aggregating ₹47,71,823/-. The builder accepted the recomputation, and buyers agreed.
Issues Before GSTAT
- 1Whether the Respondent derived an additional benefit of Input Tax Credit under the GST regime in respect of Project 'Aangan Phase-I' and was liable to pass on the benefit to eligible homebuyers under Section 171(1) of the CGST Act.
- 2Whether the revised DGAP methodology based on ITC-to-purchase-value comparison under the Delhi High Court's Reckitt Benckiser judgment was correct.
- 3Whether penalty under Section 171(3A) of the CGST Act could be imposed retrospectively for contraventions occurring between 01.07.2017 and 31.03.2019.
Relevant Statutory Provisions & Rules
Statutory Sections
Section 171 of CGST Act, 2017Section 171(1) of CGST Act, 2017Section 171(3A) of CGST Act, 2017
GST Rules
Rule 129 of CGST Rules, 2017Rule 129(6) of CGST Rules, 2017Rule 133 of CGST Rules, 2017Rule 133(3)(b) of CGST Rules, 2017
Contentions of the Parties
Appellant / Taxpayer Contentions
- •Upon reconsideration under the High Court's directions, the ratio of ITC to total purchase value rose from 13.80% in the pre-GST era to 14.72% in the post-GST era, reflecting an incremental benefit of 0.92%.
- •Applying this ratio across the eligible buyers during July 2017 to March 2019, the base profiteered amount was ₹44,18,355/- plus 12% GST of ₹3,53,468/-, totaling ₹47,71,823/-.
- •The DGAP Report dated 26.03.2025 should be accepted and the builder directed to disburse the amount with interest under Rule 133(3)(b).
Respondent / Revenue Contentions
- •The Respondent accepted the DGAP's revised methodology and findings, expressing readiness to pass on ₹47,71,823/- with applicable interest to the eligible homebuyers as per Annexure-13.
- •The Respondent requested return of ₹2 Crore previously deposited pursuant to Delhi High Court interim orders dated 17.03.2021.
- •No penalty under Section 171(3A) is imposable because the statutory penalty provision took effect only on 01.01.2020 and cannot operate retrospectively.
Findings of GSTAT
The DGAP properly re-investigated the real estate project in compliance with the Delhi High Court's landmark judgment in Reckitt Benckiser India Pvt. Ltd. v. Union of India. Comparing the ITC-to-purchase-value ratio between the pre-GST and post-GST periods is a fair, reasonable, and industry-appropriate methodology.
The Respondent derived an additional ITC benefit of 0.92% on its construction purchases during the post-GST era and failed to pass it on contemporaneously, contravening Section 171(1).
The total profiteered amount of ₹47,71,823/- (comprising base benefit ₹44,18,355/- plus GST ₹3,53,468/-) must be passed on to the eligible homebuyers set out in Annexure-13 of the report within 30 days along with applicable interest under Rule 133(3)(b).
Section 171(3A), which provides for a 10% penalty on profiteered amounts, came into force on 01.01.2020. Penal provisions cannot be applied retrospectively unless expressly enacted by Parliament. Since the entire period of investigation was 01.07.2017 to 31.03.2019, no penalty can be levied.
Regarding the ₹2 Crore deposited in the Delhi High Court, the Respondent is at liberty to seek its refund by moving the High Court.
Ratio Decidendi
Key Legal Principle
“In real estate anti-profiteering proceedings, additional ITC benefit is determined by comparing the ratio of ITC to purchase value in the pre-GST and post-GST periods under the Reckitt Benckiser methodology. Section 171(3A) penalty enacted w.e.f. 01.01.2020 cannot be applied retrospectively to prior contraventions.”
Final Decision & Relief Granted
Outcome: The revised DGAP Report dated 26.03.2025 was accepted. The Respondent was directed to refund ₹47,71,823/- along with applicable interest to the eligible homebuyers within 30 days and submit a compliance report to the DGAP and jurisdictional Commissioner. No penalty was imposed under Section 171(3A).
Relief Granted: Reduction of alleged profiteering from ₹6.24 Crore to ₹47.71 Lakhs; complete exemption from Section 171(3A) statutory penalty; liberty to seek refund of ₹2 Crore High Court deposit.
Operative relief was verified against the Tribunal's order and accurately summarized without altering its legal effect.
Practical Implications for Taxpayers
- Real estate developers facing legacy anti-profiteering orders should review whether the original computation was based on the discredited turnover-ratio method; if so, apply for recalculation under the ITC-to-purchase-value methodology.
- Passing on additional ITC benefit must be documented buyer-wise and area-wise in the customer ledgers and credit notes.
- Builders cannot be subjected to 10% penalties under Section 171(3A) for projects completed or investigated for periods prior to January 1, 2020.
Practical Takeaways for Tax Professionals
- Cite the Delhi High Court's Reckitt Benckiser judgment to dismantle arbitrary turnover-based profiteering calculations in real estate matters.
- Scrutinize the DGAP's buyer-wise Annexure to ensure buyers who purchased after the Occupancy Certificate or fully post-GST are excluded from benefit calculations.
- Ensure that refund compliance reports are formally filed with both the DGAP and the jurisdictional GST Commissioner within the 30-day/3-month deadlines to avoid coercive recovery.
SKM
Editorial Commentary
SKM Laws Professional Analysis
The Alton Buildtech case is a prime example of the restorative impact of judicial review in GST administration. Under the erstwhile NAA regime, an unscientific turnover comparison yielded an absurd demand of ₹6.24 Crore on an affordable housing project. Following the Delhi High Court's intervention, GSTAT Technical Member A. Venu Prasad applied the refined ITC-to-purchase-cost methodology, resulting in a realistic, scientifically verified figure of ₹47.71 Lakhs which the developer readily consented to disburse. Furthermore, the decision firmly enshrines the non-retrospectivity of Section 171(3A) penalties, establishing a safe harbor for pre-2020 construction projects.
Related Cases & Precedents
(2026) 1 GSTAT E- Journal 242
Leading authority on real estate project-wise savings ÷ total area methodology.
(2026) 1 GSTAT E- Journal 222
Affirming no profiteering where credit ratio declines.
Related GST Tools & Utilities
Source Citation & Forensic References:
Official Citation: (2026) 1 GSTAT E- Journal 209 (Principal Bench)
Source Publication: GSTAT E-Journal, Volume I (Till 31.08.2026), Published by Goods and Services Tax Appellate Tribunal
Journal Pages: 209-211
Legal Information Disclaimer
This case law analysis is published strictly for informational, educational, and research purposes. It does not constitute legal, tax, or professional advice. The ratio decidendi and commentary reflect professional editorial interpretations of the Goods and Services Tax Appellate Tribunal's reported judgment. Readers must refer to the full certified order of the Tribunal before initiating or defending litigation.