(2026) 1 GSTAT E- Journal 222 (Principal Bench)Anti-ProfiteeringDecision: In Favour of Assessee
GSTAT on Post-GST Real Estate Projects: No Section 171 Profiteering Where Allotment, Construction and Payments Occurred Post-GST
The GSTAT Principal Bench held that where property booking, agreement, construction, and payments transpired entirely in the post-GST era, paragraph 128(d) of Reckitt Benckiser applies. A negative ITC-to-purchase differential (-1.24%) establishes zero profiteering.
Case Name / Parties
DG Anti-Profiteering, DGAP v. Sobha Limited
Appeal Number
NAPA/98/PB/2025
Tribunal Bench
Principal Bench
Date of Judgment / Order
02/04/2026
Coram
Hon'ble Justice Mayank Kumar Jain, Member (Judicial)
For Appellant: Shri Rahul Rao Gautam, Additional Assistant Director, assisted by Shri Anurag Gupta, Inspector and Shri G.N. Jha, Assistant Commissioner
For Respondent: Shri Tarun Jain, learned Advocate (Complainants: Col. Shri Ajesh Kumar and Mrs. Savita Ahluwalia)
Facts of the Case
The Complainants applied on 17.06.2019 for allotment of Duplex Villa No. E-61A in the project 'International City' (Sectors 106, 108 & 109, Gurugram, Haryana) developed by M/s Sobha Limited. The parties executed a Builder Buyer Agreement (BBA) on 08.07.2019. The entire booking, agreement, construction activity, and installment payments occurred in the post-GST era, with the Occupation Certificate issued on 26.02.2024. The agreed price explicitly factored in the GST rate of 12% and the benefit of GST ITC. The Complainants nevertheless filed an anti-profiteering complaint under Section 171 alleging that the builder failed to pass on ITC benefits. The DGAP investigated and found that the ratio of credit availed to purchase value was 12.26% in the pre-GST period and declined to 11.02% in the post-GST period—a negative variance of -1.24%, indicating zero incremental benefit.
Issues Before GSTAT
- 1Whether homebuyers who booked, agreed, paid, and whose units were constructed entirely during the post-GST era have locus standi to agitate an anti-profiteering claim under Section 171.
- 2Whether the benefit of Input Tax Credit is required to be passed on under Section 171 where the entire spectrum of activity occurred post-GST, falling under paragraph 128(d) of the Delhi High Court's Reckitt Benckiser decision.
- 3Whether a decline in the credit-to-purchase-value ratio from pre-GST to post-GST (-1.24%) conclusively establishes the absence of profiteering.
Relevant Statutory Provisions & Rules
Statutory Sections
Section 109(3) of CGST Act, 2017Section 171 of CGST Act, 2017Section 171(1) of CGST Act, 2017Section 151 of Code of Civil Procedure, 1908
GST Rules
Rule 129(1) of CGST Rules, 2017Rule 129(6) of CGST Rules, 2017
Circulars & Notifications
Notification No. 18/2024-Central Tax dated 30.09.2024
Contentions of the Parties
Appellant / Taxpayer Contentions
- •The DGAP conducted an objective investigation in accordance with the Delhi High Court guidelines in Reckitt Benckiser.
- •The ratio of credit availed to purchase value fell from 12.26% to 11.02% (difference of -1.24%), proving that the builder received no incremental ITC benefit.
- •The DGAP concluded that the Respondent had not contravened Section 171 and recommended that the report dated 21.08.2025 be accepted.
Respondent / Revenue Contentions
- •The entire transaction occurred post-GST: booking on 17.06.2019, BBA on 08.07.2019, construction commencement post-BBA, and OC in 2024.
- •Under Paragraph 128(d) of the Delhi High Court's judgment in Reckitt Benckiser, where properties are initiated and constructed in the post-GST era, the agreed price already factors in all GST input credits; hence, Section 171 is inapplicable.
- •The Complainants entered into the contract with open eyes knowing the tax regime and have no legal right or cause of action to challenge the DGAP report.
Findings of GSTAT
Paragraph 128(d) of the Delhi High Court's judgment in Reckitt Benckiser establishes that where a property is constructed in the post-GST period and purchased in the post-GST period, no separate benefit of ITC is required to be passed on, as the agreed contract price inherently factors in the GST credit structure.
The phrase 'flat constructed in the post-GST period' does not mean the building must already be fully built when the agreement is signed; it encompasses projects where the entire spectrum of activities—booking, BBA, construction, and payments—takes place in the post-GST era. The existence of a construction-linked payment plan does not take the transaction outside paragraph 128(d).
Section 171 applies primarily to transition scenarios where a tax rate is reduced or an incremental credit benefit arises across the pre-GST and post-GST periods. Where a project commences and completes wholly post-GST, there is no baseline credit distortion to rectify. Followed GSTAT ruling in DGAP v. Pyramid Infratech Pvt. Ltd.
The DGAP's forensic audit established that the ratio of credit to purchase value declined from 12.26% to 11.02% (a negative variance of -1.24%). Where no incremental economic benefit accrued to the developer, the question of profiteering does not arise.
The Complainants had no locus standi to contest the DGAP report; the preliminary objections of the developer are sustained.
Ratio Decidendi
Key Legal Principle
“Where real estate booking, contract execution, construction, and installment payments take place entirely in the post-GST era, the transaction is governed by paragraph 128(d) of Reckitt Benckiser, and no separate passing on of ITC benefit is mandated under Section 171 of the CGST Act. A decline in the credit-to-purchase ratio negates profiteering.”
Final Decision & Relief Granted
Outcome: The preliminary objections raised by the Respondent were accepted, and the objections raised by the Complainants were rejected. The DGAP Report dated 21.08.2025 finding zero profiteering in respect of Project 'International City' was accepted in full. The proceedings were closed.
Relief Granted: Dismissal of homebuyer complaints; complete exoneration of developer from anti-profiteering liability.
Operative relief was verified against the Tribunal's order and accurately summarized without altering its legal effect.
Practical Implications for Taxpayers
- Builders launching real estate projects post-01.07.2017 should explicitly state in the Builder-Buyer Agreement (BBA) that the agreed sale consideration already factors in the benefit of GST input tax credits.
- Homebuyers who purchased units in projects launched entirely after GST implementation cannot claim anti-profiteering cash refunds under Section 171.
- If an anti-profiteering notice is received for a post-GST phase or project, developers should immediately raise preliminary maintainability objections under Paragraph 128(d) of Reckitt Benckiser.
Practical Takeaways for Tax Professionals
- Examine the project inception timeline: if the application, allotment, BBA, and construction start date all post-date 01.07.2017, argue that the buyer has no locus standi to maintain a Section 171 complaint.
- Rely on DGAP v. Pyramid Infratech Pvt. Ltd. and this Sobha Limited decision to establish that Section 171 requires a comparative baseline across tax regimes; it is not a general price-control or consumer-court forum.
- Verify the DGAP's pre- and post-GST credit-to-purchase ratios: a negative variance is fatal to the prosecution's case.
SKM
Editorial Commentary
SKM Laws Professional Analysis
The Sobha Limited decision is an essential authority demarcating the jurisdictional boundaries of Section 171 in the real estate sector. In the years following GST implementation, many flat purchasers who booked apartments in 2018 or 2019 attempted to exploit anti-profiteering provisions to obtain post-facto price discounts, arguing that because their building was still under construction, they were entitled to ITC refunds. GSTAT Member Mayank Kumar Jain dismantled this misconception. Grounding his judgment in paragraph 128(d) of the Delhi High Court's Reckitt Benckiser ruling, the Tribunal held that Section 171 was designed as a transitional mechanism to prevent windfall gains during regime change. Where a buyer purchases in a settled GST regime under a freely negotiated contract, market pricing prevails and anti-profiteering has no role to play.
Related Cases & Precedents
(2026) 1 GSTAT E- Journal 209
Distinguishing transitional projects spanning pre- and post-GST periods.
(2026) 1 GSTAT E- Journal 230
Examining post-GST pricing evidence in mixed-phase construction.
Related GST Tools & Utilities
Source Citation & Forensic References:
Official Citation: (2026) 1 GSTAT E- Journal 222 (Principal Bench)
Source Publication: GSTAT E-Journal, Volume I (Till 31.08.2026), Published by Goods and Services Tax Appellate Tribunal
Journal Pages: 222-230
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.