Delhi HC Upholds GST Anti-Profiteering Order to Refund Rs.2.31 Crore to Homebuyers with 18% Interest
The Delhi High Court has upheld a GST anti-profiteering order requiring a housing developer to pass on Rs.2.31 crore to homebuyers, along with 18% interest and held that credit which the developer says it could have claimed before GST cannot be treated as credit it actually received.
A Division Bench of Justice Anil Kshetrapal and Justice Shail Jain upheld a finding that the developer retained an additional input tax credit (ITC) benefit of Rs.2,07,08,131 instead of passing it on to flat buyers. After adding Rs.24,84,976 in GST collected on that amount, the sum payable to homebuyers came to Rs.2,31,93,107, with interest at 18%.
The proceedings arose from a homebuyer’s complaint that the benefit of ITC available after the introduction of GST had not been passed on through a corresponding reduction in prices. An initial investigation resulted in an anti-profiteering determination of Rs.1,85,70,263, which the erstwhile National Anti-Profiteering Authority accepted in June 2022.
The petitioner challenged that determination. In its January 2024 judgment in Reckitt Benckiser India Pvt. Ltd. v. Union of India, the Delhi High Court found fault with the method generally used for real estate projects: comparing ITC as a share of turnover before and after GST. Construction expenses and payments received from buyers do not arise uniformly over a project’s life, the Court had explained. It directed the authorities to calculate the total GST-related saving for each project and divide it by the project area to determine the benefit per square foot.
The petitioner’s case was consequently sent back for a fresh determination. The Directorate General of Anti-Profiteering (DGAP) submitted a revised report in April 2025, which GSTAT upheld on March 23, 2026. The developer then approached the High Court again.
For the revised calculation, the DGAP examined the project’s purchase value of goods and services and the credit actually availed. It recorded no pre-GST credit actually claimed and post-GST ITC of Rs.2,07,76,653. Using the post-GST purchase value, it calculated a project-level saving of Rs.2,07,65,434.
The DGAP divided that saving by the total project area of 2,70,048 square feet, arriving at a benefit of about Rs.76.895 per square foot. Applying that figure to the sold area of 2,69,304 square feet produced the principal profiteering amount of Rs.2,07,08,131. GST at 12% brought the total to Rs.2,31,93,107.
The assessee argued that this was effectively the rejected ITC-to-turnover method with “purchase value” substituted for “turnover.” The High Court disagreed. It said the earlier judgment had rejected an assumed link between ITC and turnover, not every comparison of the pre-GST and post-GST periods. The revised exercise assessed purchases and credit actually availed, then distributed the calculated project saving by area. The developer had not shown that this method violated the earlier directions.
A central part of assessee’s case was that it had been legally eligible for about Rs.2,38,25,609 in CENVAT credit on input services before GST but had failed to claim it because of an error. On that basis, it argued that post-GST credit on services should not be treated as a new benefit. It said that, at most, credit of Rs.14,52,570 on inward goods could be considered.
The Court drew a distinction between eligibility for credit and actual use of credit. The developer’s pre-GST ST-3 returns recorded nil CENVAT credit availed. Its affidavit also acknowledged that the credit had not been claimed. By contrast, it had actually availed post-GST ITC.
Treating the unclaimed CENVAT amount as a pre-GST benefit would compare an actual post-GST benefit with a hypothetical earlier one, the Court held. It therefore found no basis to exclude the post-GST ITC relating to input services merely because similar credit might have been available under the previous regime.
Source : https://www.jurishour.in/gst/gst-anti-profiteering-housing-developer-homebuyers-interest/
