Delhi (PB) GSTAT Finds No Profiteering as ITC-to-Purchase Ratio Decreased by 0.12% After GST Implementation

Delhi PB GSTAT's Order in The Case of DGAP vs. IREO Grace Realtech Pvt. Ltd.

The Principal Bench of the GSTAT said that there was no profiteering as the ratio of ITC to purchase value reduced by 0.12 percentage points after the inception of GST.

A complaint was submitted by Sandeep Bansal, Pratibha Bansal and Nupur Bansal for the construction services supplied by Ireo Grace Realtech Pvt. Ltd. (the respondent) in its project “The Corridors” at Sector 67A, Gurgaon.

They alleged that the respondent did not get the GST Input Tax Credit (ITC) benefit because of a commensurate decrease in price after GST came into effect from 1 July 2017.

Previously, the DGPA report had concluded that section 171 was breached. The case was sent back for investigation and was then analysed again after the Delhi HC stated that the strategy previously applied to the real estate sector was improper.

The Directorate General of Anti-Profiteering (DGAP), after a fresh investigation, has reported that the ITC-to-purchase-value ratio was 4.66% before GST and 4.54% after GST. The ratio had lessened by 0.12 percentage point, so the DGAP concluded that no other ITC benefit was obtained by the respondent after GST.

No one has represented the applicants or the respondents. One applicant notified the authorities that the disputes between the parties had been amicably sorted.

The bench, A. Venu Prasad (Technical Member), said that the fresh investigation does not specify any increase in the ITC ratio post execution of the GST.

The tribunal said that “the percentage ratio of ITC to purchase value had not increased from the pre-GST period to the post-GST period.”

The tribunal acknowledged the DGAP investigation report and said that there was no breach of Section 171 of the CGST Act. The anti-profiteering proceedings were disposed of.