No Profiteering Where Builder Absorbs Differential GST Burden: GSTAT

The Principal Bench of the Goods and Services Tax Appellate Tribunal (GSTAT), New Delhi, held that anti-profiteering proceedings cannot be sustained in the absence of evidence showing that GST benefits were withheld from homebuyers, and accordingly closed two separate complaints against real estate developers—Raja Housing and Legacy Global.

Both matters were heard together by a Bench presided over by Justice (Retd.) Dr. Sanjaya Kumar Mishra. In both cases, the Director General of Anti-Profiteering (DGAP) was the appellant and was represented by the same authorised counsel. The Tribunal also relied on investigations and reports of the Karnataka State Level Screening Committee in both matters, accepting its conclusions while closing the proceedings.

The Tribunal ruled that while allegations of profiteering must be examined on facts, the existence of consumer grievances or irregular invoicing, by itself, does not establish profiteering unless there is a demonstrable failure to pass on GST benefits.

Raja Housing Limited Case

In the case involving Raja Housing Limited, the Tribunal found that no profiteering had occurred after verifying that the builder had effectively passed on the benefit of GST changes by charging homebuyers GST at 5% while itself discharging GST at 12% under the old tax regime with Input Tax Credit (ITC), thereby bearing the differential tax burden.

The Tribunal noted that the project “Raja Ritz Avenue Phase-I” had commenced prior to 1 April 2019 and that, under Notification No. 03/2019–GST (Rate) dated 29 March 2019, the builder had opted to continue under the old tax structure of 12% GST with land exemption and the benefit of ITC. To remain competitive, however, the builder collected GST from buyers only at 5%.

Screening Committee Findings

The Karnataka State Level Screening Committee submitted a report concluding that there was no profiteering in the case. It recorded that the builder had lawfully continued under the old tax regime and that a detailed verification of sale deeds, vouchers, ledgers and audit reports for the financial years 2017–18 to 2020–21 revealed no short payment or evasion of tax on the consideration received from homebuyers.

The Committee also found that the declared sale consideration was inclusive of 5% GST, and that the benefit of the tax structure had been passed on to buyers.

Enforcement Proceedings

On the issue of non-issuance of GST invoices in the prescribed format, the Tribunal took note of enforcement proceedings initiated by the Karnataka State GST authorities for the tax period 2018–19 onwards. These proceedings, which commenced on 24 February 2025, culminated in a demand of approximately Rs. 10 crore.

However, it was found that the builder had already discharged an overall tax liability of Rs. 17.01 crore. After verification of financial records and corresponding returns, the authorities concluded that the allegation of tax evasion was not substantiated.

In light of these findings, the Tribunal closed the profiteering proceedings against Raja Housing Limited.

Legacy Global Projects Private Limited Case

In the case relating to Legacy Global Projects Private Limited, the Tribunal closed the anti-profiteering proceedings on a different footing. It noted that the complainant had already been refunded the amount in question and that there was no material on record to show that GST benefits had been withheld from homebuyers.

The Tribunal observed:

“Though, there may have certain grievances of the original complainant against the Respondent/Builder, but certainly, this is not regarding the non-passing of the ITC or reduction of the rate of the GST.”

Accordingly, the GSTAT closed the anti-profiteering proceedings against both Raja Housing Limited and Legacy Global Projects Private Limited.

Citation: 2026 LLBiz GSTAT (DEL) 2