• Dated 18^th June, 2026

ANTI-PROFITEERING PROCEEDINGS DROPPED AS ENTIRE PROCUREMENT AND EXECUTION OCCURRED POST-GST: GSTAT DELHI

BRIEF FACTS:

Mumbai Port Trust Authority filed an anti-profiteering application under Rule 128 of the CGST Rules alleging that Assessee, a contractor engaged in the "Modernization of MICT" project, had failed to pass on the benefit of Input Tax Credit (ITC) available under the GST regime. The matter was referred to the DGAP for investigation. The tender for the project was floated on 25.05.2017 (pre-GST period), but the Letter of Acceptance was issued on 08.08.2017 and the actual execution of work commenced on 03.02.2018, i.e., entirely after the introduction of GST on 01.07.2017. The DGAP found that no procurement of inputs or execution of work had taken place in the pre-GST regime and therefore no comparison of ITC benefit between the pre-GST and post-GST periods could be mad.

ASSESSEE'S CONTENTION:

Mumbai Port Trust Authority, contended that the Respondent contractor had derived additional Input Tax Credit (ITC) benefits upon the implementation of GST and was consequently required to pass on such benefits to the Applicant by way of a commensurate reduction in the contract price, in terms of Section 171 of the CGST Act, 2017. It was alleged that the Respondent had failed to transfer the benefit of the enhanced ITC available under the GST regime and had instead retained the same, thereby resulting in profiteering in contravention of the anti-profiteering provisions contained in the CGST Act. Accordingly, the Applicant sought appropriate action against the Respondent for failure to pass on the alleged GST-related benefits.

DEPARTMENT'S CONTENTION:

The Directorate General of Anti-Profiteering (DGAP) contended that the present matter related to a works contract awarded by a Government Authority and not to a real estate project involving the sale of flats or homes. Although the tender had been floated prior to the introduction of GST, the Letter of Acceptance was issued on 08.08.2017 and the actual execution of the work commenced on 03.02.2018, both of which fell entirely within the GST regime. The DGAP submitted that no procurement of inputs or execution of work had taken place during the pre-GST period, making any comparison of Input Tax Credit (ITC) between the pre-GST and post-GST periods impossible. It was further contended that since the entire procurement and execution of the project occurred after the implementation of GST, the contract price was deemed to have been fixed considering the GST tax structure itself, and therefore no additional ITC benefit arose that was required to be passed on under Section 171 of the CGST Act, 2017. Accordingly, the DGAP concluded that there was no profiteering and no contravention of the anti-profiteering provisions by the Respondent.

DECISION:

The Applicant repeatedly failed to appear before the Tribunal and did not file any objections to the DGAP report despite several opportunities. The Tribunal proceeded on the basis of the DGAP report and materials available on record. It found that the entire procurement and execution of the project occurred after the introduction of GST.Since the contract was executed wholly in the GST regime, the contract price was deemed to have been fixed keeping in view the GST tax structure. Therefore, there was no requirement to compare pre-GST and post-GST ITC benefits and no obligation to pass on any alleged ITC benefit. The Tribunal relied upon the decision in Reckitt Benckiser India (P.) Ltd. v. Union of India, wherein it was held that where the transaction is entirely under the GST regime, anti-profiteering provisions relating to transitional ITC benefits do not apply. The GSTAT accepted the DGAP's report and held that Assessee had not contravened Section 171 of the CGST Act, 2017. Consequently, the anti-profiteering proceedings were closed.

BTA's COMMENT:

This decision clarifies that anti-profiteering provisions are intended to address benefits arising from the transition from the pre-GST regime to GST. Where a contract is both procured and executed entirely after GST implementation and the contract price is determined under the GST tax structure itself, there is no identifiable transitional ITC benefit that can be passed on. In such circumstances, proceedings under Section 171 of the CGST Act cannot be sustained. No anti-profiteering liability arises where the entire procurement and execution of the contract occurred in the post-GST regime and there is no pre-GST benchmark for comparison of ITC benefits.

Case Reference- Reckitt Benckiser India (P.) Ltd. v. Union of India (2024) 14 Centax 374 (Del.) 2024 (82) G.S.T.L. 344 (Del.) = 2024 SCC OnLine Del 588.

Author- Madhurima Bose