Case Details: SAVALIYA PROCON Versus UNION OF INDIA (Tri.-Del)- (2025) 26 Centax 254 (Guj.)
Judiciary and Counsel Details
- Bhargav D. Karia & D.N. Ray, JJ.
- Shri Anand Nainawati for the Petitioner.
- Shri Chirayu A. Mehta for the Respondent.
Facts of the Case
In the instant case, the Gujarat High Court was hearing a writ filed by the assessee against the order passed by the National Anti-profiteering Authority (NAA). The NAA had directed the applicant to pass on the benefit of the additional input tax credit to the recipients of the service. The matter was remanded to the CCI to decide in accordance with the ruling of Reckitt Benckiser as the method for arriving at the profiteering amount was not correct.
High Court Held
The Gujarat High Court held that the methodology adopted by the NAA and DGAP to arrive at the profiteering amount of the real estate industry was generally based on the difference between the ratio of Input Tax Credit to turnover under the pre-GST and post-GST period. This Court is in agreement with the contention of the learned counsel for the petitioners representing the real estate companies that the methodology adopted by NAA was flawed as in the real estate sector, there was no direct correlation between the turnover and the Input Tax Credit availed for a particular period. The expenses in a real estate project are not uniform throughout the life cycle of the project, and the eligibility of credit depends on the nature of the construction activity undertaken during the particular period. As it was an admitted position that neither the advances received nor the construction activity is uniform throughout the life cycle of the project, the accrual of Input Tax Credit was not related to the amount collected from the buyers. This Court was in agreement with the learned counsel of the petitioners that one needs to calculate the total savings on account of the introduction of GST for each project and then divide the same by the total area to arrive at the per square feet benefit to be passed on to each flat buyer. This would ensure that flat-buyers with equal square feet area received equal benefit.
List of Cases Cited
- Reckitt Benckiser India Pvt. Ltd. v. Union of India — [2024] 158 taxmann.com 675 (Delhi), — Relied on
