Director General of Anti-Profiteering v. Merit Magnum Construction (formerly Vimal Builders)

01 · Facts of the case and issues

Sachin Kapure, acting for Dilip Atmaram Kapure and Kavita Dilip Kapure, complained that the developer had not passed ITC benefit for Flat 506 in Everest Countryside. The relevant building is Marigold. An earlier DGAP report dated 31 August 2021 was followed by CCI’s 20 March 2024 direction for reinvestigation under Rule 133(4) after Reckitt Benckiser. The fresh 11 December 2024 report used April 2012–June 2017 as the pre-GST period and July 2017–March 2019 as the post-GST period. It proposed Rs. 10,00,084 base benefit plus Rs. 1,20,010 GST, totaling Rs. 11,20,094.

The developer argued that construction was complete before GST because it applied for an Occupancy Certificate on 25 April 2017. It disputed methodology and recipient identification, asserted that 24 buyers paid fully before GST and six made only nominal later payments, and challenged interest while invoking Dange Enterprise. A revised submission offered Rs. 5,61,511 under protest without interest or penalty, based on asserted post-GST receipts of Rs. 41,64,808. These positions were not accepted as the final computation or proof of payment.

The Tribunal established that the actual Occupancy Certificate was granted on 13 October 2017. By its 21 May 2026 direction it required CA-certified purchases and ITC for 1 July–13 October 2017. The supplementary report dated 30 June 2026 consequently restricted the post-GST purchases to Rs. 13,17,351 and net ITC to Rs. 2,91,894. The displayed pre/post credit ratios became 3.90% and 22.16%, an 18.26-percentage-point increment. Revised savings were Rs. 2,40,548 over 89,434 square feet, or displayed Rs. 2.69 per square foot. Applied to 88,660 square feet, the source fixes Rs. 2,38,495 plus Rs. 28,619 GST, totaling Rs. 2,67,114.

Source: Complaint/history: paragraphs 1–10, physical pp. 2–5. Defences and under-protest offer: paragraphs 11–15, pp. 5–6. Actual certificate, Tribunal direction and revised computation: paragraphs 16–19 and revised Tables A/B, pp. 6–8.

02 · Discussion and reasoning of the Hon’ble Court

The Tribunal independently decides completion, investigation period, methodology, recipient identification and penalty. It rejects the proposition that an application for an Occupancy Certificate alone proves pre-GST completion. The certificate was actually issued on 13 October 2017, and credit of Rs. 2,91,894 was availed between 1 July and that date. Reading the building-sale schedules with Sections 17(2) and 17(3), GSTAT confines this project’s investigation to that period and accepts the revised CA-certified calculation. The discussion itself quotes the statutory condition concerning complete consideration after completion certificate or first occupation, whichever is earlier; it should not be expanded into an unconditional exemption for every transaction associated with a post-OC date.

Paragraphs 22.3–22.5 apply Reckitt scenario 128(c): a project started before GST continued into GST, and pre-GST payments do not eliminate entitlement to additional credit benefit accruing from post-GST procurement. An internal contradiction remains: paragraph 22.1 instead says the case falls within 128(a), which concerns fully pre-GST construction and payment. That isolated statement is not silently rewritten; it conflicts with the actual completion findings and the later express application of 128(c).

On recipients, the developer said some buyers had not complained, could not presently be traced or had resold their units, and offered a Consumer Welfare Fund deposit under protest. GSTAT rejects that inference. The company’s own books, allotment agreements, payment schedules and buyer-specific classifications supplied identifiable recipients. Nonparticipation, present difficulty contacting someone or resale did not establish inability to identify the relevant purchaser. The Tribunal found no genuine tracing effort and held that Rule 133(3)(b) recipient restitution applied. Its strict account of Rule 133(3)(c) concerns the identification defence here; it is not a complete restatement of every statutory circumstance for that provision.

The Tribunal viewed the proposed fund route as an attempt to avoid interest because the investigated period preceded the 28 June 2019 fund-interest amendment. It nevertheless imposed collection-to-return recipient interest under Rule 133(3)(b), whose operation is separately identified. No fund deposit is ordered. Its finding about this developer’s conduct is attributed to the Tribunal, not an independent accusation by this note.

Revised Table B labels the sold-area date as 30 April 2024, although the investigation ends on 13 October 2017; the earlier table labels the same area by the completion-certificate date. That source-date difference is retained. Displayed ratios and unit savings are reported as the accepted workings rather than recalculated into a replacement judicial demand. The pre-GST table shows Rs. 52,13,341 credit over Rs. 13,13,59,307 purchases, which is approximately 3.968764%, rather than the adopted 3.90%. This unreconciled displayed-ratio difference is retained; the note does not independently certify the adopted 18.26% increment as an exact formula result or replace the ordered sum.

Source: Completion and period: paragraphs 20–21.6, physical pp. 8–9. Conflicting 128(a)/(c) statements and methodology: paragraphs 22.1–22.5, pp. 9–11. Recipient records and interest route: paragraphs 23.1–23.11, pp. 11–13. Sold-area labels: original Table B pp. 4–5 and revised Table B p. 7.

03 · Judicial decision and operative relief

GSTAT accepted the supplementary report dated 30 June 2026 and found a Section 171 contravention. The developer must refund Rs. 2,67,114, comprising Rs. 2,38,495 principal benefit and Rs. 28,619 GST, to the eligible homebuyers identified in that report. Interest is 18% per annum from collection of the higher amount from each buyer until actual refund, under Rule 133(3)(b). Paragraph 23.11 directs individual restitution forthwith.

No penalty under Section 171(3A) is payable: the narrowed 1 July–13 October 2017 period precedes its 1 January 2020 commencement, and the Tribunal rejects retrospective penal application. Paragraph 26 separately requires a report evidencing principal and interest refunded to each eligible buyer to the jurisdictional CGST/SGST Commissioner, with a copy to DGAP, within three months from the order date. That reporting period does not erase the direction to refund forthwith.

Copies must be circulated for compliance; the matter was disposed of and pronounced in open court. The record does not establish that any offered deposit was made, that the refunds occurred or that the reporting obligation was fulfilled. The absent recipient schedule must be obtained before treating the 136-buyer contention or any current flat owner as the final payee list.

Source: Forthwith recipient refund and interest: paragraph 23.11, physical p. 13. Penalty reasoning: paragraphs 24.1–24.2, p. 13. Operative principal, interest, no penalty and three-month report: paragraphs 25–29, p. 14.

04 · In favour of

Final substantive adjudication resolving the completion and period disputes, testing the revised computation and rejecting the proposed fund substitution on buyer-record evidence. The reduced amount is a fresh recipient-refund direction, not closure after settlement or verified compliance.

Source: Paragraphs 20–29, physical pp. 8–14.