GSTAT Holds No Anti-Profiteering Liability

In DGAP v. Belhekar & Kale Associates, the GST Appellate Tribunal (“GSTAT”) dealt with the applicability of anti-profiteering provisions to a government works contract executed entirely during the GST regime. 

The dispute arose from allegations that the respondent contractor failed to pass on Input Tax Credit (“ITC”) benefits under Section 171 of the CGST Act, 2017 in relation to a modernization contract awarded by the Mumbai Port Trust Authority.

The Tribunal ultimately accepted the DGAP report and held that no anti-profiteering liability could arise because the procurement and execution of the contract had occurred entirely after the introduction of GST. 

Relying upon the Delhi High Court judgment in Reckitt Benckiser India Pvt. Ltd. v. Union of India, the Tribunal observed that where the contract pricing itself was formulated in the post-GST environment, the pricing mechanism was presumed to have already factored the GST tax structure and associated ITC benefits. Consequently, the provisions of Section 171 were held not to have been contravened.