Case Summary
Case Title: M/s Savaliya Procon & Anr. v. Union of India & Ors.
Court: High Court of Gujarat at Ahmedabad
Petition No.: R/Special Civil Application No. 22598 of 2022 with R/Special Civil Application No. 4321 of 2023
Judgment Date: 18 December 2024
Category of Dispute: Anti-profiteering (Real Estate Sector)
Relevant Sections: Section 171, CGST Act, 2017; Anti-profiteering provisions and methodology under NAA/DGAP.
Facts (Para 1–2)
The petitioners, real estate developers, challenged the orders dated 12.05.2022 (Case No. 10/2022) and 26.08.2022 (Case No. 61/2022) passed by the National Anti-profiteering Authority (NAA). These orders computed profiteering based on the ratio of Input Tax Credit (ITC) to turnover pre- and post-GST. The petitioners argued that such a methodology was arbitrary and did not reflect the actual benefit of GST in real estate projects.
Questions (Para 2–3)
The key issue was whether the NAA and DGAP’s methodology, relying on ITC-to-turnover ratio, could form a valid basis for determining profiteering in the real estate sector under Section 171 of the CGST Act.
Observations (Para 3–6)
The Court noted that the Delhi High Court in Reckitt Benckiser India Pvt. Ltd. v. Union of India (WP(C) No. 7743/2019, decided on 29.01.2024) had already held that the methodology adopted by NAA/DGAP was fundamentally flawed. Specifically, in real estate, turnover and ITC have no direct correlation, as construction expenses vary across project stages and credit eligibility depends on activity undertaken during a given period. The Delhi High Court clarified that the correct approach is to calculate the total GST savings on a project, then allocate the benefit uniformly to buyers on a per-square-foot basis (Para 129).
Judgement (Para 7–8)
The Gujarat High Court followed the Delhi High Court’s reasoning. It quashed the impugned orders of NAA and remanded the matters to the Competition Commission of India (CCI) (successor to NAA) for fresh adjudication in line with the Delhi High Court’s interpretation.
Cases Referred
| Case | Court | Citation / WP No. | Verdict |
|---|---|---|---|
| Reckitt Benckiser India Pvt. Ltd. v. Union of India & Ors. | Delhi High Court | WP(C) No. 7743/2019 & allied | Held NAA’s methodology flawed; directed benefit allocation based on per-square-foot basis in real estate projects |
Between Fine Lines
For the real estate sector, this ruling underscores that anti-profiteering cannot be determined mechanically on ITC-to-turnover ratios. Authorities must adopt a project-based analysis, ensuring buyers get equitable per-square-foot benefit. For developers, it provides relief against arbitrary demands and reaffirms that profiteering assessments must reflect business realities.
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