NAA Upholds Finding of Profiteering, Orders Payment of Excess Amount

The National Anti-Profiteering Authority (NAA) upheld the findings of profiteering against the Respondent for not passing on the benefit of GST rate reduction to consumers. The NAA directed the payment of the excess amount charged, Rs. 11.73, along with interest to the applicant. The Respondent was instructed to comply with the previous order to deposit the profiteered amount in Consumer Welfare Funds (CWFs), with Rs. 6 to be paid from both the Central and Telangana State CWFs to the applicant.

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Issues Involved:
1. Allegation of profiteering by not passing on the GST rate reduction benefit.
2. Investigation and findings by the Director-General of Anti-Profiteering (DGAP).
3. Quantification of the profiteered amount.
4. Respondent’s submissions and legal proceedings.
5. Final order and directions by the National Anti-Profiteering Authority (NAA).

Issue-wise Detailed Analysis:

1. Allegation of Profiteering:
The case originated from an application alleging that the Respondent did not pass on the benefit of GST rate reduction from 28% to 18% on movie tickets priced above Rs. 100, effective from 01.01.2019. The applicant claimed that the Respondent increased the base price of tickets, maintaining the total price unchanged, thus not passing on the tax reduction benefit.

2. Investigation and Findings by DGAP:
The DGAP conducted an investigation and reported that the Respondent had been previously investigated for similar allegations. The earlier investigation confirmed profiteering of Rs. 30,13,058/- for the period from 01.01.2019 to 07.02.2019. The current investigation, based on a ticket dated 04.01.2019, confirmed that the Respondent had indeed profiteered by not reducing the ticket prices commensurately.

3. Quantification of the Profiteered Amount:
The DGAP’s report detailed the computation of the excess amount charged. For the ticket in question, the base price was increased from Rs. 117.18 to Rs. 127.12 post-GST rate reduction, keeping the total price at Rs. 150/-. The commensurate price should have been Rs. 138.27, leading to an excess charge of Rs. 11.73/-. This amount was part of the previously determined profiteering sum of Rs. 30,13,058/-.

4. Respondent’s Submissions and Legal Proceedings:
The Respondent argued that the issue was already settled in a previous order (No. 37/2020 dated 07.07.2020), which confirmed profiteering and directed the deposit of the profiteered amount in Consumer Welfare Funds (CWFs). The Respondent also mentioned a pending writ petition challenging the constitutional validity of the Anti-Profiteering provisions. The Delhi High Court, in an interim order, directed the Respondent to deposit the principal profiteered amount in installments while staying the interest and penalty proceedings.

5. Final Order and Directions by NAA:
The NAA accepted the DGAP’s report, noting that both the applicant and the respondent agreed with the findings. The NAA reiterated that the issue of profiteering had already been addressed in the previous order. Since the amount of Rs. 11.73/- was included in the total profiteering sum, the applicant was entitled to this amount along with applicable interest. The NAA directed that Rs. 6/- be paid from both the Central and Telangana State CWFs to the applicant. The order was passed considering the delay due to the COVID-19 pandemic and in line with the relevant notifications and rules.

Conclusion:
The NAA upheld the findings of profiteering against the Respondent, confirming that the benefit of GST rate reduction was not passed on to the consumers. The applicant was awarded the excess amount charged along with interest, and the Respondent was directed to comply with the previous order regarding the deposit of the profiteered amount in CWFs.

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