GST rate reduction on cinema tickets had to be passed on despite a State-imposed price ceiling.

GST rate reduction on cinema tickets had to be passed on to consumers under the anti-profiteering regime, and a State licensing price ceiling did not displace that obligation. The reduction in GST from 28% to 18% applied from 1 January 2019, and the supplier was required to retain the pre-reduction base price so the benefit reached recipients. Increasing the base ticket price after the tax cut defeated that statutory duty. The challenge to the anti-profiteering finding failed, and no interference was warranted with the impugned order.

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Issues: Whether the petitioner was entitled to retain the benefit of GST rate reduction on cinema tickets despite the ticket prices being subject to a maximum ceiling under the Telangana Cinemas (Regulation) Act, 1955.

Analysis: The GST rate on admission to exhibition of cinematograph films was reduced from 28% to 18% with effect from 01.01.2019 by Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018. The statutory mandate under Section 171 of the Central Goods and Services Tax Act, 2017 required the supplier to pass on the benefit of such rate reduction to recipients. A price ceiling fixed by the licensing authority under Section 4 of the Telangana Cinemas (Regulation) Act, 1955 only prescribed the maximum sale price and did not dilute the independent obligation under the GST anti-profiteering regime. The petitioner had increased the base price of tickets after the rate reduction instead of maintaining the pre-reduction base price to pass on the benefit.

Conclusion: The challenge to the anti-profiteering finding failed. The price cap under the State licensing regime did not exempt the petitioner from passing on the GST benefit, and the impugned order called for no interference.

Ratio Decidendi: A licensing authority's maximum price ceiling does not override the statutory duty under Section 171 of the Central Goods and Services Tax Act, 2017 to pass on the benefit of GST rate reduction to consumers.

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