Anti-profiteering in GST tickets: price increase after rate cut led to liability to deposit profiteered amount, with no retrospective penalty.

GST rate reduction on cinema tickets required a commensurate reduction in prices, and the supplier's increase in base ticket price after the tax cut showed that the benefit was not passed on. The Tribunal held this to be a contravention of the anti-profiteering mandate under Section 171 of the CGST Act. The DGAP's revised computation, after re-investigation and correction of the turnover and formula issues, was accepted, and the quantified profiteered amount was directed to be deposited with applicable interest and credited to the Consumer Welfare Funds. No penalty was imposed because the relevant period pre-dated the penalty notification and retrospective penalty was not available.

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Issues: (i) Whether the respondent passed on the benefit of reduction in GST rate on cinema tickets by commensurate reduction in prices, or contravened the anti-profiteering mandate. (ii) Whether the profiteered amount computed by the DGAP, as modified on re-investigation, was liable to be accepted and recovered. (iii) Whether penalty could be levied for the period in question.

Issue (i): Whether the respondent passed on the benefit of reduction in GST rate on cinema tickets by commensurate reduction in prices, or contravened the anti-profiteering mandate.

Analysis: The rate reduction on admission to cinematography films required the supplier to reduce prices commensurately. The respondent did not produce cogent evidence showing that the ticket prices were fixed or increased by any competent authority for the relevant period, and its stand was found to be internally inconsistent. The material on record showed that the base price of tickets was increased after the tax reduction instead of being reduced in line with the benefit.

Conclusion: The respondent did not pass on the benefit of GST rate reduction and contravened Section 171 of the Central Goods and Services Tax Act, 2017.

Issue (ii): Whether the profiteered amount computed by the DGAP, as modified on re-investigation, was liable to be accepted and recovered.

Analysis: The methodology and revised computation of the DGAP were not successfully disputed. The re-investigation reconciled the turnover discrepancy and corrected the earlier formula error, resulting in a quantified profiteered amount of Rs. 8,99,273/-. The respondent's objections did not dislodge the revised computation.

Conclusion: The DGAP reports were accepted and the profiteered amount was directed to be deposited with applicable interest and apportionment to the Consumer Welfare Funds.

Issue (iii): Whether penalty could be levied for the period in question.

Analysis: The period involved pre-dated the levy of penalty under the applicable notification, and the recipients were not identifiable for the purpose of direct restitution. On that basis, the matter was treated as falling within the relevant rule governing distribution of the amount, but without retrospective penalty.

Conclusion: No penalty was leviable.

Final Conclusion: The respondent was held liable for anti-profiteering contravention and was directed to deposit the quantified profiteered amount with interest, while penalty was declined.

Ratio Decidendi: Where a supplier retains a tax-rate reduction by increasing the base price instead of passing on the benefit through commensurate price reduction, the supplier violates the anti-profiteering obligation and becomes liable to disgorge the profiteered amount, though penalty cannot be imposed retrospectively absent a valid enabling provision for the relevant period.

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