AI Drafter 
TaxTMI 
TaxTMI 
2020 (3) TMI 612
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....n of cinematograph films where price of admission ticket was one hundred rupees or less" from 18% to 12% w.e.f. 01.01.2019, vide Notification No. 27/2018- Central Tax (Rate) dated 31.12.2018, by way of commensurate reduction in prices, in terms of Section 171 of the Central Goods and Services Tax Act, 2017 and instead, had increased the base prices to maintain the same cum-tax selling prices of the admission tickets. Along with the application, the Applicant No. 1 had submitted copies of invoices with 28% and 18% GST charged, his own working of GST computation and GSTIN details of the Respondent. 2. The above Applicant had also submitted the following documents along with his application:- (a) APAF Form (b) Driving Licence (c) Copy of invoice wherein 28% GST had been charged (d) Copy of invoice wherein 18% GST had been charged (e) Detailed Working of GST collected and paid (f) GSTN details of NY Cinemas 3. The DGAP has stated in his Report dated 12.09.2019 that the Standing Committee on Anti-profiteering had examined the above application in its meeting held on 11.03.2019, the minutes of which were received by the DGAP on ....
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.... the tax rates for the movie tickets of value more than Rs. 100/- from 28% to 18% and for movie tickets of value less than or upto Rs. 100 from 18% to 12% for the initial period of 2 days i.e. 01.01.2019 to 02.01.2019. c. That the excess tax collected for the period from 01.01.2019 and 02.01.2019 for the cinema located in Hapur amounted to Rs. 3,309/- and a summary of the price list along with tax collected and paid by the Respondent pre and post 01.01.2019 was submitted by him. d. That the Respondent had not breached the provisions of Section 171 of CGST Act, 2017 citing the following reasons:- i. That the benefit was passed on to the consumers only in the cases where reduction in the rates of tax had not reduced the cum-tax prices of the admission tickets. ii. That the base prices of the admission tickets had remained unchanged for the period from 01.01.2019 to 02.01.2019. iii. That the rates of tax had also remained unchanged for the period from 01.01.2019 and 02.01.2019. e. That the Notice was received only for the cinema located in District of Hapur, however, the amount of excess tax collected for the whole state of Uttar P....
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....s had continued to charge the erstwhile higher rates of GST which was a case of wrong charging of the rates of GST and was not under the purview of this investigation. The DGAP has further intimated that the Respondent's claim that he had not breached the provisions of Section 171 of the Act was not maintainable due to the following reasons:- a. The reduction in the prices of the tickets should have been commensurate with the reduction in the rates of tax. Mere reduction in the cum tax prices of admission tickets could not be treated as compliance of the provisions of Section 171 of the Act, if the reduction was not commensurate with the reduction in the rates of Tax. b. To comply with the provisions of Section 171 of the Act, the Respondent had to maintain the base prices of the tickets across all classes of seats, across all time slots during the period post 01.01.2019, as they were earlier, and the applicable reduced rates of GST should have been charged on such base prices w.e.f. 01.01.2019. 11. The DGAP has further intimated that from the analysis of the details of outward supplies of admission tickets submitted by the Respondent for the month of Decem....
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....uction of GST rate, in "Gold" Class, across all days and time-slots, and in the "Platinum" Class for the morning shows, the cum-tax price included 18% GST as the base price was upto 100/- only. In all other Class and time-slots, 28% GST was applicable. By reverse calculation, the base prices across all class and time-slots were arrived at by the DGAP as under:- Table B Time-period Class (Price in Rs.) Gold Platinum Premium Morning show on all days 84.74 100 156.25 Weekdays- other than morning show 100 117.18 195.31 Weekends- other than morning show 100 140.63 234.37 14. He has also averred that the analysis of the details during the period from 01.01.2019 to 31.03.2019 revealed that the Respondent had increased the base prices of the tickets across some categories so that the actual cum-tax prices of admission tickets had not been reduced commensurately for the period from 01.01.2019 onwards. A comparison of the commensurate prices post rate reduction w.e.f. 01.01.2019 and the actual selling prices has been given in Table C by the DGAP as under:- Commensurate Price post 01.01.2019 Actual Price post 0....
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.... ticket dated 16.02.2019, 12:30 PM, of Platinum Class sold to him. The details of computation of the profiteered amount have been given by the DGAP in Annexure-11 of his above Report. 16. The DGAP has also submitted that it appeared that the allegation of profiteering by way of either increasing the base prices of the services or by way of not reducing the selling prices of the services commensurately, despite a reduction in the GST rates on "Services by way of admission to exhibition of cinematograph films where price of admission ticket was above one hundred rupees" from 28% to 18% and on "Services by way of admission to exhibition of cinematograph films where price of admission ticket was one hundred rupees or less" from 18% to 12%, w.e.f. 01.01.2019 stood established against the Respondent. On this account, the Respondent has realized an excess amount to the tune of 14/- from the Applicant No. 1 which included both the profiteered amount and the GST on the profiteered amount. The DGAP has also claimed that the investigation has revealed that the Respondent has realized an excess amount of 4,01,5061- from the other recipients and the Applicant No. 1 which included both the pr....
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....f Abbott Healthcare Private Limited & Anr. v. Union of India & Ors. = 2019 (5) TMI 563 - DELHI HIGH COURT, the petitioners have questioned the constitutional validity of Section 171 of the CGST Act and Chapter 15 of the CGST Rules and in particular Rule 126, 127 and 133. it was directed by the Hon'ble High Court of Delhi that there shall be stay on further proceedings against the petitioners pursuant to the impugned order of this Authority, hence the present proceedings were not maintainable. IV. In the case of Kiran Chimirala v. M/s Jubilant Food Works Limited 2019-VIL 183-DEL = 2019 (2) TMI 295 - NATIONAL ANTI-PROFITEERING AUTHORITY the Hon'ble High Court of Delhi had stayed the operation of the order passed by this Authority on the ground that no methodology had been prescribed for determining profiteering. V. The supply of services by admission to exhibition of cinematograph films for the movies exhibited after the rate change did not have a price valuation in the past which could be compared for the purpose of profiteering and hence no profiteering could be alleged. VI. For the purpose of profiteering there must be a comparison of the same su....
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....change. (Electricity consumption vis-a-vis Demand of the movies dropping after the 2nd week of their release). XV. The supply of service of admission to exhibition of cinematograph films could not be compared to the Fast Moving Consumer Goods (FMCG) which were subject to MRP and hence no profiteering could be computed on them. XVI. This Authority could not expand the scope of investigation except in the case of the complained multiplex located at Hapur and hence the details of other multiplexes could not be asked from the Respondent. 19. The above submission of the Respondent were sent to the DGAP for filing clarifications who vide his Report dated 22.02.2020 has submitted that the Respondent has cited the case of K. Damodarasamy Naidu & Bros. v. State of Tamil Nadu and another (2000) 117 STC 1(SC) = 1999 (10) TMI 598 - SUPREME COURT, wherein the Hon'ble Supreme Court had observed that in the absence of the rules made by the State Governments to ascertain the amount relating to the supply of goods and Services out of the composite charges collected, it was impossible in practical terms, for the sales tax authorities to make assessments on the basis of the facts rele....
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....hat the Respondent was trying to claim that for the service supplied by the Respondent viz. "Services by way of admission to exhibition of cinematograph films where price of admission ticket was above one hundred rupees" where Rate of GST was reduced from 28% to 18% and "Services by way of admission to exhibition of cinematograph films where price of admission ticket was one hundred rupees or less" where Rate of GST was reduced from 18% to 12% could be compared only for the films that were being screened at the time of rate reductions and subsequently for other films there shall be no impact of rate reductions. However, this logic was against the spirit of law, as the nature of services supplied had remained the same and the impact of rate reductions would be applicable on the services being supplied irrespective of the film being screened. 20. The DGAP has also argued that the Respondent has claimed that the rates of admission charged on the films screened post rate reduction on 18.01.2019 could not be compared with the rates of admission charged for the film shown on 28.12.2018 during the pre rate reduction period on the ground that no price valuation for comparison was availa....
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....ed 12.09.2019. He has further submitted that the contention of the Respondent to consider Monday-Thursday as weekdays and Friday-Sunday as weekends had been considered by him and it had no impact on the profiteered amount when the data for the pre and post rate reduction periods was compared by him. Moreover, it was an exception which could not be considered as a common trend and specific instances had been treated individually by him. 23. The DGAP has further submitted that due to some error in calculation, few shows of 3D movie were included in the amount of profiteering totalling up to 11,2481- which may be reduced from the total amount of profiteering. He has also submitted that in the case of M/s Jubilant Food Works Ltd., further proceeding were stayed by the Hon'ble High Court of Delhi subject to the petitioner depositing an amount of Rs. 20 Crore in the Consumer Welfare Fund and no prima facie grounds were mentioned by the Hon'ble Court. The impugned case has not yet been decided and there was no stay on the legality of the Anti-profiteering provisions. In the case of M/s Abbott Healthcare Pvt. Ltd. = 2019 (5) TMI 563 - DELHI HIGH COURT, the Hon'ble High....
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.... to exhibition of cinematograph films where price of admission ticket is above one hundred rupees" in respect of which the GST rate was reduced from 28% to 18% and "Services by way of admission to exhibition of cinematograph films where price of admission ticket is one hundred rupees or less" on which the GST rate was reduced from 18% to 12% w.e.f. 01.01.2019, vide Notification No. 27/2018- Central Tax (Rate) dated 31.12.2018. Prior to 01.01.2019, as per Notification No. 11/2017- Central Tax (Rate) dated 27.06.2017. "Services by way of admission to exhibition of cinematograph films where price of admission ticket was above one hundred rupees" had GST rate of 28%, and "Services by way of admission to exhibition of cinematograph films where price of admission ticket was one hundred rupees or less" were having GST rate of 18%. Therefore, it is evident that the services provided by the Respondent were impacted by the rate reductions allowed vide Notification No. 27/2018- Central Tax (Rate) dated 31.12.2018 and hence the Respondent was liable to pass on the benefit of both the above tax reductions. 28. It is also revealed from Table A of the Report that the Respondent was having thre....
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....n the benefits of reduction in the rate of tax and ITC has been clearly and unambiguously outlined in Section 171 (1) of the CGST Act, 2017 itself which provides that "Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices." It is evident from the above provision that any "reduction in the rate of tax or benefit of ITC" has to be passed on by a supplier to his recipients since such reduction has been given by sacrificing the tax revenue by the Central and the State Governments. It also means that the above benefits have to be passed on each Stock Keeping Unit (SKU) or unit of construction or service to each buyer and in case they are not passed on, the profiteered amount has to be calculated. These benefits also have to be passed on to each recipient at each SKU/unit/service level. Further, the above Section mentions any supply" which means that the above benefits have to be passed on each taxable supply made to each buyer and a registered person cannot pass more benefit to one customer at the cost of another customer. Each buyer is entitled to receive the bene....
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....ass on the above benefits as per the provisions of Section 171 (1) which are abundantly clear, unambiguous and mandatory. Therefore, the above contention of the Respondent is not correct and hence the same cannot be accepted. 30. He has also quoted the case of K. Damodarasamy Naidu & Bros v. State of Tamil Nadu and another (2000) 117 STC 1 (SC) = 1999 (10) TMI 598 - SUPREME COURT in his support in which the Hon'ble Supreme Court had ruled that the State Government was required to frame rules to determine how the sales and services were to be assessed. In this connection it would be appropriate to mention that no tax has been levied under Section 171 of the above Act and hence the above Section cannot be termed as the charging section for levy of tax and its assessment. This Section only provides for passing on the benefit of tax reduction or ITC by commensurate reduction in prices. As has been explained in para supra the methodology to compute the profiteered amount has been mentioned in the above Section itself and hence, there is no requirement of framing separate rules for determining how the benefits are to be passed and hence, the law settled in the above case cannot be....
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.... demand and thus they could not fall under the ambit of anti-profiteering. In this connection it would be pertinent to mention that the Respondent is free to fix his rates of admission and no restriction can be placed on him while doing so. However, perusal of the supplementary Report dated 22.01.2020 filed by the DGAP shows that the claim of the Respondent that he was charging different prices keeping in view the demand and supply was not correct as the pricing pattern adopted by the Respondent was similar in respect of all the films and he had not charged different prices for admission for different movies keeping in view their demand. Perusal of the above Report also shows that the Respondent while fixing his prices had not used his discretion. It was also not established from the data supplied by him to the DGAP that he had taken in to account the fixed costs or the reduced demand of a movie after second week while fixing his prices. The DGAP has already taken in to account those movies where there was tax exemption or extra charges were levied on 3D movies, while computing the profiteered amount. Therefore, the above contentions of the Respondent are frivolous and hence, they ....
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....tion as is clear from Table A submitted by the DGAP. The DGAP has also taken in to account the pricing pattern of the shows for the period immediately prior to the rate reductions for the calculation of profiteering. Therefore, the above claim of the Respondent in not maintainable. 39. The Respondent has also pleaded that Mondays and Thursdays have been considered as weekdays whereas Fridays and Sundays have been considered as weekends for the purpose of pricing of tickets for different movies. However, if the movie was released on a Thursday, the weekend should be considered from Thursday onwards. The DGAP has examined the above contention of the Respondent and stated that it had no impact on the profiteered amount when the data for the pre and post rate reduction periods was compared by him. He has further stated that release of movies on Thursdays was an exception which could not be considered as a common trend and specific instances had been treated individually by him. The above explanation given by the DGAP is reasonable and hence the contentions of the Respondent made in this regard are not correct and hence they cannot be accepted. 40. The Respondent has also submitte....
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....ether the Respondent has passed on the benefit of tax reductions or not and hence the above contention of the Respondent is untenable. 41. The Respondent has also cited the judgements passed in the cases of Commissioner Central Excise & Customs Kerala v. Larsen & Toubro Ltd. (2016) 2 SCC 170 = 2015 (8) TMI 749 - SUPREME COURT and Tata Sky Limited v. State of Madhya Pradesh & others (2013) 4 SCC 656 = 2013 (4) TMI 373 - SUPREME COURT in his support stating that the charging section was required to be provided for computation of profiteering. In this connection it is respectfully submitted that no tax has been levied under the anti-profiteering measures mentioned in the CGST/SGST Acts, 2017 and hence, no charging section is required to be incorporated in them and hence, the law settled in the above cases is not being relied upon. 42. The Respondent has further contended that the DGAP has wrongly calculated profiteering amounting of Rs. 11,248/- for some of the shows of the 3D movie 'Captain Marvel' despite providing an exception on account of extra charges being levied for the 3D glasses. The DGAP vide his Supplementary Report dated 22.01.2020 has accepted this contenti....
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....espect of the other recipients which also includes the GST on the said profiteered amount, as per the provisions of Rule 133 (1) of the CGST Rules, 2017. Accordingly, the Respondent is directed to reduce the sale prices of his admission tickets immediately commensurate to the reduction in the rates of tax as were notified on 31.12.2018 and pass on the benefit of reduction in the rates of tax to his customers. The Respondent is further directed to refund an amount of Rs. 14/- to the Applicant No. 1 along with interest to be calculated @ 18% from the date when the said amount was collected by him from the above Applicant till the above amount is paid. Since, the rest of the recipients in this case are not identifiable, the Respondent is directed to deposit the balance amount of profiteering of Rs. 1,95,129/- in the Central CWF and Rs. 1,95,129/- (Total Rs. 3,90,258) in the Uttar Pradesh State CWF as per the provisions of Rule 133 (3) (C) of the CGST Rules, 2017, along with 18% interest, as all the supplies were made in the District of Hapur in the State of Uttar Pradesh. The above amount shall be deposited within a period of 3 months from the date of receipt of this order failing whi....