TaxTMI 
TaxTMI 
2020 (7) TMI 286
X X X X Extracts X X X X
X X X X Extracts X X X X
....despite the reduction in the rate of GST from 28% to 18% W.e.f. 01.01.2019. Along with the application, Applicant No. had also submitted the APAF-I Form, copies of cinema tickets issued in the pre and post rate reduction period and the details of the GST paid. 2. Vide his Report, the DGAP has reported that Applicant No. 1 had alleged that the base price of '2D Movie' tickets was increased by the Respondent from Rs. to Rs. 127.12/- and that of '3D Movie' tickets from Rs. 195.32/- to Rs. 211.86/- when the GST rate was reduced from to w.e.f. 01.01.2019. The above Applicant had also alleged that the Respondent has not passed on the benefit Of reduction in the GST rate from 28% to 18% which came into effect on 01.01.2019 Vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018 and that the Respondent had instead increased the base price of the tickets. Along with his application, the Applicant had enclosed copies of tickets dated 31.12.2018 & 01.01.2019 along with his application in APAF-I form. The aforesaid reference was examined by the Standing Committee on Anti-profiteering and it was decided to forward the same to the DGAP for a detailed investigation into the matter on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icket prices even after 01.01.2019 i.e. after the reduction in GST rate from 28% to 18% and that there was no benefit to him (d) in line with the reduction of movie ticket prices by other competing multiplexes in the city of Hyderabad, he had reduced his movie ticket prices proportionately to the reduction in the rate of GST from 28% to 18% with effect from 08.02.2019; that he had then started to absorb the additional burden with effect from 08.02.2019. (e) the rates of admission to his six-screen multiplex were fixed by the State Government at 150/- for screen nos. 1 to 5 and at Rs. 250/- for the Screen no. 6 (IMAX screen): that these rates were inclusive of all taxes; that the rate of tax before the rollout of GST, i.e., 17.30% Entertainment Tax was also lesser than the reduced rate of GST at 18%, and hence there no benefit to him that could have been passed on by him to his consumers end that he had not contravened the anti-profiteering provisions of the GST law. (f) he has also relied on the decision of this Authority given in the case of State-level Screening Committee on Anti-Profiteering, Kerala and another vs. Zeba Distributors [2018] 100 taxmann.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... i. a copy of the reply dated 04.02.2019 & 08.02.2019 submitted before the office of Principal Commissioner, Central GST, Hyderabad. 5. The DGAP has reported that vide his notice dated 09.07.2019, the Respondent was informed that if any information/documents provided were confidential then, in terms of Rule 130 of the CGST Rules 2017, he could furnish a non-confidential summary of such information/documents that he wished to remain confidential. However, the Respondent did not classify any of the information/documents submitted by him as confidential. 6. The DGAP also reported that the main issues to be examined in the present matter were whether the GST rate on 'Services by way of admission to the exhibition of cinematograph films where the price of admission ticket was above one hundred rupees" was indeed reduced from 28% to 18% w.e.f. 01.01.2019 and if so, whether the benefit of such reduction in the rate of GST had been passed on by the Respondent to his recipients, in terms of Section 171 of the CGST Act, 2017. 7. On the above issues, the DGAP reported that the Central Government, on the recommendation of the GST Council, had indeed reduced the GST rate on "S....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by way of admission to the exhibition of cinematograph films where the price of admission ticket was above one hundred rupees" from 28% to 18% w.e.f. 01.01.2019, vide Notification No. 27/2018- Central Tax (Rate) dated 31.12.2018. (b) ln the ease of Ahuja Radios, the GST rate was reduced from 28% to 18% w.e.f. 15.11.2017 vide N/N 41/2017 (Central Tax Rate) dated 14.11.2017 on the impugned goads "PA Ceiling Speaker and "PA Wall Speaker". In that case, Ahuja Radios had maintained the same base prices (excluding GST) and charged a reduced rate of GST over the same base price resulting in a reduction in cum tax selling prices to be paid by his recipients. However, in the present case. the Respondent had increased the base price from Rs. 117.18/- to Rs- 127.12 per ticket for '2D Movies' and from Rs, 195.32/- to Rs. 211.86/- per tickets for '3D Movies'. (c) ln the ease of Fab India Overseas (P) Ltd., the matter to be decided was concerning a change in tax rates on the introduction of GST i.e. on 01.07.2017. However, the present case does not pertain to a change in the rate of tax from 01.07.2017 but w.e.f. 01.01.2019 and hence. the plea of the Respondent that the pre-GS....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the period 01.12.2018 to 31, 12.201B (pre-GST rate reduction) and the total taxable value thereof were taken and an average base price (after discount) of the tickets sold in that period was obtained by dividing the total taxable value by the aggregate number of tickets sold during that period i.e. pre-rate reduction, The said average base price of the movie ticket in the pre rate reduction period was then compared with the actual selling price of the tickets sold during post-GST rate reduction i.e, on or after 01.01.2019. as has been illustrated in Table-'A' below:- Table-'A' Sl.No. Description Factors Pre-GST Reduction (01.12.2018 to 31.12.2018) Post Rate Reduction (From 01.01.2019) Pre-Rate Reduction (01.12.2018 to 31.12.2018) Post Rate Reduction (From 01.04.2019) 1. Multiplex Screens No.'s A Screen 1 Screen 6 2. Screen Category B 2D 3D 3. Ticket MRP C 150/- 150/- 250/- 250/- 4. Total No. of tickets sold D 36,618 60,167 5. Total taxable value (after Discount) E 41,73,717/- 1,17,51,818/- 6. Average base price (without GST) F....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ue (after Discount) D 1,78,96,433 2,19,18,539 5,56,68,652 1,17,51,818/- 1,07,53,802 3,58,26,491 5. Average base price (without GST) E=D/C 117.18/- 127.12/- 116.94/- 195.32/- 211.86/- 194.92/- 6. GST Rate F 28% 18% 18% 28% 18% 18% 7. Actual Selling price (post rate reduction) (including GST) G=E*(1+F) 150/- 150/- 138/- 250/- 250/- 230/- 8. Commensurate Selling price (post Rate reduction) (including GST) H=118% of E 138.2724/- 138.2724/- 230.4776/- 230.4776/- 9. The excess amount charged or Profiteering per Tickets I=G-H 11.7276/- - 19.5224 - 10. Total Profiteering J=C*I 20,22,120/- - 9,90,938 - 11. Total Profiteering (All Screens) (K) 30,13,058/- 13. The DGAP has also reported that the Respondent had increased the base prices of the movie tickets sold by him during the period from 01.01.2019 to 07.02.2019 to maintain the same selling prices (or MRP), thus making his customers/recipients pay the same total prices for the tickets, which they were paying before the reduction in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mission has been revised by the State Government at periodical intervals considering the cost factors affecting the commercial activities; that on the introduction of GST, the rate of GST on the exhibition of films was fixed at 28% and thus there was an increase of 10.70% over the existing Entertainment Tax element Which was leviable that G.O. Ms NO. 75 Home (General) Department dated 23-06-2017 was issued by the State Government revising the maximum rates of admission into multiplexes to Rs. 200/- and Rs. 300/- (for 3D theatres) inclusive of taxes, from the existing rates of Rs. 150/- and Rs. 250/- respectively to match the increase in the tax structure; that however the above G.O. was not implemented but was kept in abeyance until further Orders by the Government Vide Memo No. 659 (P)/General/A1/2017 dated 30-06-2019. b. That the increase in GST aver the Entertainment Tax had to be borne by him by adjusting the base prices downwards to maintain the selling prices of the ticket at the earlier rates of Rs. 150/- and Rs. 250/- respectively; that representations apprising the Government of India of the above facts had resulted in the subsequent reduction of the rate of GST f....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... f. That the DGAP in his Report has stated that the case law relied upon by the Respondent i.e. State-level Screening Committee on Anti-Profiteering, Kerala and another vs. Zeba Distributors [2018] 100 taxmann.com 327 (NAA) = 2018 (12) TMI 1001 - THE NATIONAL ANTI-PROFITEERING AUTHORITY, Mandalika Sakunthala and another Vs, Fab India Overseas (P) Ltd. (2019) 71 GST 243 = =(2018) 99 Taxman.com (NAA) = 2018 (11) TMI 1011 - NATIONAL ANTI-PROFITEERING AUTHORITY, State-level Screening Committee on Anti-Profiteering, Kerala and another vs. Ahuja Radios [2018] 100 taxmann.com 505 (NAA) = 2018 (12) TMI 1602 - NATIONAL ANTI-PROFITEERING AUTHORITY" do not apply to the present case on the ground that the facts of these cases were different, It was submitted that though the facts were different, the rationale of these decisions of this Authority ought to have been applied to his case since in his case also there was no profit arising out of the reduction in the rate of GST which could have been passed on to the consumers of service. g. That no profit had arisen out of the reduction of the GST rate from 28% to 18% from 01-01-2019; that there were arithmetical mistakes in the calculat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ommensurate reduction in prices. (2) The Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him. (3) The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed. (3A) Where the Authority referred to in sub-section (2) after holding examination as required under the said sub-section comes to the conclusion that any registered person has profiteered under sub-section (1), such person shall be liable to pay penalty equivalent to ten per cent. of the amount so profiteered: Provided that no penalty shall be leviable if the profiteered amount is deposited within thirty days of the date of passing of the order by the Authority. Explanation.- For the purposes of this section, the expression "profiteered" shall mean the amount determined on a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rately as per the provisions of Section 171(1) of the CGST Act, 2017. Therefore. the facts of the above case referred by the Respondent are different from his case and are of no help to him. Therefore, the contention of the Respondent is not tenable and hence denied. 23. The Respondent has also cited the definition of term profiteering given in Black's Law Dictionary as "taking advantage of the un-usual or exceptional circumstances to make excess profit". He has further stated that the Shorter Oxford English Dictionary. Law Lexicon. and Chambers 20^th Century Dictionary also gave similar definition of profiteering. The Taxmann's Dictionary for Corporate Laws also define the term profiteering as "a motive that is aimed at making excessive profit at the cost of public". In this connection, it would be appropriate to refer to the definition of the profiteered amount given In the Explanation attached to Section 171 which states as under:- "Explanation : For the purposes of this section, the expression shall mean the amount determined on account of not passing the benefit of reduction in rate of tax on supply of goods or Services or both or the benefit of ITC to the recipien....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion Of the Respondent is not correct In the case of the . State-level Screening Committee on Anti-Profiteering, Kerala and another vs. Zeba Distributors [2018] 100 taxmann.com 327 (NAA) = 2018 (12) TMI 1001 - THE NATIONAL ANTI-PROFITEERING AUTHORITY, in which this Authority has held that "there was no reduction in the rate of tax on the subject product and hence anti-profiteering provisions contained m Section 171(1) of the CGST Act, 2017 are not attracted" Further, in the case of Mandalika Sakunthala and another Vs, Fab India Overseas (P) Ltd. (2019) 71 GST 243 = =(2018) 99 Taxman.com (NAA) = 2018 (11) TMI 1011 - NATIONAL ANTI-PROFITEERING AUTHORITY, this Authority has held that "It is further revealed that the base price of these products had been reduced ty the Respondent to maintain the same MRP (Pre GST MRP) invite of the increase in the tax rate of both the above products," Therefore, the anti-profiteering provisions contained in Section 171(1) of the CGST Act, 2017 were round to have not been contravened in the above mentioned case. Also in the case of State-level Screening Committee on Anti-Profiteering, Kerala and another vs. Ahuja Radios [2018] 100 taxmann.com 505 (NAA) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....espondent and hence the above amount has rightly been included in the profiteered amount as it denotes the amount of benefit denied by the Respondent Therefore, the above contention of the Respondent is untenable and hence cannot be accepted Accordingly, an amount of Rs. 4,59,604/- cannot be subtracted from the profiteered amount. 27. This Authority based on the facts discussed above has found that the Respondent has resorted to profiteering by way of either increasing the base prices of the service while maintaining the same selling prices or by way of not reducing the selling prices of the service commensurately, despite a reduction in GST rate on 'Services by way of admission to exhibition of cinematograph films where price of admission ticket is above one hundred rupees" from 28% to 18% w.e.f. 01.01.2019 to 30.06.2019. on this account, the Respondent has realized an additional amount to the tune of Rs. 30,13,058/- from the recipients which included both the profiteered amount and GST on the said profiteered amount. Thus the profiteering is determined as Rs. 30,13,058/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017. The Respondent is therefore directed to redu....