TaxTMI 
TaxTMI 
2020 (12) TMI 1202
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....01.01.2019 vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018. 2. Vide his Report, the DGAP has reported that Applicant No. 1 had alleged that the Respondent had not passed on the benefit of reduction in the GST rate on the aforesaid movie admission tickets, from 18% to 12% w.e.f. 01.01.2019, vide Notification No. 27/2018- Central Tax (Rate) dated 31.12.2018 and instead, increased the base prices to maintain the same cum-tax selling prices. Applicant No. 1 had also alleged in his letter dated 03.04.2019 that the Respondent was selling tickets of different categories priced at Rs. 100/- or less than 100/- (excluding Tax). However, the DGAP, on examination of the record of the monthly sale of tickets in each category, observed that in the month of March 2019 and May 2019, three different categories of tickets, i.e. other than the categories mentioned by Applicant No. 1 had been sold by the Respondent. Scrutiny of the records submitted by the Respondent also revealed that these three categories of tickets were not the matter of the complaint made by the above Applicant and the existence of these categories was also not reflected in the sales data for the pre-ta....
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....approval. (ii) State Government's GO (Government Order) directed the Respondent to sell tickets at allowed prices, inclusive of taxes. Therefore, he had continued to sell the tickets, for the lower classes at Rs. 80/- and Rs. 50/-, whereas for the upper classes, he had reduced ticket prices because of the different GST tax rates in existence. (18% and 28%) (iii) He had faced losses as a result of the introduction of GST w.e.f. July 2017. Before the introduction of GST on 1st July 2017, his ticket rate was Rs. 120/- inclusive of entertainment tax. He was unable to arrive at Rs. 120/- inclusive of GST as the price of his movie ticket since the bandwidth of pricing at any price between Rs. 118/- (100+18%) and Rs. 129/- (101+28%) was made unavailable. Therefore, he was forced to sell the movie tickets at Rs. 2/- lesser than earlier, i.e. at Rs. 100+18%= Rs. 118/- resulting in substantial losses to him. (iv) He had changed the pricing a few times during this period of last 6 Months depending upon- a. Type of Movie (Starcast etc.) b. Number of days, the movie ran. c. If the movie was a hit or flop. (v) State Government wa....
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....confidential". 8. The DGAP further reported that the reference received from the Standing Committee on Anti-profiteering, the various replies of the Respondent, and the documents/evidence on record had been examined in detail and the main issue was whether the rate of GST on "Services by way of admission to exhibition of cinematography films where price of admission ticket is above one hundred rupees" was reduced from 28% to 18% w.e.f. 01.01.2019 and "Services by way of admission exhibition of cinematograph films where price of admission ticket is one hundred rupees or less" was reduced from 18% to 12% w.e.f. 01.01.2019 and if so, whether the benefit of such reduction in the rates of GST was passed on by the Respondent to the recipients, in terms of Section 171 of the Central Goods and Services Tax Act, 2017. 9. The DGAP also observed that the Central Government, on the recommendation of the GST Council, reduced the GST rate on the "Services by way of admission to exhibition of cinematograph films where price of admission ticket is one hundred rupees or less" from 18% to 12% w.e.f. 27.07.2018, vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018. This was a matte....
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.... 2017 the base prices of the tickets were Rs. 100/-, Rs. 67.80 & Rs. 42.37 only. However, no clarification concerning the variation in prices during the month of March 2019 and May 2019 was submitted. The Respondent was once again sent a letter/email on 13.12.2019, requesting him to submit the reasons for the movie ticket prices in the month of March 2019 & May 2019. The Respondent vide email dated 13.12.2019 submitted that the ticket rate changes in March and May, in his case, should not attract any anti-profiteering penalties, as he had not profiteered. As the comparable data/rates of new categories during the months of March 2019 or May 2019 were not available during the last 4 months before the rate reduction, the profiteering for these categories had not been worked out. Hence the investigation was limited to the consequences of the reduction in the rate of GST from 18% to 12% only and for only three categories mentioned by Applicant No.1. 12. The DGAP also reported that the Respondent's contention that he did not fall in the category of beneficiaries due to input credit accrual, had not impacted the investigation as the same had neither been alleged by Applicant No.1 n....
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....1.43 67.80 75.93 3 Second Class 50 18 42.37 50 12% 44.64 42.37 47.45 The DGAP further observed that from the above Table- "A" it was apparent that in case of admission tickets of "Upper and Lower Balcony" the base price i.e. the taxable price had not been changed from Rs. 100/- and the cum tax price had been reduced from Rs. 118/- to Rs. 112/- resulting into reduction of Rs. 6/-. However, the Respondent had increased the base price of the admission ticket from Rs. 67.80 to 71.43 for the First class and from Rs. 42.37 to 44.64 for the Second Class. Thus it was observed that the actual cum tax prices of the tickets were not reduced though they should have been revised as Rs. 75.93 for First class and Rs. 47.45 for the second class but the Respondent continued to charge the pre rate reduction prices and maintained the actual cum tax prices by increasing the base prices of the tickets. Therefore, in terms of Section 171 of the Central Goods and Services Tax Act, 2017, the benefit of GST rate reduction from 18% to 12% in respect of "Services by way of admission to exhibition of cinematography films" was not passed on to the recipients in case of tw....
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..... The investigation report was received by this Authority on 18.12.2019 and it was decided to accord an opportunity of hearing to the Applicants and the Respondent on 13.01.2020. Notice dated 20.12.2020 was thus issued to the Respondent directing him to explain why the Report dated 18.12.2019 furnished by the DGAP should not be accepted and why his liability for violation of the provisions of Section 171 of the CGST Act, 2017 should not be fixed. 19. The first hearing was held on 27.01.2020 wherein Sh. Raj Tadla, Partner, appeared for the Respondent and furnished written submissions dated 27.01.2020, whereby the Respondent has contended as follows:- a. That from the date when the tax rate was reduced, he had charged the customers reduced prices. b. That since a movie ticket was a service and no stocking was required, he did not have any benefit of ITC due to tax rate changes and that he had forwarded the benefit of ITC accrued to his customers. c. That he kept changing the prices of the movie admission tickets depending on whether the movie was old or a new release; whether it was a well-performing movie with high viewership/ demand or otherwise. ....
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...., and budgets, etc. He also elaborated it through various examples. (a) Supplementary Report was also called from the DGAP on the above submissions of the Respondent. The DGAP submitted his supplementary report dated 20.02.2020 under Rule 133 (2A) of CGST Rules, 2017 on the submission made by Respondent. In respect of the contention of the Respondent regarding payment of the profiteered amount to the producer/distributor to procure the right to exhibit the movie and keeping his profit margins the same, the DGAP submitted that the costing of the product has not been looked into in the investigation. Further, the Respondent has three categories of admission tickets, and the cum tax prices of the admission tickets before 31.12.2018 were fixed for upper & lower balcony as Rs. 118/-, First Class as Rs. 80/- and Second Class as Rs. 50/-, The Respondent had reduced the price of upper & lower Balcony tickets from Rs. 118/- to Rs. 112/- but no price reduction was done in the case of the other two categories. Further, the contention that the amount which he has been alleged to have profiteered has been paid to the producer did not absolve the Respondent from the allegation of profit....
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....ty days of the date of passing of the Order by the Authority. Explanation:- For the purpose of this section, the expression "profiteered" 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 input tax credit to the recipient by way of commensurate reduction in the price of the goods or services of both." 24. The Respondent has contended that he has been providing the service in respect of admission to the exhibition of cinematography films and no stocking was required and hence, he did not have any benefit of ITC due to tax rate changes in the present case. In this connection, it would be relevant to mention that the DGAP has carried out the investigation in respect of the services provided by the Respondent and looked into the aspect of reduction in the price of movie tickets following the GST rate reduction from 18% to 12% as per the Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018. Therefore, the question of stocking of the goods does not arise in the present case. The Respondent has to pass on the benefit of reduction in the tax rate of GST not the bene....
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....mentary evidence/ agreement to evidence that the price was fixed by the film producers/distributors. Hence, the above two statements made by the Respondent are not correct. Therefore, the contention made by the Respondent cannot be accepted. 28. The Respondent has further contended that the computation made by the DGAP to arrive at the profiteering amount was wrong and unsustainable as there wasn't any period prescribed for raising the price of his services. In this context, we observe that in this case, while the rate of GST was reduced from 18% to 12% in respect of the "Services by way of admission to exhibition of cinematography films where price of admission ticket is one hundred rupees or less" w.e.f. 01.01.2019, the Respondent had increased the base prices of his tickets immediately thereafter and did not pass on the resultant benefit by a commensurate reduction in the prices of his supplies at any point of time till 30.06.2019. In other words, the violation of the provisions of Section 171 of the CGST Act 2017 has continued unabated in this case and the offence continues to date. The Respondent has nowhere produced any evidence to prove from which date the benefit was....