TaxTMI 
TaxTMI 
2022 (5) TMI 1416
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....ion in the GST rate on the "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, vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018, and had instead, increased the base prices of the movie tickets to maintain the same cum-tax selling prices as were in the pre-rate reduction period despite the reduction in the rate of tax. 2. The DGAP has reported that Applicant No. 1 had forwarded the Application to the Standing Committee on Anti-profiteering for necessary action along with the relevant supporting documents and that the aforesaid application was examined by the Standing Committee on Anti-profiteering in its meeting and consequentially it was decided to refer the said matter to the DGAP to initiate a detailed investigation, including collection of necessary evidence for determining whether the benefit of reduction in the rate of GST on the supply of "Services by way of admission to exhibition of cinematography films" had been passed on by the Respondent to his recipients/ customers. The DGAP has reported that the period covered in the investigation is fr....
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....019. ii. Category-wise pricelists of the tickets for the pre and post-tax rate reduction periods. iii. Sample copies of tickets pertaining to the pre and post-tax rate reduction periods. iv. GSTR-1 and GSTR-3B Returns for the period from 01.12.2018 to 30.09.2019. 6. The DGAP has further reported that the time limit to complete the investigation was 08.04.2020. However, due to the prevalent pandemic of COVID-19 in the country, vide Notification No. 35/2020-Central Tax dated 03.04.2020 issued by the Central Govt. under Section 168 (A) of the CGST Act, 2017, it was notified that where any time limit for completion/furnishing of any report, had been specified in, or prescribed or notified under the CGST Act, 2017 which fell during the period from the 20th day of March 2020 to the 29th day of June 2020, and where completion or compliance of such action had not been made within such time, then, the time limit for completion or compliance of such action, shall be extended up to 30.06.2020. Further, vide Notification No. 55/2020-Central Tax dated 27.06.2020 and Notification No 65/2020 dated 01.09.2020, the time limit was extended up to 30.11.2020. Further, the....
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.... the Respondent had also informed vide letter dated 29.05.2020 to the jurisdictional office that he had only three rates of admission tickets i.e. Rs. 70/-, Rs. 50/- and Rs. 10/-. However, the Respondent in his reply dated 29.05.2020 submitted to the Jurisdictional office stated that he was not maintaining the class type transactions separately and that during the filing of returns he was mentioning the total receipts for the month and paying tax accordingly. The investigation was limited to the "Services by way of admission to exhibition of cinematography films where price of admission ticket was one hundred rupees or less" where reduction in the rate of GST was from 18% to 12% only. 12. The DGAP has further reported that before inquiring into the allegation of profiteering, it was important to examine Section 171 of CGST Act, 2017 which governed the anti-profiteering provisions under GST. Section 171 (1) of CGST Act, 2017 states that "Any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices." Thus, the legal requirement was that in the event of a benefit of ITC or reduct....
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....in the subject case was to be worked out in lump sum, the benefit of 6% (18%-12%) on the taxable turnover of each month w.e.f. 01.01.2019 was to be passed on to the recipients by way of commensurate reduction in prices of the tickets. From the sales data made available, it appeared that the Respondent increased the base price of the admission ticket when the GST rate was reduced from 18% to 12% w.e.f. 01.01.2019. As per the summary submitted by the Respondent, even after 01.01.2019, he continued to charge 18% GST. The price list of all the three categories of the tickets for pre and post-tax rate reduction periods submitted by the Respondent clearly indicated that the same cum tax price was maintained for the tickets during the pre and post-tax rate reduction periods. 16. The DGAP has stated that having established the fact of profiteering, the next step was to quantify the same. On the basis of aforesaid pre/post reduction in GST rates and the details of month-wise outward supplies submitted by the Respondent, it was observed that profiteering during the period from January 2019 to September 2019 worked out Rs. 1,31,754/- due to the increase in the base prices of the movie tick....
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.... the CGST Act, 2017, requiring that "any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices", had been contravened in the present case by the Respondent. 19. The investigation report was received by this Authority on 29.09.2020 and it was decided to direct the Applicants and the Respondent to submit consolidated reply/written submissions by 15.10.2020 and any specific request for hearing if required. Notice dated 01.10.2020 was issued to the Respondent directing him to explain why the Report dated 28.09.2020 furnished by the DGAP should not be accepted and his liability for violation of the provisions of Section 171 of the CGST Act, 2017 should not be fixed. The Respondent vide his submissions dated 14.10.2020 has submitted that there was no variation in his price list before the commencement of GST, or after GST. The Respondent has also enclosed the copies of earlier letters submitted to the concerned offices/Inspectors in respect of the subject investigation with his submissions. 20. Supplementary Report was sought from the DGAP on the issues raised by the Responden....
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....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, the benefit of which was required to be passed on to the recipients by the Respondent as per the provisions of Section 171 of the above Act. 23. On examining the various submissions placed on record, this Authority needs to find whether there was any reduction in the GST rate and whether the benefit of reduction in the rate of tax was passed on or not to the recipients as provided under Section 171 of the CGST Act, 2017. 24. Section 171 of the CGST Act provides as under:- "(1). Any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate 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 ITCs 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 hi....
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....increasing the base prices of all categories of admission tickets immediately after the tax rate had been reduced. 27. Further, this Authority takes note of the fact that the Respondent has not submitted any argument against the charges framed in the DGAP's report. Therefore we don't find any basis to differ from the findings of the DGAP that the Respondent had indeed contravened the provisions of Section 171 of the CGST Act 2017. 28. Based on the facts discussed above, it has been established that the Respondent has profiteered by way of increasing the base prices of his supplies of the three categories of movie tickets by maintaining the same selling prices of the movie admission tickets despite the reduction in GST rate on "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. 01.01.2019 to 30.06.2019. It is also clear to us that the Respondent has not passed on the benefit amounting to Rs. 1,31,754 (inclusive of GST) to his customers/recipients. Thus the profiteering is determined as Rs. 1,31,754/- as per the provisions of Section 171 read with Rule 133 (1) of t....