TaxTMI 
TaxTMI 
2022 (6) TMI 1076
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....nt did not pass on the benefit of reduction in the GST rate on "Services by way of admission to exhibition of cinematograph fi lms", which was reduced w.e.f. 1.1.2019, 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 CGST Act, 2017, and instead, increased the base prices to maintain the same cum-tax selling prices of the admission tickets. (ii) The aforesaid applications were examined by the Standing Committee on Anti-profiteering, in its meeting, the Minutes of which were received by the DGAP on 06.05.2020, whereby it was decided to forward the same to the DGAP to conduct a detailed investigation in the matter. The Standing Committee forwarded the following submission/documents of the Applicant Nos. 1 & 2:- a. Online complaints NAACMP34678 & NAACMP3716 filed by the Applicant No. 1 & 2 respectively. b. Letter dated 30.09.2019 of the Respondent to the Superintendent (Anti-Evasion) regarding his working of ticket prices with GST rates from 1.1.2019 to 3.2.2019. (iii) After the receipt of the reference from the Standing Committee on Anti-profiteering, a Notice of Investigation (NOI) date....
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....rder No. GO. Ms. No. 54, Home (Gen. A) Department, dated 26.04.2017, wherein the Government of Telangana accorded permission for the rate of admission to Recliner and Regular Seats, details of which have been mentioned below:- Sr.No. Screen Total No. of Seats Recliner Seats Regular Seats No. of Seats Rate of admission ticket Rate of admission to 3D films No. of Seats Rate of admission ticket Rate of admission to 3D films 1. Screen-1 94 0 0 0 94 150 175 2. Screen-2 455 28 200 225 427 150 175 3. Screen-3 131 0 0 0 131 150 175 4. Screen-4 607 29 200 225 578 150 175 Total 1287 c. That the Respondent had applied before the licensing authority to allow an increase in the rates of tickets for certain movies and provided copies of such applications. However, the Respondent had not submitted the approval for the higher costs, if received from the licensing authority d. The Respondent submitted calculation of the differential amount payable in respect of tickets sold during the period 1.1.2019 to 3.2.2019 in the Executive (Regular) and Gold (Recliner) categories, which was me....
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....e reference received from the Standing Committee on Anti-profiteering, various replies of the Respondent, and the documents/evidence on record had been examined in detail by the DGAP. The findings of the DGAP are as under:- (i) The main issue to be looked into was whether the rate of GST on the "Services by way of admission to exhibition of cinematography films where price of admission ticket was above one hundred rupee? 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 was 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 rate of GST was passed on by the Respondent to the recipients, in terms of Section 171 of the CGST Act, 2017. (ii) The DGAP has further submitted that Section 171(1) of CGST Act, 2017 which governs the anti-profiteering provisions under GST states that "Any reduction in the 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 IT....
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....ion w.e.f. 01.01.2019. Further, the Respondent was charging the same prices for tickets in both categories of seats irrespective of the fact whether the film was a normal one or a 3D film. Similarly, post GST rate reduction w.e.f. 01.01.2019, the Respondent had maintained the same prices in both categories of seats irrespective of the fact whether the film was a normal or 3D film. Also, the Respondent had provided copies of the Application made to the Licensing authority requesting him to hike prices across different categories for specific movies. However, he had not produced a copy of the approval received on his requests. In light of the Respondent's inability to submit substantive & conclusive evidence that such increment in prices were allowed to him by the Authorities, there was no ground to accept his contention. Further, it had been observed that price revision had been done for only a few movies, whereas old rates had been maintained for even those movies where the Respondent had requested for increase in rates from the licensing authority. There were altogether six such movies where ticket prices had been revised upward by the Respondent. These included one "Sye Raa N....
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.... of tickets in two categories mentioned in table 'B' below amounts to 1,31,292/- for Recliner Category, 11,52,707/- for Regular Category and 84,18,946/- for exceptions in both the categories of tickets. The total amount of net higher sales realization due to an increase in the base prices of the movie tickets, despite the reduction in GST rate from 28% to 18% or in other words, the profiteered amount comes to 97,02,945/-. The brief of the computation has been furnished in the Table 'B' below:- Table-B Sr.No. Category 01.01.2019 to 30.04.2020 Base Price per unit in pre-rate-reduction (Excl.GST) Commensurate Price per unit post-rate reduction Actual Selling Price post-rate-reduction Profiteering per unit (Incl.GST) Qty Sold. Total Profiteering (in Rs.) A B C D=C*118% E F=E-D G H=F*G 1 Recliner 156.25 184.37 200 15.63 8400 1,31,292 2 Regular 117.18 138.27 150 11.73 98270 11,52,707 3 Exceptions 117.18 138.27 200 61.73 122087 75,36,138 156.25 184.37 350 165.63 5330 8,82,808 Total 97,02,945 (viii) Based on the details of outward supplies of the tickets (Services) submitted by the Respondent, it was o....
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....lar (Executive class) 150 150 11.73 98270 11,52,707 Total Regular category 1,06,670 12,83,999 b. That it was a fact on record that the rate of GST in respect of "services by way of admission to of cinematographic films" was reduced from 28% to 18% w.e.f. 01.01.2019. Looking to this reduction in rates of GST, the ticket prices for the regular category- recliner and regular seats -were revised by the Respondent from 04.02.2019 from Rs. 150/- to Rs. 138/- for regular seats and from Rs. 200/- to Rs 184/- for recliner seats. Therefore, the present dispute relates only to the period 01.01.2019 to 03.02.2019. c. That the calculation was of the differential amount payable in respect of tickets sold during the period 01.01.2019 to 03.02.2019 under the regular category for Regular seats (executive) and Recliner seats (Gold). Out of the alleged excess amount of Rs. 11.73 per ticket in Regular seats and Rs. 15.63 per ticket in the Recliner seats an amount of Rs. 9.94 and Rs. 13.25 respectively was on account of the basic value of tickets whereas Rs. 1.79 and Rs. 2.38 respectively pertained to the GST amount which already stood deposited to the revenu....
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.... distributors. i. That if any demand for recovery of the profiteered amount was made on the Respondent, then the same should be made to the extent of 50.35% of such amount which pertained to Respondent's share of the revenue from the sale of such tickets. (ii) 'Exceptions Category' - Recliner and regular seats:- a. The calculation of profiteering under 'Exception Category' for the recliner and the regular seats has been summarized herein below:- Sr.No. Category Ticket Price before 1-1-2019 Ticket Price After 1-1-2019 Alleged profiteering per ticket No. of tickets sold Total profiteering A. Exceptions (Recliner) 200 350 165.63 1,22,087 75,36,138 B. Exceptions (Regular) 150 200 61.73 5330 8,82,808 Total Exceptions category 1,27,417 84,18,946 b. That admittedly rate of GST in respect of 'Services by way of admission to exhibition of cinematographic films" was reduced from 28% to 18 % w.e.f. 01.01.2019. Accordingly, wherever any ticket prices were fixed by authorities before 01.01.2019, they were based on considering the applicable GST rate of 28%, and the same were required to be re-co....
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....e safely concluded that the inbuilt GST rate under the exception category was the prevailing rate of 18% and not 28%. iii. That copy of the Order dated 26.11.2019 of Hon'ble High Court for the State of Telangana at Hyderabad issued in favour of the property owner granting an interim direction permitting to run the Respondent's theatre by collecting the enhanced ticket rates as proposed in the letter dated 21.11.2019 has attached. This showed that the sanction of the Hon'ble High Court for increased ticket prices under the exception category was also on 26.11.2019 i.e. post 01.01.2019 when the GST rate was already reduced from 28% to 18%. f. That perusal of the above documents shows that the base prices of the pre-GST regime taken by the DGAP in the present Notice/Report under 'Exception Category' were based on just assumption and presumption. Such an artificial base prices of the pre-GST regime taken by the DGAP by assuming a GST rate of 28% were not applicable because such an exception prices did not pertain to the pre 01.01.2019 period when the GST rate was 28%. The corresponding application/sanction/fixation pertained to the post 01.01.2019 period when the GS....
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.... of the CGST Act, 2017 could not be imposed on the Respondent. c. That the penal proceedings were, by their very nature, quasi-criminal proceedings and, therefore, unless it was established that he acted in conscious disregard of the legal provisions and with intent to enjoy some benefit which was not permitted by law to enjoy, a penalty could not be proposed on the Respondent. d. That the Respondent placed reliance on the following case laws in support of the fact that no penalty should be imposed upon him: * HINDUSTAN STEEL LTD. vs. STATE OF ORISSA reported at 1978 (2) ELT (J159) * SUMEET INDUSTRIES LTD. vs. COMMISSIONER OF CENTRAL EXCISE, SURAT reported at 2004 (164) E.L.T. 335 (Tri. - Mumbai) * STEEL AUTHORITY OF INDIA LTD. vs. COMMISSIONER OF CUSTOMS, CALCUTTA reported at 2001 (136) E.L.T. 316 (Tri. - Kolkata) e. That though the above case laws pertained to the pre-GST regime, however, the ratio of the same applied to the present situation as well, and hence; the penalty proposed on the Respondent was liable to be dropped. 5. Copy of the above submissions dated 06.02.2021 filed by the Respondent was supplied to the DGAP for supplementary Report under Rule 133(2A) ....
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....uction in the rate of tax by way of commensurate reduction in the prices of goods or services supplied by him. Hence, it was the responsibility of the Respondent to comply with the provisions of Section 171 of the CGST Act, 2017. Therefore, the submission of the Respondent was untenable. e. That the averment made by the Respondent at para 22(ii)(a-g) of the letter dated 06.02.2021 appeared to be untenable in as much as the Respondent could not produce the Orders of the Government of Telangana regularizing the ticket prices sold at higher rates. Further, the Hon'ble High Court of Telangana vide Common order with reference to W.P.No.15101/2019 clubbed with other Writ Petitions dismissed the writ petitions as infructuous. 6. The Respondent vide his rejoinder dated 17.05.2021 to the above clarifications of the DGAP, submitted as under:- a. That it was a varifiable fact on record that the ticket prices were revised giving the effect to the reduction in GST rates from 04.02.2019 and therefore the dispute under this category related only to the period 01.01.2019 to 03.02.2019. b. That the fact of excess collection on account of GST and its payment to the Government as submitted....
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....along with details of each Hon'ble Telangana High Court Order vide which such special ticket rates were fixed. The Respondent further stated that all these special rates under the 'Exception Category' were determined after 01.01.2019 when the prevailing rate of GST was already 18% and therefore no further reduction was required to be made. The summary of the demand of Rs. 84,18,945/- under `Exception Category' has been furnished in the below table:- Sr. No. Movie Name Anti-Profiteering amount as per Department (in Rs.) Details Reference 1 Ala Vaikunthapurr amuloo (Telugu) 24,85,354 Average Ticket Price inclusive of GST has been increased: a. From Rs. 150/- to Rs. 200/- in case of Regular (Executive Class) b. From Rs. 200/- to Rs. 350/- in the case of Recliner (Gold class) Telangana High Court Order dated 27.03.2020 2 Darbar (Telugu) 2,84,655 Average Ticket Price inclusive of GST has been increased : a. From Rs. 150/- to Rs. 200/- in case of Regular (Executive Class) b. From Rs. 200/- to Rs. 350/- in the case of Recliner (Gold class) Telangana High Court Order dated 27.03.2020 3 Sari Leru Neekevvaru (Telugu) 16,93,027 Average Ticket Pri....
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....hority, 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 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 commensu....
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....Gen A) Department, dated 26.04.2017. Further, the Hon'ble High Court of Telangana in its Common order dated 27.03.2020 in the case of W.P.No.15101/2019 clubbed with other Writ Petitions dismissed the writ petitions as infructuous. The GST department of State or Centre or DGAP or NM were not the Respondents in the said Writ Petition. 15.The Commissioner of Police, Cyberabad, Hyderabad vide letter No. A4/03/Cinemas/Cyb/2018-19 dated 20.11.2019 has a fixed rate of admission ticket of Rs 75 per seat along with other conditions. The Respondent submitted a copy of letter no. GH&H/CP/2019-20 dated 21.11.2019 written by M/s Global Home and Hearth Pvt. Ltd., Ameerpet, Hyderabad to the Commissioner of Police, Cyberabad Commissionerate, Cyberabad, Ranga Reddy District requesting an increase in the ticket prices for screening in multiplex theater by him. The letter dated 21.11.2019 was written by the Respondent in response to the letter dated 20.11.2019 he received from the Commissioner of Police, Hyderabad fixing the said rate. In the letter dated 21.11.2019 it was intimated that "kindly refer to your permission for screening Cinemas in 4 screens with a total capacity of 1078 people in o....
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....ons as well as during the personal hearing has admitted the above-said liability of excess collection during the period 1.1.2019 to 30.4.2020. 17. With regard to the fixation of admission ticket rates for the 'Exception Category', it is claimed by the Respondent that no such category existed before 1.1.2019, and hence the admission ticket rates were not available for comparison post 1.1.2019. It was further claimed by the Respondent that the fixation of the ticket rates for the exception category has taken into consideration the prevalent GST rate of 18% and hence no amount of profiteering can be made out against them. To verify the above-said claim, the Authority has looked into various documents submitted by the Respondent to the DGAP. It is found that the DGAP vide Notice dated 4.6.2020 had demanded various documents and details from the Respondent during the course of the investigation, which also included a pricelist of the movie admission tickets pre-and-post 1.1.2019 and invoices for the period before 1.1.2019. However, it appears from the perusal of the records submitted along with the Investigation Report dated 31.12.2020 of the DGAP that the relevant documents or....
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....t Reported at 2008 (232) E.L.T. 621 (Tri. - Ahmd.) c. Komal2- STRAW BOARD & MILL BOARD INDS. vs. COMMR. OF C. EX., LUDHIANA reported at 2005 (16) E.L.T. 584 (Tri. - Del.) d. COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH vs. PILOT PRODUCTS reported at 2005 (182) E.L.T. 59 (Tri. Del.) e. SPORTS & LEISURE APPAREL LTD. vs. COMMISSIONER OF C. EX., NOIDA reported at 2005 (180) E.L.T. 429 (Tri. Del.) for the waiver of penalty. In this regard, it is to mention that the facts of the above cases referred by the Respondent are related to the matters like excise duty, etc. and the facts of the case laws cited above are different from the present case. Therefore, the contention of the Respondent is not tenable and hence rejected. 21.The Respondent also submitted that no penalty ought to be imposed on the Respondent as Section 171 (3) of the CGST Act could not be applied to the present case. In this regard it is to mention that vide Section 112 of the Finance Act, 2019 specific penalty provisions have been added for violation of the provisions of Section 171 (1) which have come into force w.e.f. 01.01.2020, by inserting Section 171 (3A). The investigation in the case covers the period from ....
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.... reduction in the rate of tax so that the benefit is passed on to the recipients. The Respondent is also directed to deposit the profiteered amount of 12,83,999/- along with the interest to be calculated @ 18% from the date when the above amount was collected by him from the recipients till the above amount is deposited. The Respondent is further directed to refund an amount of Rs. 11.73/- each to Applicant Nos. 1 & 2 along with interest to be calculated @ 18% from the date of when the said amount was collected by him from the above Applicants 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 amount of profiteering of Rs. 6,41,988/- in the Central Consumer Welfare Fund (CWF) and Rs. 6,41,988/- in the Telangana State CWF as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017, along with 18% interest. The above amount shall be deposited within a period of 3 months from the date of receipt of this Order failing which the same shall be recovered by the Commissioner CGST/SGST as per the provisions of the CGST/Telangana GST Act, 2017. 25.The Authority finds that the Respondent has den....