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2023 (12) TMI 146
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....ules, 2017, alleging profiteering by the Respondent in respect of supply of "Services by way of admission to exhibition of cinematography films". The Applicant No. 1 had alleged that the Respondent did not pass 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 price to maintain the same cum-tax selling price as detailed in Table-A' below:- Table-"A" Category of Ticket Price of Ticket is Rs. 100/- Price of Ticket is Rs. 80/- Price of Ticket is Rs. 60/- Price of Ticket is Rs. 30/- Before (01.01.2019) Base Price 84.75 67.80 50.85 25.42 Tax Rate 18% 18% 18% 18% Tax Amount 15.25 12.20 9.15 4.58 Total 100.00 80.00 60.00 30.00 On or after (01.01.2019) Base Price 89.29 71.43 53.57 26.79 Tax Rate 12% 12% 12% 12% Tax Amount 10.71 8.57 6.43 3.21 Total 100.00 80.00 60.00 30.00 Price without profiteering ought to be Base Price 84.75 67.80 50.85 25.42 Tax Ra....
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....s. In response to the summons dated 03.01.2020, the Respondent vide e-mail dated 09.01.2020 submitted partial documents. The Respondent submitted his replies vide letters and e-mails dated 04.11.2019, 13.11.2019, 09.01.2020, 17.01.2020 and 23.01 2020. The replies of the Respondent have been summed up as follows:- a) The Respondent has submitted that his theatre was having single screen and four classes namely (a) Balcony, (b) Dress Circle, (c) 1^st Class and (d) 2nd class. The ticket slab rates were as is furnished in Table-'B':- Table-"B" S.No. Class Ticket Price (Inc. GST) Cost of ticket when GST was 18% Cost of ticket when GST was 12% 1 Balcony 100 84.75 89.29 2 Dress Circle 80 67.80 71.43 3 1^st Class 60 50.85 53.57 4. 2nd Class 30 25.42 26.79 b) The Respondent also informed that when big films were released, the distributors got special permission from Hon'ble High Court to increase the cost of tickets for one week and after getting permission from Hon'ble High Court, the revised ticket prices were fixed. vii. Vide the aforementioned letters; the Respondent ha....
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....its. From 01.01.2019, the Respondent, in terms of Section 171 of the CGST Act, 2017, was bound to maintain the Base Price of the tickets across all class of seats/slots and GST should have been charged on the pre rate reduction Base Price. xi. As regards profiteering, the DGAP has observed that there were basically four classes of tickets in the Respondent's theater, namely, 'Balcony', 'Dress Circle', 1^st Class' and Rs. 2nd Class'. For the purpose of determination of profiteering, the number of tickets sold during the period 01.12.2018 to 31.12.2018 (pre-GST rate reduction) were taken and an average base price (after discount) was obtained on dividing the total taxable value by total number of tickets sold during this period. The average commensurate selling price of the ticket was compared with the actual selling price of the tickets sold during post-GST rate reduction i.e. on or after 01.01.2019 as illustrated in the Table-'C' below:- Table-'C' (Amount in Rupees) SI.No. Description Factors Pre-Rate Reduction (01.12.2018 to 31.12.2018) Post Rate Reduction (Fom 01.01.2019) 1. Theatre Name A Amba ....
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....pondent has sold admission ticket in the State of Telangana only. 2. Consequently, the DGAP has concluded that the allegation of profiteering by way of increasing the base prices of the tickets (Services) by way of not reducing the selling prices of the tickets (Services) commensurately, despite the rate reduction in GST rate on "Services by way of admission to exhibition of cinematography films where price of admission ticket was one hundred rupees or less" was reduced from 18% to 12% w.e.f. 01.01.2019, was not passed on to the recipients appeared to be correct. The DGAP has stated that the total amount of profiteering covering the period from 01.01.2019 to 30.09.2019, was Rs. 7,19,187/-. The recipients of the services were not identifiable as no such details of the consumers have been provided. 3. The above Report was considered by the erstwhile Authority in its meeting held on 06.03.2020 and it was decided that the Applicants and the Respondent be given an opportunity of hearing on 24.03.2020 and to file their submissions before the Authority. Notice dated 06.03.202 was issued to the above Respondent asking him to explain why the Report dated 03.03.2020 furnished by the DG....
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....s running from 28.12.2018 for a week which was to end on 03.01.2019 and at the most, the Respondent was liable for payment of profiteering amount for three days only as running of picture had ended on 03.01.2019 and the Respondent was changing the film every week and no profit would accrue to him on the running of film. For example if the goods were stocked with the trader and the price/tax was decreased and trader sold the stocks at the same rate to the purchaser and profit would accrue after deduction of tax to the trader then anti-profiteering would come into effect in such case. In this case, there was no stock or service involved after week end. Every Thursday was a day when week ended for cinema theatre. If the tax was effective w.e.f. 01.01.2019 then at the most, it could be affected on the theatre owner for that week only ending on 03.01.2019. Therefore, the Respondent has claimed that service was not provided after 03.01.2019 as new film was released and the rate of admission was controlled by State Government Authorities. (d) Some times when big films were released, the distributor would get special permission to increase the cost of tickets for one week. After g....
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....e. (c) The order of the licensing authority is liable to be cancelled or modified by the Government, if they consider such a course Just or necessary. (d) Any person aggrieved by the order of the licensing authority may appeal to the Government who may make such order as it deemed fit." (c) Further, it was nowhere mentioned in the above Rule that the maximum price fixed was inclusive of applicable taxes. Further and more pertinently, as the Licensing Authority only fixed the maximum Rate, the rate so fixed did not interdict the Respondent or other theatre owners/operators from reducing the ticket price in order to commensurately pass on the benefits of reduction in tax rates. (d) As already submitted the State Government only fixed the maximum rate of movie ticket. The cinema management was free to sell the tickets at the lower price e.g. in the event of reduction of taxes. The State Government came into picture only when the cinema management wanted to increase the price of tickets beyond the maximum rate already fixed. (e) Further, reference was also made to the provisions of Section 171 of Central Goods and Services Tax Act, 2017 whic....
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....he present proceedings, DGAP had received the reference from the Standing Committee on Anti-profiteering on 09.10.2019 issued Notice of Investigation on 22.10.2019 and period till 30.09.2019 was covered. 5. Notice dated 11.10.2023 was issued to the Respondent to attend the hearing on 09.11.2023 but he has not appeared inspite of service of the notice therefore, there is no alternative except to proceed against him ex-parte. This Commission has carefully perused all the submissions and the documents placed on record, and the arguments advanced by the Respondent. The Commission needs to determine as to 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. 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 co....
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....from Hon'ble High Court. It is evident that the Licensing Authority only fixes the maximum price of the ticket. The Respondent is free to sell the tickets at the lower price i.e. in the event of the reduction in taxes which infact has happened in the subject case. The State Authorities comes into picture only when the theatre owner (the Respondent) wants to increase the prices of tickets beyond the maximum price as fixed by the State Authorities. Therefore, the above plea of the Respondent is not maintainable; hence the same cannot be accepted. 8. The Respondent has contended that the benefit of difference which arose in base price was due to increase in the rate of Tax only and the benefit went to Government in form of Taxes. The commission observes that there was reduction in GST Tax rate from 18% to 12% not increase as stated by the Respondent above. The Respondent should have kept his base prices same to transfer the benefit of Rate reduction to the consumers. Instead, he increased the base prices of tickets thereby pocketing the profit. Therefore, the above contention of the Respondent cannot be accepted. 9. The Commission finds that, as per the details and calculati....
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....ana State CWF respectively, 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 this Order failing which the same shall be recovered by the Commissioner CGST/SGST as per the provisions of the CGST Act, 2017. 11. It is also evident from the above narration of facts that the Respondent has denied benefit of rate reduction to his customers/recipients in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act. However, perusal of the provisions of Section 171 (3A), under which liability for penalty arises for the above violation, shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.07.2017 to 30.09.2019 when the Respondent had committed the above violation and hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively for the said period. 12. Further, the Commission as per Rule 136 of the CGST Rules 2017 directs the ju....