TaxTMI 
TaxTMI 
2024 (7) TMI 97
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....e 128 of the Central Goods and Services Tax Rules, 2017, alleging profiteering by the Respondent with respect to supply of Services by way of admission to exhibition of cinematography films" by not passing on the benefit of reduction in the GST rate on the aforesaid movie admission tickets, from 28% to 18% 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 arm-tax selling vice as detailed in Table-'A below:- Table-A Sr. No. Admission Ticket 01.12.2018 to 31.12.2018 01.01.2019 to 30.06.2019 No. Price of Ticket inclusive of tax (in Rs.) GST Rate % Amount Charged i.e. Base Price (in Rs.) Price of Ticket inclusive of tax (in Rs.) GST Rate % Amount Charged i.e. Base Price (in Rs.) Commensurate Base Price (in Rs.) Amount which was to be Charged (in Rs.) A B C D E=[C/128%] F G H I J=[I*118%] 1. Premium Seats 175 28 136.72 17 18 148.31 136.72 161.32 2. Regular Seats 150 28 117.19 150 18 127.12 117.16 138.28 b. The Applicant No. 1 had enclosed copies of ticket....
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....ation had annexed copy of admission ticket where the price was Rs. 175/- including taxes. The Respondent had also informed vide letter dated 27.08.2019 that he had only two rate of admission tickets ie. Rs. 150/- (Regular seats) and 175/- (Premium Seats) only. Hence, the investigation was limited to reduction in rate of GST from 28% to 18% only. h. From the Table-'A'- above it was apparent that the Respondent had increased the base price of admission ticket i.e Premium Seats' from Rs. 136.72 to 148.31 and Rs. 117.19 to 127.12 for Regular seats'. Therefore. in terms of Section 171 of the CGST Act, 2017, benefit of GST rate reduction from 28% to 18% in respect of "Services by way of admission to exhibition of cinematography films", was not passed on to the recipients. i. On the basis of aforesaid pre/ post reduction in GST rates and the details of outward supplies for the period 01.12.2018 to 30.06.2019 submitted by the Respondent, it was observed that profiteering during the period from January, 2019 to June 2019 from the sale of tickets in two categories mentioned in table 'A' above amounts to Rs. 3.63.299/- for 'Premium Seats' and Rs. 44,62,671/- for Regular seat....
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....a challenging the notice dated 16.12.2019. The proceedings were stayed for four weeks by the Hon'ble Court in the present case. vide order dated 11.02.2020. The Hon'ble Court vide order dated 03.06.2021 disposed of the aforesaid Writ Petition directing the Respondent to submit his explanation in response to the erstwhile Authority's notice dated 16.12.2019. Accordingly, the Respondent vide his letter dated 23.01.2020 has filed his written submissions on the DGAP's Report dated 10.12.2019 and stated:- a. That Rule 128 provides that the Standing Committee had to take a decision within a period of 2 months from the date of written application. In the instant case. the written application was made on 29.03.2019 and the Standing Committee referred the case to DGAP on 02.07.2019. almost 3 months after the date of Application by the Applicant No. 1 and therefore the entire proceeding are not maintainable in terms of Rule 128 of the CGST Rules, 2017 and the investigation was time barred. b. There was reduction in the profits due to introduction of GST The Respondent stated that the State Government had been regulating the ticket prices through Government Orders. The last ....
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....ng the amount profiteered, if any, it would be evident that there was no violation of Section 171 In fact, the tax element that was borne by the Respondent had increased from Re. 19.56 to Rs. 22.88 per unit in case of 'Regular Seats' and from Rs. 22.82 to 26.69 per unit in case of Premium Seats'. In essence, the Respondent had suffered losses to the extent of Rs. 3.32 per unit in case of Regular Rs. 1.87 per unit in case of 'Premium Seats'. f. That the DGAP tailed to appreciate that in the case of Kerala Screening Committee on Anti Profiteering Vs. Ms. Saint Gobain India Pvt. Ltd. (Case No. 32/2019), it was held that Section 171 of CGST Act. 2017 would not apply where GST applicable was higher than the tax in Pre GST regime. g. That the DGAP faded to appreciate that in the case of ASV & Co. vs. Professional Colrain (2019) (NAA). It was observed that there was no reduction in the rate of tax on supply of Courier Service' after the Implementation of GST, instead there was increase in the rate of tax from 15% in pre-GST regime to 18% in post-GST regime. NAA went onto hold that "the fact that the Respondent had increased his base price for providing courier serv....
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.... For the contention made by the Respondent that the Investigation was time barred, the DGAP clarified that the complaint dated 29.03 2019 against the Respondent was sent by Principal Commissioner. Medchal and was received in DGAP on 18.04.2019 and then forwarded to the Standing Committee. The Standing Committee in its meeting held on 15.05.2019 forwarded the minutes of the meeting dated 15.05.2019 which were received in DGAP on 02.07.2019. It would be seen that the period between 18.04 2019 and 15.05.2019 was less than two months and thus within time limit. b. For the averment made by the Respondent that there was reduction in his profits due to introduction of GST. the DGAP has clarified that this issue had been discussed in pare 17 of DGAP's Report in which it was shown that the Respondent had a base price (exclusive of taxes) of Rs. 136.72/- and Rs. 117.19/- for the Premium and Regular class tickets respectively before the GST rate reduction on 01.01.2019 which was raised to Rs. 148.31/-and Rs. 127.12/- respectively. c. For the contention raised by the Respondent that the DGAP has not considered the lack of change in base price from when GST Was introduced, the....
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....dered the request of the Respondent and decided to grant one weeks' time to submit written submissions along with relevant documents. 6. The Respondent vide his letter dated 16 05 2024 filed his additional written submissions and stated:. a. That the DGAP failed to take into consideration that the prices being charged by the Respondent is within the maximum permissible limit set by the Regulating Authority i.e., the licensing authority which is a specialized body. The Respondent relied upon Hon'ble Supreme Court of India's judgment dated 05.12.2018 in Competition Commission of India v. Bharti Airtel Ltd. & Ors. b. That the DGAP has Misconstrued the scope and ambit of Section 171 of the CGST Act, 2017 The Respondent relied upon the decision of the Hon'ble High Court of Delhi in the case of Reckitt Benckiser India Private Limited & Ors. v. Union of India & Ors. c. That the DGAP has gone beyond the purview of the Complaint made by the Applicant. d That the Standing Committee considered the DGAP's Report beyond the mandatory statutory period. e. Rule 133 (3) mentions a 'recipient' to whom the benefit was not passed and not 'receipt'. &nbs....
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....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 111 of the above Act. 9. The Commission finds that, one of the contentions of the Respondent was that that the entire proceeding are not maintainable in terms of Rule 128 of the CGST Rules. 2017 as the investigation was time barred. In this regard, it is to mention that the complaint dated 29.03.2019 sent by Principal Commissioner, Medchal was received in DGAP on 18.04.2019 and then forwarded to the Standing Committee. The Standing Committee in its meeting held on 15.05.2019 forwarded the minutes of the meeting dated 15.05 2019 which were received in DGAP on 02.07.2019 It would be seen that me period between 18.04.2019 and 15.05.2019 was less than two months and thus within time limit and therefore. the above contention of the Respondent is not tenable. 10. The Respondent further contended that there was reduction in his profits due to introduction of GST. In this regard, the Commission finds that upon perusal of table 'A' above it is evident that the Respondent had a base pri....
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....ccepted. 12. The Commission further finds that the Respondent also contended that the DGAP has not considered the lack of change in base price from the period when GST was introduced. The Respondent also contended that the DGAP should have considered the base price of tickets which was applicable before Introduction of GST i.e. Rs 130.43 for regular tickets and Rs. 152.17 for premium tickets. In this regard, it is to mention that the DGAP starts investigating only when Section 171 of CGST Act, 2017 was attracted i.e. when the Government issued notification leading to "any reduction in rate of tax on supply of goods and service or the benefit of input fax credit". In the instant case Notification No. 27/2018 Central Tax (Rate) dated 31.12.2018 was effective form 01.01.2019 and therefore was applicable w.e.f. 01.01.2019 only. Therefore the above contention of the Respondent is not tenable and hence denied. 13. The Commission further finds that the Respondent in his submission also referred to various case laws of NAA namely Kerala Screening Committee on Anti Profiteering Vs M/s. Saint Gobain India Pvt. Ltd (2019), ASV & Co. vs. Professional Couriers (2019), State Level Scree....
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....stituted under any law for the time being in force, to examine whether input fax 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'. Therefore, the above Section has already given powers to this Commission to expand the scope of the investigation to all the supplies made by a registered person. The Section empowers this Commission to examine if the benefit of input tax credit and reduced tax rates have boon passed on by him or not. Since, the Section doesn't mention about any particular recipient it implies that all the supplies made by a registered person to all recipients need to be examined from of passing on the benefit to each recipient. Therefore, in view of the above, the contention raised by the Respondent is not tenable and denied Further, tax policies are made keeping in view the larger interest of the society and nation and any violation of the same entails potential to larger harm Individual applicant may be a trigger for investigation and once the proceedings are initiated, it is bound to consider all the taxes which ha....