AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (7) TMI 796
X X X X Extracts X X X X
X X X X Extracts X X X X
....ms" 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 cum-tax selling price. b) The Applicant has enclosed copies of tickets dated 31.12.2018 & 25.01.2019 along with his application form (APAF-1 form). Further, the Applicant has also submitted the price trend of ticket prices sold by the Respondent. c) Accordingly, the DGAP decided to initiate an investigation and collect evidence necessary to determine whether the benefit of reduction in rate of tax had been passed on by the Respondent to the recipients in respect of supply of service by the Respondent. d) The DGAP issued a Notice on 09.07.2019 under Rule 129 of the CGST Rules, 2017 to the Respondent calling upon the Respondent to reply as to whether he admitted that the benefit of reduction in rate of tax had not been passed on to the recipients by way of commensurate reduction in prices and if so, to suo moto determine the quantum thereof and indicate the same in his reply to the Notice as well as to furnish all sup....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 117.18/- 7. GST Rate G 28% 18% 28% 18% 8. Actual Selling price (post rate reduction) (including GST) H=128% of F 150/- 150/- 9. Commensurate Selling price (post Rate reduction) (including GST) I=118% 138.27/- 138.27/- 10. Post Reduction Session ID & date J 63028 dated 14.01.2019 23811 dated 04.02.2019 11. Total No. of Tickets sold in above Session ID K 250 27 12. Total Tickets Value (including GST) L 37,500 4,050/- 13. Actual Selling price (post rate reduction) (including GST) M=L/K 150/- 150/- 14. Excess amount charged of Profiteering N=M-I 11.73/- 11.73/- 15. Total Profiteering O=K*N 2,932.50/- 316.71/- From the above table 'A', it is clear that in the said instance, the Respondent did not reduce the selling price commensurately of the "Movie Tickets", when the GST rate was reduced from 28% to 18% w.e.f. 01.01.2019, vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018 and hence profiteered an amount of Rs. 11.73/- per ticket and thus the benefit of reduction in GST rate was not passed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lling prices of the tickets (Services) commensurately, despite the reduction in GST rate on "Services by way of admission to exhibition of cinematography films where price of admission ticket was above one hundred rupees" from 28% to 18% 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 30.06.2019, was Rs. 13,99,061/-. 2. The above Report of the DGAP dated 07.02.2020 was considered by the erstwhile NAA and it was decided to allow the Respondent and the Applicant to file their consolidated written submissions in respect of the above Report of the DGAP. Notice dated 14.02.2020 was also issued to the Respondent directing him to explain why the above Report furnished by the DGAP should not be accepted and his liability for violation of the provisions of Section 171 of the Act should not be fixed. The Respondent vide his letter dated 29.01.2021 has filed his written submissions against the DGAP's Report dated 07.02.2020. Summary of the Written Submissions is provided as under:- a) The Applicant has no locus standi to make the application alleging profiteering ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the contention raised by the Respondent that the Applicant has no locus standi to make the application alleging profiteering by the Respondent under Section 171 of CGST Act, 2017, the DGAP has clarified that Rule 128 of the CGST Rules, 2017 read with Section 171 of the CGST Act, 2017 endows a right to the complainant/applicant to make a complaint to the statutory authority in case benefit of rate reduction was not passed on by the supplier by way of commensurate reduction of prices. b) For the contention raised by the Respondent that he has abided the provision of Section 171 in passing on the benefit of rate reduction to the recipient by way of commensurate reduction in prices, the DGAP clarified that he has conducted a thorough investigation in terms of Section 171 on the basis of documents and information submitted by the Respondent and submitted the report dated 07.02.2020 under Rule 129 (6) of the CGST Rules, 2017, wherein it was concluded that Respondent has realised an additional amount i.e. profiteering to the tune of Rs. 13,99,061/-. c) For the contention raised by the Respondent that the price of movie ticket are market driven and are controlled dynamically on certain....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed 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 constituted under any law for the time being in force, to examine whether ITC 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to ascertain whether the Respondent has misappropriated the benefit of rate reduction which he was required to pass on to the buyers. The DGAP cannot overlook commission of an offence which has occurred under Section 171 (1) of the above Act once it has come to its notice during the course of the investigation and hence the above contentions of the Respondent are not correct. 8. The Respondent further contended that he has abided by the provisions of Section 171 in passing on the benefit of rate reduction to the recipients by way of commensurate reduction in prices. In this regard, the Commission finds that the DGAP has conducted a thorough investigation in terms of Section 171 of the Act on the basis of documents and information submitted by the Respondent and submitted its report dated 07.02.2020 under Rule 129 (6) of the CGST Rules, 2017, wherein it was concluded by the DGAP that Respondent has realised an additional amount i.e. profiteering to the tune of Rs. 13,99,061/- 9. The Respondent also averred that the price of movie tickets are market driven and are controlled dynamically on certain factors i.e. class of ticket, rating of movie, location, movie type, weekdays/weekend....
X X X X Extracts X X X X
X X X X Extracts X X X X
....even though the Respondent was incurring losses he had to reduce base price of tickets from Rs. 127.12/- to Rs. 116.95/- due to peer market pressure on such business. In this regard, the Commission finds that the provision of Section 171 of the CGST Act, 2017 has obligated the Respondent to reduce the prices commensurately and pass on the benefit of reduction in rate of tax to the consumer. 13. The Respondent has prayed that penalty cannot be imposed upon the Respondent as decided in the judgment passed by erstwhile NAA in the matter of M/s. Sattva Developers Pvt. Ltd. Case No 71/2020 dated 05.11.2020 vide which the erstwhile NAA stated that "vide Section 112 of the Finance Act, 2019 specific penalty provisions have been added for violation of provisions of Section 171 (1) which have come in to force w.e.f. 01.01.2020, by inserting Section 171 (3A). Since no penalty provisions were in existence between 01.07.2017 to 31.08.2018, the penalty under Section 171 (3A) cannot be imposed". In this regard, the Commission finds that as Section 112 of the Finance Act, 2019 was not in operation during the period from 01.01.2019 to 05.02.2019 when the Respondent had committed the above violati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mount payable by the Respondent for violation of Section 171 (1), CGST Act, 2017. However, the proceedings to recover any amount from the Respondent cannot be initiated. 15. Therefore, the Commission finds that, as per the details and calculations in Tables 'A' & 'B' above, there was one class of tickets namely 'Platinum' in the Respondent's Multiplexes 'Gold Spot' and 'Leonia'. The Respondent had profiteered by way of increasing the base prices of the tickets (Services) and by not reducing the selling price of the tickets (Services) commensurately, despite reduction in GST rate on "Services by way of admission to exhibition of cinematograph films" where price of ticket was one hundred rupees or above, from 28% to 18% w.e.f. 01.01.2019. It is evident from Table 'B', that the base prices of the admission tickets were indeed increased during the period from 01.01.2019 to 05.02.2019 to maintain the same selling price (or MRP), as a result of which the benefit of reduction in GST rate was not passed on to the recipients. Hence, the Respondent denied the benefit of reduction in rate of tax to his customers. However, w.e.f. 06.02.2019, the Respondent had revised its selling price of tic....