TaxTMI 
TaxTMI 
2024 (7) TMI 796
X X X X Extracts X X X X
X X X X Extracts X X X X
....ay of admission to exhibition of cinematograph 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 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 ind....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bsp; 5. Total taxable value (after Discount, if any) E 96,10,049/- 21,58,807/- 6. Average base price (without GST) F=(E/D) 117.18/- 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 red....
X X X X Extracts X X X X
X X X X Extracts X X X X
....28% to 18% w.e.f. 01.01.2019. Hence, the Respondent denied the benefit of reduction in rate of tax to his customers. However, w.e.f. 06.02.2019, the Respondent has revised its selling price from Rs. 150/- to Rs. 138/- which commensurates to passing of the benefit of reduction in rate of tax from 28% to 18%. h) The DGAP has concluded that the allegation of profiteering by way of increasing the base prices of the tickets (Services) and by way of not reducing the selling 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 issu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he instant case therefore as the inward price increased the outward supply price also increased during the instant period. j) 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. 3. A supplementary Report was sought from the DGAP on the above submissions of the Respondent under Rule 133 (2A) of the Rules. The DGAP filed his clarifications vide letter dated 24.05.2022, wherein, it was stated that:- a) For 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e reply emails dated 02.04.2024, 06.06.2024 and 25.06.2024 stated that the National Company Law Tribunal (NCLT) Mumbai vide its order dated 14.07.2023 has ordered commencement of Corporate Insolvency Resolution Process (CIRP) against the Respondent by appointing Interim Resolution Professional (IRP) and also stated that "in view of suspended powers of the Board of Directors of the Company, you are requested to approach the Resolution Professional (Sh. Ashok Kumar Gulla) regarding any claim against the Company". 5. 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ther a registered person has passed on the benefit of tax reduction or ITC to the recipients or not and hence during the course of investigation if it comes to the notice that the benefit has not been passed on to any recipient, including those who had not filed complaint against the registered person, the DGAP is legally bound to investigate the same and bring the facts before this Commission for determination of those benefits to the eligible recipients. It is also clear that the above benefit has accrued to the Respondent due to the concession given by the Government out of the public exchequer, therefore, the DGAP is bound to investigate 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 comme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s from Rs. 117.19/- to Rs. 127.12/-. In this regard, the Commission finds that the contention of the Respondent that they are a loss making company cannot form the basis for not passing on the benefit of subsequent GST rate reduction w.e.f. 01.01.2019. Further, the Respondent in his submissions himself has admitted that he has increased the base price of his movie tickets from Rs. 117.19/- to Rs. 127.12/- and has not passed the benefit of rate reduction to the ticket buyers and thus contravened the provisions of Section 171 of the Act. Therefore, the contention of the Respondent is not tenable. 12. The Respondent also contended that w.e.f. 05.02.2019, 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 m....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of tax payable by the company which is being wound up" Further, the Hon'ble Supreme Court in the case of Sundaresh Bhatt, Liquidator of ABG Shipyard vs. Central Board of Indirect Taxes (2023) 1 SCC 472, inter alia has held that:- "48. From the above discussion, we hold that the respondent could only initiate assessment or reassessment of the duties and other levies. They cannot transgress such boundary and proceed to initiate recovery in violation of Sections 14 or 33 (5) of the IBC." In view of the aforesaid settled position of law and the moratorium under Section 14 of IBC, 2016 imposed by the NCLT, the Commission finds that there is no bar on initiating proceedings or proceeding to assess the amount 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)....