AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (10) TMI 112
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....2018-Central Tax (Rate) dated 31.12.2018 by way of commensurate reduction in price, in terms of Section 171 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the "Act") and instead, increased the base price to maintain the same tax-cum selling price of the admission tickets. Accordingly, it was decided to initiate an investigation and collect evidence necessary to determine whether the benefit of GST rate reduction from 18% to 12% w.e.f. 01.01.2019, had been passed on by the Respondent to the recipients by way of commensurate reduction in price, in terms of Section 171 of the Act. b) That the aforesaid application was examined by the Standing Committee on Anti-profiteering, in its meeting held on 15.05.2019, the minutes of which were received in the DGAP on 28.06.2019, whereby it was decided to forward the same to the DGAP to conduct a detailed investigation in the matter. Accordingly, it was 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 "Services by way of admission to exhibition of cinematogra....
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....tion of the details of sales data, letter of the Applicant and replies submitted by the Respondent it was observed that basically there were three categories of tickets Balcony Rs. 50/-, First Class Rs. 50/- and Second Class Rs. 30/- sold by the Respondent during the pre-rate reduction period effective from 01.12.2018 to 31.12.2018 and the changed prices of these three categories of tickets were Balcony Rs. 125/- 110/-, 90/- First Class Rs. 50/-, 70/- and Second Class Rs. 40/-, 30/- post rate reduction w.e.f. 01.01.2019. j) That from the sales data made available, it appeared that the Respondent increased the base price of the admission tickets when the GST rate was reduced from 18% to 12% and 28% to 18% w.e.f. 01.01.2019 in the manner illustrated in table-'A' below. From the table-'A', it was observed that the prices of three categories of tickets were changed on different dates randomly. Table-A 01.12.2018 to 31.12.2018 01.01.2019 to 30.06.2019 S.No. Category Price of Ticket inclusive of tax GST Rate (%) Base Price Price of Ticket inclusive of tax GST Rate (%) Commensurate Price Profiteering per ticket (in Rs.) A B C D E=[C/118%] F G H=E*112%....
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....plain 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. 4. The Respondent vide letter dated 04.02.2020 has made his written submissions on the DGAP's report dated 27.12.2019. The same has been summarised as below:- i. The rate of admission of tickets of a cinema theatre in the State of Telangana will be fixed by the Licencing Authority and the theatre owner has no independent right to reduce or increase the rates without permission. The Respondent has also submitted that he had obtained permission for enhancement of rates and screening of films in the second week of January 2019. The Respondent submitted that no benefit had accrued to the theatre by virtue of change of percentage of tax and that the government was getting the revenue directly from the theatre and that he had not collected tax separately form the audience. ii. When GST was introduced or the tax on GST was reduced, the officers concerned in the State of Telangana had not intimated the Respondent by issuing any notice except the notice received from the DGAP. iii. There was no stocking of goods at an....
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....vant Notifications/Circulars of the GST Act and the Notifications were uploaded on the website of CBIC. iii. There was no question of stocking of goods as the investigation carried out by the DGAP pertained to the services offered by the Respondent. iv. The Respondent in his submissions agreed that prices could not be increased in the transitory period of GST rate reduction. However, the Respondent also stated in the same submission that he had increased the prices in the second week of January, 2019 i.e. merely a week after reduction of rate of tax. v. The Respondent's submissions appeared to be very vague about who actually determine the prices, whether it was the Licensing Authority or the film owners/producers/ distributors. 6. The Respondent filed Writ Petition No. 1167/2020 (on 19.01.2020) before Hon'ble Telangana High Court seeking stay on proceedings pursuant to NAA's Notice dated 01.01.2020. The Hon'ble Court granted interim stay of 'four weeks' vide order dated 04.02.2020. Further, Hon'ble Court vide its common order dated 12.12.2023 vacated the stay and disposed of the Writ Petition No. 1167/2020 and held that "the authorities concerned thereafter in turn is expec....
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....the profiteering amount as per the submissions of the Respondent dated 06.06.2024 and submit its report under Rule 133 (2A) of the CGST Rules, 2017. 10. The DGAP vide letters dated 21.08.2024 and 05.09.2024 has filed his supplementary reports under Rule 133 (2A) of the Rules on the submissions of the Respondent dated 06.06.2024, wherein it is stated that:- i. The DGAP on directions of the Commission considered the submissions of the Respondent given in column 1 to 5 of the table-'C'. Whereas, the contention of the Respondent at column 6 for "Maharshi" movie had not been taken for consideration as movie ticket price of Maharshi for 2nd class was fixed at Rs. 30/during the period of 01.01.2019 to 30.06.2019. The calculation is given in the table 'D' below:- Table 'D' No Movie Period Category Enhanced Ticket price No. of tickets sold Profiteering per ticket as per DGAP report Amount 1 F2 10.01.2019 to 24.01.2019 Balcony 110 18934 24.58 4,65,398 2 Maharshi 09.05.2019 to 22.05.2019 Balcony 125 10683 35 3, 73,905 3 F2 10.01.2019 to 24.01.2019 1st class 70 24,660 22.54 5,55,836 4 Maharshi 09.05.2019 to 22.05.2019 1st class 70 21,234 22.54 4,78,6....
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..... Price includes both, the base price and the tax paid on it. If any supplier has charged more tax from the recipients, the aforesaid statutory provisions would require that such amount be refunded to the eligible recipients or alternatively deposited in the Consumer Welfare Fund, regardless of whether such extra tax collected from the recipient has been deposited in the Government account or not. Besides, any extra tax returned to the recipients by the supplier by issuing credit note can be declared in return filed by such supplier and his tax liability shall stand adjusted to that extent in terms of Section 34 of the CGST Act, 2017. Therefore, the option was always open to the Respondent to return the tax amount to the recipients by issuing credit notes and adjusting his tax liability for the subsequent period to that extent. 11. This Commission has carefully gone through the Report dated 27.12.2019 furnished by the DGAP as well as all the other material placed on record and finds that the Central and the State Governments had reduced the rates of GST on "Services by way of admission to exhibition of cinematograph films where price of admission ticket is above one hundred rupees....
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.... re-calculated from Rs. 24,25,630/-to Rs. 4,65,549/- by the DGAP and the same is upheld by this Commission. 14. The Respondent in his submission also averred that when GST was introduced or the GST rate was reduced, the officers concerned in the State of Telangana have not intimated by issuing any notice except the notice received from the DGAP. In this regard, the Commission finds that the relevant Notifications/Circulars of the GST Act are uploaded on the website of CBIC in public domain whenever the tax rates are changed by the Central Government on recommendation of the GST Council. Therefore, the above contention of the Respondent is not tenable. 15. The Respondent vide his submissions also contented that there was no stocking of goods at an older tax rate and therefore possibility of not passing on the benefit of ITC did not arise. In this regard, the Commission finds that the services offered by the Respondent are "by way of admission to exhibition of cinematography films" and therefore the question of stocking of goods does not arise. As per Section 171 benefit of reduction of GST rate is required to be passed on to the ticket buyers which was not passed on during the per....
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....can be prescribed to determine the amount of benefit which a supplier is required to pass on to a recipient or the profiteered amount. Further, Section 171 of the Act mentions "any supply" i.e. each taxable supply made to each recipient thereby clearly indicating that netting off of the benefit of tax reduction by any supplier is not allowed. Each customer is entitled to receive the benefit of tax reduction on each product purchased by him. 18. The Respondent also averred that the term 'profiteering' is not defined in the CGST Act or rules made thereunder. In this regard, the Commission finds that 'Profiteering' has been defined in the CGST Act as an Explanation to Section 171 which was inserted in the Statute vide Section 112 of the Finance Act, 2019 (No. 2) which came into force w.e.f. 01.01.2020. Further, the Respondent has cited the definitions of 'Profiteering' from the 'Chambers Dictionary', 'Collins Cobuild English Dictionary' and 'Oxford English Reference Dictionary' in his support. However, it would be worthwhile to mention here that Section 171 of the CGST Act is very much clear, according to which the benefit commensurate to the amount of reduction in rate of tax or be....
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.... notified Rules 126, 127 and 133 which prescribe the functions, duties and power of the Authority. All Rules of Anti-profiteering have been framed under Section 164 of the said Act which has the sanction of the Parliament and the State Legislatures. It also shows that the delegated power to the Authority given under section 171 (3) of the said Act has been duly exercised by the Central Government by formulating the Rules, on the recommendation of the GST Council. Therefore, the power to determine its own methodology under Rule 126 is just and enables the Authority to clarify and effectuate the powers given and functions to be discharged by the Authority and this enabling provision has been granted to the Authority after careful consideration at several stages and levels and therefore there is no ground for claiming that the present delegation is excessive or arbitrary. Further, the Hon'ble High Court of Delhi vide its judgment dated 29.01.2024 has upheld the constitutional validity of Section 171 of Act, 2017 as well as Rules, 122, 124, 126, 127, 129, 133 & 134 of the Rules, 2017. 21. This Commission, based on the facts discussed above, finds that the Respondent has resorted to p....