TaxTMI 
TaxTMI 
2024 (10) TMI 112
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....% w.e.f. 01.01.2019, vide Notification No. 27/2018-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 "Serv....
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....se price of the ticket of Rs. 100/-. However, he had increased the prices of the other tickets. i) That on examination 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 (%) Ba....
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....ed findings, it appeared that Section 171 (1) of the Act has been contravened by the Respondent. 3. The above report of the DGAP dated 14.02.2020 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 01.01.2020 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. 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 vir....
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....the prices at which the goods and services ought to have been supplied. Section 171 only requires the supplier to pass on the benefit of reduction in rate of tax or the benefit of Input Tax Credit to the recipients by reducing the price commensurately and does not require him to seek any approval to conduct trade or fix the prices of the products supplied by him. ii. GST applicable on the products or service supplied was self-assessed by the supplier based on the relevant 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 Authori....
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....as that the amount has been collected and retained by the Respondent and not deposited with the Government. 8. The Commission granted opportunities of hearing to the Respondent on 28.03.2024, 02.05.2024, 06.06.2024 and 08.08.2024. Hearing in the matter was held on 08.08.2024. Sh. Sanjay Kumar Chatter, Assistant Commissioner and Sh. Diwakar Sharma, Inspector appeared on behalf of the DGAP. Sh. Venkata Prashad P., Advocate appeared on behalf of the Respondent to advance arguments. The Respondent re-iterated his submissions dated 06.06.2024. 9. The Commission vide its O.Ms dated 09.08.2024 and 28.08.2024 directed the DGAP to re-calculate 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 colum....
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....spect of one cinema hall would not be similar to another cinema hall. Therefore, no set parameters can be fixed for determining methodology to compute the benefit of rate revision which would be required to be passed on to the buyers. The CGST Rules have provided an elaborate mechanism for determination of the benefits and hence there is sufficient machinery to implement the antiprofiteering provisions. iii. The contention of the Respondent that alleged profiteering amount has been incorrectly inflated by adding GST is frivolous and not acceptable. Section 171 of the CGST Act, 2017 and Chapter XV of the CGST Rules, 2017, require the supplier of goods or services to pass on the benefit of the tax rate reduction to the recipients by way of commensurate reduction in price. 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, an....
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....ission for enhancement of rates and screening of films in the second week of January 2019. In this regard, the Commission finds that the Respondent sought specific permission from Licensing Authority to increase the ticket price for the period 10.01.2019 to 24.01.2019 and again for the period 09.05.2019 to 22.05.2019 and collected the enhanced ticket price and paid applicable GST accordingly. In this regard, it is to mention that the contention of the Respondent at column 6 for "Maharshi" movie had not been taken into consideration as movie ticket price of Maharshi for 2nd class was fixed at Rs. 30/- during the period from 01.01.2019 to 30.06.2019. However, on the basis of the submissions of the Respondent made in column 1 to 5 of the above table-'C', the Profiteering amount has been 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 ....
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....ng of goods is a complex exercise involving numerous factors. The Respondent stated that the law uses the word 'any' before supply of goods and the same has been used to denote singular as against the plural for price. In this regard, the Commission finds that the word "commensurate" mentioned in Section 171 of the Act gives the extent of benefit to be passed on by way of reduction in the prices which has to be computed in respect of each product based on the tax reduction or availability of additional ITC as well as the existing base price (price without GST) of the product. The computation of commensurate reduction in prices is purely a mathematical exercise which is based upon the above parameters and hence it would vary from product to product and hence no fixed mathematical methodology 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 o....
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....Further, the reliance on the judgement of R.S. Joshi, Sales Tax Officer, Gujarat v. Ajit Mills Limited reported at (1977) 4 SCC 98 by the Respondent is completely misplaced as the facts and circumstances of the said case are different and distinct from facts of the case at hand. 20. The Respondent also averred that Rules 126, 127 and 133 of the CGST Rules suffer from the vice of excessive delegation. In this regard, the Commission finds that the legislature had delegated the task of prescribing the powers and functions of the Authority to the Central Government as per Section 171 of CGST Act, 2017 read with Section 2 (87) of the Act, on the recommendation of the GST Council. The Central Government, on the recommendation of the GST Council under 101th Amendment of the constitution has formulated and 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....