TaxTMI 
TaxTMI 
2025 (9) TMI 531
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....it per day (Rs.) Rate of GST Upto 30.09.2019 From 01.10.2019 1000 and less Nil Nil 1001 to Rs. 2500 12% 12% 2501 to Rs. 7500 18% 7501 and more 28% 18% 2. The CGST Act came into force on 01.07.2017 and as per the Provisions of the Act and Rules framed there under, the GST Rates up to 13.09.2019 for hotel rooms priced at 1000 or less was nil. For rooms priced from Rs. 1001 to Rs. 2500 and Rs. 2500 to Rs. 7500 the GST rates were of 12 % and 18 % respectively. Moreover, any hotel room priced Rs. 7501 or more per day upto 13.09.2019 was charged with GST at the Rate of 28 %. However, from by virtue of Notification 20/2019-Central Tax dated 13.09.2019 on the recommendation of the GST Council, the Rate of GST was reduced as far as rooms price between Rs. 1001 to Rs. 7500 per day, are concerned @ 12% of the value and any room priced at the rate higher then Rs. 7500 i.e. Rs. 7501 or more, with the GST @ 18% of the value. On 05.02.2020, an initial complaint was filed against M/s Babylon Inn Pvt. Ltd. by Principal Commissioner, Raipur. On 19.06.2020 in its 30th meeting, the standing committee on Anti-Profiteering took up the matter and decided to fo....
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....us rooms plan were as mentioned below: a) European Plan: Abbreviated as EP in hotel listings, indicates that the quoted rate was strictly for lodging and did not include any meals. Any food provided by the hotel was billed separately. b) Continental Plan: Abbreviated as CP in hotel listings, means that breakfast is included along with the room. c) Modified American Plan: Abbreviated as MAP in hotel listings, included room, breakfast, and supper or dinner, depending on which side of the pond you were on. d) American Plan: Abbreviated as AP in hotel listings, means that the nightly rate quoted by a hotel or resort includes three meals a day, i.e., breakfast, lunch, and dinner. Meals at the buffet and main dining room were included in the price. iv) As per the details of outward taxable supplies during the period 01.10.2019 to 30.06.2020 submitted by the Respondent, the DGAP had noticed that each category of room has a different PAX / Plan associated with it, viz. American Plan (AP), European Plan (EP), Continental Plan (CP), and Modified American Plan (MAP).The Room Sale Price per night varied across the different plans and also varied for....
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....oms 3/EP Executive Room (Triple Occupancy) European Plan Executive Rooms 3/MAP Executive Room (Triple Occupancy) Modified American Plan Executive Rooms 4/CP Executive Room (Quad Occupancy) Continental Plan Presidential Suites 1/CP Presidential Suites (Single Occupancy) with Continental Plan Presidential Suites 1/EP Presidential Suites (Single Occupancy) with European Plan Presidential Suites 2/CP Presidential Suites (Double Occupancy) Continental Plan Presidential Suites 3/CP Presidential Suites (Triple Occupancy) with Continental Plan Royal Rooms 1/AP Royal Room (Single Occupancy) with American Plan Royal Rooms 1/CP Royal Room (Single Occupancy) with Continental Plan Royal Rooms 1/EP Royal Room (Single Occupancy) with European Plan Royal Rooms 1/MAP Royal Room (Single Occupancy) with Modified American Plan Royal Rooms 2/CP Royal Rooms (Double Occupancy) Continental Plan Royal Rooms 2/EP Royal Rooms (Double Occupancy) European Plan Royal Rooms 3/CP Royal Room (Triple Occupancy) with Continental Plan Royal Suites 1/CP Royal Suites (Single Occupancy) with Continental Plan Royal Suites 1/EP Ro....
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.... the Table-'C' below:- Table-'C' (Amount in Rupees) Sl.No. Description Factors Pre-GST (01.07.2019 to 30.09.2019) Post-GST (01.10.2019 to 30.06.2020) 1. Room Description A Deluxe Room Single Occupancy (American Plan) 2. Total Amount received (Excluding Taxes) B 97,024 3. Total No. of Nights C 23 4. Average Base Price D 4,218 5 Rate of GST E 18% 12% 6 Commensurate Selling price (post GST period) (excluding GST) F 4,218 7 Invoice No. G 9068 8 Invoice Date H 19.12.2019 9 No. of nights (as per invoice Indicated in G) I 1 10 Amount received (excluding GST) J 4,500 11 Actual Selling price per unit (post rate reduction) (excluding GST) K=J/I 4,500 12 Excess amount charged or Profiteering L=K-F 282 13 Total Profiteering (excluding GST) M=L*I 282 14 Total Profiteering (including GST) N=M*(1+E%) 316 The DGAP has submitted on the basis of Table "C" above, that the average ba....
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....he recipients were charged lower invoice amount (i.e. Room rent plus GST). It was not necessary to decrease the base price of the room for passing on the commensurate benefit of the reduction in rate of GST, when the price was not inclusive of GST, and the same was charged separately in the Invoice. This is an unambiguous admission by the Respondent that the base price has not been reduced. ii) The methodology adopted by the DGAP for pointing out an increase in prices was faulty and not tenable. Various factors affecting the prices of accommodation services had been ignored by the DGAP. iii) The Respondent generally refuted various allegations levelled in the impugned report and impugned notice. iv) Hotel room prices were ever fluctuating depending upon various factors and hence, the hotel room price for a particular period could not be ascertained, more so, for a long period of 3 months, i.e. 01.07.2019 to 30.09.2029 (prior to tax rate reduction) as done by the DGAP in the impugned report. Precisely for this reason, the average price could not be considered as it could not represent the actual price of a period. v) Comparison of average price wi....
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....benefit at the cost of the consumers. Such benefits must go to the consumers. Accordingly, the DGAP had worked out the profiteered amount of Rs. 31,28,631/-. iii) On the contention of Respondent vehemently disagreement with the various allegations leveled in the impugned report and impugned notice the DGAP replied that the DGAP had done a thorough investigation based on the documents and information submitted by the Respondent, and its report clearly mentioned the procedure followed by the DGAP and the basis of computation made by the DGAP for determining the amount of profiteering. iv) On the contention raised by the Respondent that the hotel room prices fluctuate too frequently and too wide the DGAP had clarified that the average base price in the pre-rate reduction period has been calculated separately for each channel of supply of service on the basis of data supplied by the Petitioner. This base price was exclusive of taxes like GST, Central Excise duty, Service Tax etc. Normally, this average base price was calculated over a period of one month prior to the rate reduction. In case the base price of some products was not available, then the DGAP go to previou....
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....at during the investigation the DGAP had computed profiteering amount of Rs. 31,28,631/- in respect of 1890 invoices where the price was more than the commensurate price. Therefore, it was clear that such cases existed where the price was more than the commensurate price, and only these cases were considered for the calculation of profiteering. viii) On the contentions raised by the Respondent, the hotel room price was transaction value, which varies from transaction to transaction; and, hence, it could not be alleged that the base price had been deliberately increased to nullify the effect of the reduction in GST rate the DGAP had replied that it was already replied in the preceding paras that the profiteering was calculated based on the transaction value and the benefit of reduction of tax had to be calculated in the post rate reduction period on every supply that is transaction wise and benefit had to be passed to each recipient individually. ix) On the contentions raised by the Respondent that Anti - Profiteering provisions did not prescribe any time limit for examining profiteering, the DGAP had replied that the period of investigation was uniformly taken fro....
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....market dynamics and as such that there cannot be a fixed formulae or algorithm for defining or fixing prices throughout the year. 15. Moreover, it is submitted that the prices of hotel rooms depends on various factors like seasonal concessions, tourist seasons, festive seasons etc. However, we consider this aspect and take note of the fact that the period that covers the period of investigation by the DGAP is between 01.10.2019 to 13.06.2020. We also take notice of the judicial fact that from February 2020, most of the hospitality industry suffered because of the Covid-19 pandemic. During this period, there was shut down of all commercial activities which only prompts a conclusion that even if market dynamics are taken into consideration, the pricing of the hospitality industry cannot be taken to be rising for the period falling after February 2020. 16. Moreover, we have given enough opportunities to Mr. Verma, the Learned Tax Professionals appearing for the Respondent to place before us, if there was any type of conscious activity on the part of the management of the Respondent to establish before us that they have made a conscious decision depending upon various factors and....
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....t of corona virus. Such additional costs were included in the room rent. They incurred additional cost in the shape of purchasing equipments, sanitary products and human resources to carry out further cleanliness to combat the spread of the corona virus. However, the Respondent has not taken such a plea in his initial written submissions. Mr. Verma would submit that after the last date hearing i.e. on 12.08.2025, an additional written argument was submitted as permitted by the Tribunal. In such submissions Mr. Verma would further submit, a specific plea has been raised by the Respondent through its professional regarding increase the price during the covid period because extra requirement of cleanliness and, therefore, prices were increased. We have carefully gone through the additional written submissions sent to us through speed post, which is a part of the record. We find that and there is no such plea or submission made therein. It appears to us that the submissions made by the Respondent on this count for rising in prices because of the covid pandemic and to combat it, is rather a castle of air than a real substance. Moreover, it is a clear after thought and not supported by a....