AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 1136
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.... short the "CGST Act, 2017") insofar as it failed to pass on the benefit of reduction in GST rates on cinema tickets from 28% to 18% w.e.f. 01.01.2019 vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018 (for short "The Notification"). It is alleged that the Respondent failed to commensurately reduce the prices of such tickets, thereby denying the benefit of tax reduction from 28% to 18% on Cinema tickets to the recipients. 2. The Complaint was examined by the Standing Committee on Anti-profiteering and the same was forwarded to the Director General of Anti Profiteering (hereinafter referred to as "the DGAP") under Rule 129(1) of the CGST Rules, 2017. 3. The investigation was set into motion by the DGAP. A notice was issued to the Respondent calling upon to show cause whether the benefit of the GST rate reduction on Cinema tickets has been passed on to the consumers by way of commensurate reduction in the prices in respect of services by way of admission to exhibition of cinematography films supplied by them. 4. Upon completion of the investigation, the DGAP submitted its report under Rule 129(6) of the CGST Rule, 2017 dated 29.01.2020 before National Anti-Pro....
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....he Respondent continued to charge Rs. 277/- and Rs. 185/- for respective categories. The DGAP concluded that the Respondent has profiteered Rs. 44,380/- by charging excess amount during the aforesaid period which has not been deposited by the respondent. 4.7 That the Respondent informed the DGAP that pursuant to the orders passed by the Hon'ble High Court, Telangana, rate of Cinema tickets have been increased from Rs. 185/- to Rs. 200/- and from Rs. 277/- to Rs 300/- inclusive of GST. However, the DGAP opined that the judgment of the Hon'ble High Court, Telangana was about fixing of rates of cinemas by the State Government and not about anti-profiteering provision of CGST Act 2017. The Hon'ble High Court, Telangana did not discuss or given any exemption from profiteering, the department was neither made a party to the proceedings nor was informed by the Respondent. In absence of such information, the DGAP was not aware as to whether the Respondent informed the Hon'ble Court that such reduction was done when the Anti-Profiteering wing of the department visited their premises. 4.8 The DGAP tabulated the profiteered made by the Respondent as under;- 22.02.....
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.... Act, 2017, has been empowered to examine Anti-Profiteering cases w.e.f. 01.10.2024, vide Notification No. 18/2024-Central Tax dated 30.09.2024. 11. A notice was issued to the Respondent calling upon their written submissions against DGAP report dated 29.01.2020. 12. The Respondent submitted its written submissions with the following averments that:- 12.1 Maximum tickets prices in the State of Telangana are determined by State Government under the provision of the Telangana Cinema (Regulation) Act 1955. If any of the Cinema Hall fails to comply with the prices determined by the said authority, then it is liable for prosecution and punishment under Section 9(A) of the said Act. 12.2 The State Government issued a government order 26.04.2013 determining maximum prices for Cinema tickets in cinema halls. 12.3 The said Government order was challenged by the cinema owners by way of Writ Petition No 19046 of 2014. The Hon'ble High Court, Telangana vide order dated 31.10.2016 set aside the aforesaid order. Further, the State Government was directed to constitute a committee to study the issue and to promulgate fair prices. However, in the meantime the cinem....
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....d this fact that the prices of cinema tickets were reduced following the reduction in rate of applicable GST. Therefore, at the time of passing the order dated 08.02.2019, the reduction of prices in tickets was duly considered by the Hon'ble High Court, Telangana. The non-joinder of the DGAP to the said writ petition is not fatal. 12.10 The DGAP did not consider this fact that each movie is a separate product and pricing of each movie can vary depending on the market forces and demand and supply cinema halls owners are at liberty to set prices for each movie. 12.11 The provision under Section 171 of the CGST Act 2017 is mis interpreted by the DGAP. It has been erroneously interpreted that any reduction in price due to the rate of tax be permanently maintained. Any restriction on the same will be contrary to India's economic policy. 12.12 The DGAP in its report has admitted that for the period of 01.01.2019 to 30.06.2019 the recipient of Goods and Services are not identifiable, therefore the case of the Respondent is covered under Rule 133 (3) (c) of the CGST Rules, 2017. The provision for levy on penalty came into force only on 01.04.2020, therefore, no p....
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....to grant permission to sell the cinema tickets at Rs. 200/- and Rs. 300/- for the respective category including tax. The respondent filed the W.P. No. 2482 of 2019 before the Hon'ble High Court, Telangana for directing the competent authority to permit the petitioner to run the theatre according to the rates as mentioned in the application dated 06.02.2019. The said Writ Petition was disposed of vide order dated 08.02.2019 in terms of the order dated 28.06.2018 passed in WP No. 21782 of 2018. 17. The W.P. No. 2718 of 2018 was disposed of by the Hon'ble High Court, Telangana vide order dated 31.10.2016, whereby petitioners- theatre were permitted to run their theatre by collecting their proposed fares. The Respondent increased the prices of cinema tickets pursuant to the permission granted by the Hon'ble High Court, Telangana. Therefore, the provision of Section 171 CGST Act, 2017 cannot be invoked. 18. To buttress his arguments, the Learned Counsel for the Respondent placed reliance on the following Judgements:- (i) Reckitt Benckiser India Private Limited & Ors. V. Union of India & Ors. (MANU/DE/0566/2024) (ii) Commissioner of Income tax (Central)-1 New Delh....
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....were reduced vide notification no. 27/2018-Central tax (Rate) dated 31.12.2018. 26. Section 171 of the CGST Act, 2017 reads thus: "Section 171 Antiprofiteering measure- (1). Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit 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 input tax credits 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. Provided that the Government may by notification, on the recommendations of the Council, specify the date from which the said Authority shall not accept any request for examination as to whether input tax credits 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. ....
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....mediately be passed on to the end-user by way of reduction in the prices commensurate with the reduction in the rate of tax. This, in other words, would mean that, the moment there is a cut in the rate of G.S.T., the price of the commodity or the services rendered has to be reduced automatically to the extent of the reduction in the rate of tax. If the supplier continues to sell the product at the same price particularly when the prices are inclusive of G.S.T., the respondent-Department or the beneficiary is not being benefitted by the Government's decision in lowering the rate of tax." (Emphasis added) 29. The current period of investigation was from 01.01.2019 to 30.06.2019. 30. Following points for determination arise to adjudicate the matter in issue;- (i) Whether the Respondent increased the price of cinema tickets, to Rs. 300/- and Rs. 200/- for respective categories, pursuant to the orders dated 08.02.2019, passed by Hon'ble High Court, Telangana in WP No. 2482 of 2019 by adhering it in letter and spirits? (ii) Whether in view of the given facts and circumstances of the case the Respondent is entitled to any relief in equity? (ii....
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....pondent provided the benefit of the commensurate reduction in rate of tax to the end-consumer from 06.02.2019 to 21.02.2019. 35. The Respondent submitted an application dated 06.02.2019 to the Commissioner of Police & Licensing Authority Hyderabad to grant permission for sale of cinema tickets at the price of Rs. 200/- & Rs. 300/- including tax for respective category with the following averments:- "Due to reduction of GST slabs, now we have to get the rate of admission to protect the interest of the state and the management. Cinema tickets rate includes the tax component and also tax-free maintenance charges.... The Government originally imposed tax components at the rate of 18% for the tickets rates up to Rs 100/- and 28% above Rs 100/-ticket price. From 01.01.2019, the Central Government has reduced the tax percentage from 18% to 12% and 28% to 18% on the tickets rates up to Rs 100/- (12%) and over and above Rs 100/- (18%). Now, the tax authority are insisting to reduce the tax component from the ticket rates, but actually cinema ticket rates are governed by Cinema (Regulation) Act and GST has no right to insist to reduce the ticket rate." 36. The plain r....
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.... reveal that the aforesaid application was submitted merely as formality and solely to lay the ground work for filing the writ petition. 41. Further, the Respondent has pleaded in its written submission that:- "11. That keeping in mind the directions of the Hon'ble High Court of Telangana in its order dated 31.10.2016 in Writ Petition No. 19046/2014, the Respondent applied the Commissioner of Police and licensing Authority, Hyderabad, the licensing Authority constituted under the Cinemas Act for permission to enhance the rate of its tickets back to Rs. 300/- and Rs. 200/- for the platinum and gold classes respectively. However, the Respondent's application was rejected in violation of the direction of the Hon'ble High Court for Telangana. 12. In view of the same the Respondent was constrained to prefer Writ Petition No. 2482 of 2019 before the Hon'ble High Court, Telangana seeking direction from the Hon'ble Court to declare action of the Licensing Authority in not fixing the rate of admission for the Respondent's theatre as per its application dated 06.02.2019 as null, void, and arbitrary." 42. No such order, whereby the application of the Respondent dated 0....
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.... The Hon'ble High Court, Telangana disposed of the W.P. No. 2482/2019 vide order dated 08.09.2018. The order passed by Hon'ble Court is reproduced here:- "ORAL ORDER: Heard learned counsel for petitioner and learned Government Pleader for Home. 2. This writ petition is filed assailing the action of respondents in not allowing the petitioner-theatre to run as per rates mentioned in its application dated 06-02-2019. 3. It is stated by learned counsel for the petitioner that in similar circumstances, this Court disposed of WP. No. 21782 of 2018 by its order dated 28-06-2018. The same is not disputed by learned Assistant Government Pleader for Home. 4. In view of the same, for the reasons alike in the aforesaid order dated 28-06-2018, this writ petition is also disposed of in terms thereof. As a sequel to the disposal of this petition, miscellaneous petitions, if any, pending shall stand closed." 46. The order dated 28.06.2018 passed in WP. No. 21782 of 2018 by the Hon'ble High Court, Telangana is reproduced herein:- "ORDER: This writ petition is filed to declare the action of the respondents in not fixing the rate of admission for ....
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....therein to collect the rates as proposed in their applications, and to maintain separate account with regard to the difference amount in the rates collected by them. Those interim orders passed by this Court earlier in some of the writ petitions shall stand superseded. However, the authorities concerned are directed to take a decision with regard to the difference amounts maintained separately by the petitioners pursuant to the interim orders of this Court; (vii) It is made clear that the petitioners in the writ petitions, in which there are no such earlier interim orders, shall approach the authorities concerned and inform them as to the rates of the tickets, which they intend to collect. (viii) All the petitioners are directed to pay the taxes proportionate to the proposed rates of the tickets. 11. With the above directions, the Writ Petitions are disposed of. No costs. Consequently, all the miscellaneous petitions pending, if any, shall stand closed." 48. The Hon'ble High Court, Telangana vide order dated 31.10.2016 granted liberty to the petitioners-theatres to run their theatres by collecting their proposed fares. A condition precedent was imposed....
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....ling with the point for determination No. (i) and (ii), we conclude that the Respondent completely failed to comply with the mandatory direction of the Hon'ble High Court, Telangana given vide order dated 31.10.2016 passed in W. P. No. 19046 of 2014 in true letter and spirits. Further, on account of non-compliance, contradictory pleadings and submissions as discussed above, the Respondent is not entitled to any equitable relief under the facts and circumstances of the case. 54. Disposal of point for determination No. (iii) (iii) Whether the Respondent has been indulged in profiteering and has contravened the provision u/s 171 of the CGST Act, 2017? 55. The DGAP concluded in its report that in the amount of profiteering as calculated by the Respondent for the period of 01.01.2019 to 05.02.2019 a difference of Rs. 19,479/- was noted. The respondent submitted that it is incorrect. However, the submission of the Respondent is not substantiated with any cogent evidence. Further, for the period of 06.02.2019 to 21.02.2019, the DGAP computed the profiteered amount to Rs. 44,380/- due to the difference occurred even the prices of the tickets were reduced by the Respondent. I....
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....rved as under: "We agree to the argument advanced by the Learned Counsel for the Respondent that the provision of imposition of 18% interest on the profiteered amount shall come into force only to those cases which call after the notification on the amending (Fourth) Rule came into force, i.e. 28.06.2019 and not on 01.04.2020 'as argued by the Learned Counsel. However, in this case, profiteering took place much prior to date of coming into force of such provisions for levying interest in view of the Constitution Bench Judgment of the Supreme Court in the case Vatika Township Pvt. Ltd. (Supra), we are of the opinion that this is not the fit case where Respondent should be directed to pay any interest on the profiteered amount. (C.I.T.(C-I) New Delhi vs. Vatika Township Pvt. Ltd. (2015) SCC 1." 61. In the instant case, since the period of violation is 01.01.2019 to 30.06.2019, the Respondent shall be liable to pay interest, as applicable under Rule 133(3)(c) of the CGST Rules, 2017 from 28.06.2019 till the date the profiteered amount as calculated by the DGAP is deposited. 62. Disposal of point for determination No. (v) (v) Whether the Respondent is liable to ....