TaxTMI 
TaxTMI 
2026 (6) TMI 741
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....contravention of Section 171 of Central Goods and Services Tax Act, 2017 (for short "the CGST Act, 2017") in so far as it failed to pass on the benefit of reduction in GST rate with respect to supply of "services by way of admission to exhibition of cinematography films", where price of admission ticket is one hundred rupees or less, were reduced from 18% to 12% w.e.f. 01.01.2019 vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018 (for short "the Notification"). 3. It is alleged that the Respondent failed to commensurately reduce the prices of such tickets, thereby denying the benefit of a tax reduction18% to 12% on cinema tickets to the recipients and instead increasing the base price to maintain the same cum-tax selling price. 4. The complaint was examined by the Standing Committee on Anti-Profiteering, and the same was forwarded to the Director General on Anti-Profiteering (hereinafter referred to as "the DGAP") under Rule 129(1) of the CGST Rules, 2017. 5. Based on the aforesaid reference, the DGAP initiated an investigation. A notice was issued to the Respondent calling upon it to show cause whether the benefit of GST rate reduction on Cinema tickets has....
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....4 56.94 3 30 18 25.42 30 12 26.78 25.42 28.47 4 80 18 67.79 80 12 71.42 67.79 75.92 5 40 18 33.89 40 12 35.71 33.89 37.95 6 112 18 94.91 112 12 100.00 94.91 106.29 7 125 18 105.93 125 12 111.60 105.93 118.64 (vi) Based on the aforesaid table, it was noted that the Respondent has increased the base of price of admission ticket of Rs. 100/-from Rs. 84.74 to 89.28, price ticket of Rs. 60/- from Rs. 50.84 to 53.57, price ticket of Rs. 30/- from Rs. 25.42 to 26.78, price ticket of Rs. 80/- from Rs. 67.79 to Rs. 71.42, price ticket of Rs. 40/- from Rs. 33.89 to Rs. 35.71, price ticket of Rs. 112/-from Rs. 94.91 to Rs. 100/- and from Rs. 105.93 to Rs. 111.60 for Rs. 125/- whereas, it should have been revised to Rs. 94.91 for price ticket of Rs. 100/- Rs. 56.94 for price ticket of Rs. 60/- Rs. 28.47 for price ticket of Rs. 30/- Rs. 75.92 for price ticket of Rs. 80/- Rs. 37.95 for price ticket of Rs. 40/ Rs. 106.29 for price ticket of Rs. 112/- and Rs. 118.64 for price ticket of Rs. 125/-. (vii) In view of the above, it was concluded tha....
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....as sold the tickets @ Rs. 118/- in December 2018 and has paid GST @ 18%, which was supposed to be 28% as the price of the tickets was above Rs. 100/-. Similarly, the Respondent has charged Rs. 112/- per Cinema ticket in January, 2019 and some @ Rs. 125/- in August, 2019 and has paid GST @ 12%, which was supposed to be 18%. Therefore, there was a short payment of GST during the pre and post-rate reduction period. (ii) Therefore, it was concluded by the DGAP that the Respondent has increased the base price of the admission ticket when the GST rate was reduced from 28% to 18% w.e.f. 01.01.2019. The said observation is demonstrated in the following table:- Period (01.12.2018 to 31.12.2018) Period (01.01.2019 to 30.06.2019) S.No. Price of Ticket inclusive of Tax (in Rs.) GST Rate (%) Base Price exclusive of Tax (in Rs.) Price of Ticket inclusive of Tax (in Rs.) GST Rate (%) Base Price exclusive of Tax (in Rs.) Commensurate Base Price (in Rs.) Price of Ticket which should have been charged (in Rs.) A B C D=B/128% E F G=E/118% H=D I=H*118% 1 112 28 87.50 112 18 94.92 87.50 103.25 2 125 ....
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.... Rs. 1,18,29,858/-and the outward supplies declared in GSTR-3B returns as Rs. 1,46,63,004/-. The said discrepancy was neither reconciled by the Respondent nor clarified by the jurisdictional Commissionerate, thereby casting doubt upon the accuracy of the profiteering computation and necessitating further investigation. During the re-investigation, the DGAP, upon scrutiny of revised data and submissions, identified a formula error in the earlier computation and corrected the taxable turnover to Rs. 1,38,29,858/-. After exclusion of non-ticket revenues amounting to Rs. 8,49,626/-, the adjusted turnover of Rs. 1,38,13,378/- reconciled substantially with the corrected sales data, leaving only a minor differential of Rs. 16,481/-which was attributed to rounding/misplacement. Accordingly, the discrepancy was deemed reconciled, and the profiteering was conclusively quantified at Rs. 8,99,273/-, thereby modifying and superseding the earlier findings. (vii) The DGAP accepted the Respondent's explanation that a formula error in the January 2019 sales statement had caused a substantial mismatch. After corrections and reconciliation, the turnover figures were largely aligned, and ....
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....ation. The Cinema owners do not issue any invoices. The Respondent is submitting regular returns to the GST authorities. (vii) Cinema theatres in the state of Telangana are governed by the Cinema Regulation Act and Rules. The theatre owners have no independent right to sell the ticket on their own for any enhancement or reduction. (viii) The screening of films in the theatre is on a weekly basis, and the film is changed every week. It commences on Friday and ends on Thursday. Every week, a new film will be released, and new rate of admission will be decided by the distributor with the permission of the licensing Authority. (ix) If a new and high-budget film is scheduled for release, the admission rate will be increased at the will and wish of the producer and distributor. The Government is granting permission for such a film for one or two weeks. Since the Respondent has no stock keeping in the theatre, as every show is a new show, there is no question of profiteering in the cinema business. The Respondent has not committed any irregularity and has not gained any money which attracts profiteering. 13. The DGAP submitted its clarification that:- ....
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.... Counsel vehemently argued that the competent Authority grants permission to high ticket rates in case a particular popular movie is scheduled to be screened. The learned Counsel referred to the permission dated 10.12.2025, which was granted for the movie "AKHANDA-2" releasing on 12.12.2005, the management of all the theatres in the state of Telangana was permitted to enhance the rate of the tickets. For the ready reference, such permission is reproduced herewith:- "In the circumstances reported in the reference 2nd cited, after careful examination, Government hereby accord permission to hike in ticket rates as detailed below for the Movie "AKHANDA-2" releasing on 12-12-2025 to the managements of all the Theatres in the State of Telangana in relaxation of Rules/Guidelines specified in the reference 1st cited. • One Show at 8.00 pm on 11.12.2025 with ticket rate of Rs. 600/-including GST. • Enhanced Rates (for all theatres): Single Screens: Rs. 50/- hike in rate per ticket (including GST) Multiplexes: Rs. 100/- hike in rate per ticket (including GST). Applicable period: from 12-12-2025 to 14-12-2025 (3 days)." 18. Similarly, for the mov....
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....nput 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. Explanation 1. --For the purposes of this sub-section, "request for examination" shall mean the written application filed by an applicant requesting 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. Explanation 2. --For the purposes of this section, the expression "Authority" shall include the "Appellate Tribunal (3) The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed. (3A) Where the Authority referred to in sub-section (2), after holding examination as required under the said sub-section comes to the conclusion that any registered person has profiteered under sub-section (1), such person shall be liable to pay penalty equivalent to ten per cent. of the amount so profiteered: Provided that no penalty ....
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....ence is brought on record by the Respondent which can substantiate their argument. Further, no such evidence regarding the permission granted by the Hon'ble High Court of Telangana in the matter of the Respondent is brought on record to support their argument that they had approached the Hon'ble High Court to increase the rate of the cinema tickets, and an order in favour of the Respondent was passed by the Hon'ble Court. 26. In their written submissions, on the one hand, the Respondent averred that as of today, the theatre owners are entitled to determine the rates of the tickets and the licensing Authority has no power to grant permission to increase the rate, but on the other hand, it is averred that the rate of admission in the theatre is determined by the licensing Authority at the request of the theatre. Furthermore, it is pleaded that the theatre owners have no independent right to sell the ticket on their own for any enhancement or reduction. Every week, a new film will be released, and new rate of admission will be decided by the distributor with the permission of the licensing Authority. It is also averred that when a new and high-budget film is scheduled for release, ....
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....espondent. 31. One important aspect, which is surfaced from the perusal of the record and based upon the arguments forwarded on behalf of the Respondent, is that the Respondent did not challenge the methodology adopted by the DGAP for investigation and the calculation of the profiteering amount for the period 01.01.2019 to 30.06.2019. The Respondent has not disputed the report dated 26.02.2024 and the supplementary report dated 18.06.2024. Consequently, it must be inferred that the facts, figures, calculations, observations, and conclusions drawn by the DGAP stand uncontested. 32. Our view is supported by a decision given by the Hon'ble Division Bench of the Hon'ble Apex Court in Thangam and Another Vs. Navamani Ammal 2024 (4) SCC 247, where no specific denial was made by the opposite party in their written statement against the averment made in plaint filed before the trial court observed that:- "15. In the absence of para-wise reply to the plaint, it becomes a roving inquiry for the Court to find out as to which line in some paragraph in the plaint is either admitted or denied in the written statement filed, as there is no specific admission or denial with referenc....
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....ead Page 20 of 34 together would only mean that the prices of ticket for admittance to Cinema Hall in the state of Telangana are monitored by a Committee which fixes the maximum price, beyond which a cinema owner cannot charge a person for admittance into a theatre to watch a cinematography film. However, the fixing of prices of a particular class, or any locality or particular show is the discretion of the theatre owners. As far as this discretion is concerned, it has not been tampered with or in any way restricted by the local law and Special law as mentioned above, except prescribing a higher limit. Moreover Rs. 3/- additional charge of maintenance cost has to be included in the ticket as its Central law will take precedence and GST has to be calculated on this Rs. 3/- also. So, we do not find any substance in the contention raised by the Learned Counsel for the Respondent." (Emphasis Added) 35. In view of the foregoing observations, discussions and legal pronouncements, we arrived at the conclusion that the Respondent failed to discharge the onus under Section 171 of the CGST Act, 2017, to reduce the price of cinema tickets to pass on the benefit of tax rate reducti....