TaxTMI 
TaxTMI 
2026 (8) TMI 1051
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...."the Respondent") with respect to supply of "Services by way of admission to exhibition of cinematography films". 2. The Complainant alleged that the Respondent did not pass on the benefit of reduction in the GST rate on the "Services by way of admission exhibition of cinematograph films where price of admission ticket is one hundred rupees or less", from 18% to 12% w.e.f. 01.01.2019, vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018 (hereinafter referred to as "the Notification") and instead, increased the base price to maintain the same cum-tax selling price. 3. The said complaint was examined by the Standing Committee on Anti-Profiteering and the same was forwarded to the Directorate General of Anti-Profiteering (hereinafter referred to as "the DGAP") to initiate investigation and collect necessary evidence under Rule 129(1) of the CGST Rules, 2017. 4. Upon completion of the investigation, the DGAP submitted its report under Rule 129(6) of the CGST Rules, 2017 dated 21.01.2020 to the National Anti-Profiteering Authority (NAA), the erstwhile authority competent to adjudicate matters relating to anti-profiteering. 5. The observations and findings drawn ....
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....1,07,369 Grand Total (2+4+6) 14,26,344 5.4. Based on the aforesaid table, the DGAP observed that the Respondent had increased the base price of the admission tickets and had consequently not passed on the benefit of reduction in GST rate from 18% to 12% by way of commensurate reduction in the prices charged. The profiteering was quantified at Rs. 9,48,026/- in respect of Balcony tickets Rs. 3,70,939/- in respect of Dress Circle tickets and Rs. 1,07,369/- in respect of First Class tickets, aggregating to Rs. 14,26,344/-. 5.5. In view of the above, the DGAP concluded that the benefit of reduction in GST rate from 18% to 12% w.e.f. 01.01.2019 had not been passed on to the recipients and that the Respondent had contravened the provisions of Section 171 of the CGST Act, 2017. The total amount of profiteering for the period from 01.01.2019 to 31.08.2019 was accordingly determined as Rs. 14,26,344/-(Rupees Fourteen Lakh Twenty-Six Thousand Three Hundred and Forty-Four only). The DGAP further observed that the Respondent had supplied the services only in the State of Telangana and that the recipients were not identifiable. 6. The Princip....
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.... rates, which they intend to collect in respect of all classes till adjudication of the issues in question by the respective committees. vi) In some of the writ petitions, this Court issued interim orders permitting the petitioners 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." 8.2. The Respondent submitted that, while disposing of the said writ petitions, the Hon'ble High Court permitted the theatre o....
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....ioner shall approach the authorities concerned and inform them as to the rates of the tickets, which it intends to collect. The petitioner is directed to pay the taxes proportionate to the proposed rates of the tickets." 8.6. The Respondent also relied upon the order dated 02.08.2019 passed by the Hon'ble High Court of Telangana in W.P. No. 18232 of 2019, submitting that similar directions were issued permitting the theatre owners to run their theatres by collecting their proposed fares, subject to informing the concerned authorities and paying taxes proportionate to the proposed rates. 8.7. The Respondent further submitted that the Central Government, vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018, reduced the GST rate on movie tickets from 18% to 12% w.e.f. 01.01.2019. It was contended that, pursuant to the aforesaid orders of the Hon'ble High Court, the Respondent had increased the base price of the tickets and intimated the same to the concerned authorities from time to time. It was further submitted that, after the reduction of GST rate from 18% to 12%, the ticket price remained unchanged from 01.01.2019, which position was also in....
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.... 12% w.e.f. 01.01.2019 on movie tickets pursuant to Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018. Accordingly, Notice of Initiation dated 14.08.2019 was issued and, on the basis of the information and documents furnished by the Respondent, investigation was conducted for the period 01.01.2019 to 31.08.2019, culminating in the Investigation Report dated 21.01.2020. 9.3. The DGAP further submitted that the Respondent itself had admitted that, even after reduction of the GST rate from 18% to 12%, the ticket prices remained unchanged from 01.01.2019, which necessarily implied that the base price of the tickets had been increased. The DGAP stated that its Investigation Report had also concluded that the base prices of the tickets were in fact increased by the Respondent and that the total profiteering arising on account of such increase during the period from 01.01.2019 to 31.08.2019 amounted to Rs. 14,26,344/-. 9.4. The DGAP submitted that, although the licensing authority may fix the maximum permissible rates of tickets, the obligation under Section 171 continued to rest upon the supplier, i.e. the Respondent, to reduce the ticket prices so as to pass....
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.... 9.8. The DGAP further submitted, relying upon the aforesaid judicial pronouncements, that if the supplier sought to justify a variation in price on account of factors other than the reduction in tax rate, the same was required to be established on a cogent basis and could not be used merely as a device to circumvent the statutory implications of Section 171 or to reduce the benefit required to be passed on to the consumers. 10. Hearings in the matter were held on 15.10.2025, 03.12.2025, 03.02.2026, 09.03.2026, 15.04.2026, 13.05.2026, 20.05.2026, 16.07.2026 and 06.08.2026. Shri Ajay Tehlan, learned AAD, appeared on behalf of the DGAP. Shri Hitendra Nath Rath, Advocate-on-Record, and Ms. Lakshmi, learned Advocate, appeared on behalf of the Respondent. Issues for determination 11. In view of the submissions made by the Respondent, the DGAP's report and clarification, and the material available on record, the following issues arise for determination: (i) Whether the Respondent was liable to pass on the benefit of reduction in the GST rate from 18% to 12% w.e.f. 01.01.2019 in respect of the admission tickets, in terms of Section 171(1) of the CGST Act, 2017, by way....
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....rom the aforesaid reduction in the GST rate was duly passed on to the recipients by way of a corresponding and commensurate reduction in the prices charged for such admission tickets. 16. The DGAP, upon examination of the price and sales data furnished by the Respondent, adopted the methodology of first determining the pre-rate-reduction base price of the admission tickets by excluding GST applicable at 18%, and thereafter comparing the same with the base price reflected in the prices charged by the Respondent after the GST rate was reduced to 12%. On this basis, the DGAP determined the commensurate selling prices that ought to have been charged w.e.f. 01.01.2019 by retaining the pre-rate-reduction base prices and applying GST at the reduced rate of 12%. 17. The computation undertaken by the DGAP reveals that, notwithstanding the reduction in the rate of GST, the Respondent had increased the base prices of the admission tickets. In respect of the Rs. 100/- ticket, the base price increased from Rs. 84.75/- to Rs. 89.29/-; in respect of the Rs. 60/- ticket, from Rs. 50.85/- to Rs. 53.57/-; and in respect of the Rs. 30/- ticket, from Rs. 25.42/- to Rs. 26.78/-. Consequently, the....
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....hich 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." 20. The aforesaid observation is squarely applicable to the facts of the present case. While the regulatory framework governing cinema ticket prices may prescribe or regulate the maximum permissible price of admission tickets, such regulation cannot be construed as dispensing with or overriding the statutory obligation cast upon the supplier under Section 171(1) of the CGST Act, 2017. The obligation to pass on the benefit arising from a reduction in the rate of tax operates independently and re....
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....19 along with relevant submissions submitted to the licencing authority i.e. Commissioner of Police, which ought to include replies received from the Commissioner of Police regarding tickets rates and sample tickets for the period of 01.01.2019 to 31.07.2019, with an advance copy to the DGAP." 26. The Respondent has also placed on record copies of certain representations addressed to the Commissioner of Police, Cyberabad Commissionerate, Hyderabad, seeking permission for enhancement of the rates of admission tickets for specified periods. One of the first such representation is dated 6.10.2018, wherein the Respondent sought permission for enhancement of the ticket rates for the period from 11.10.2018 to 25.10.2018, at the following rates: Due to heavy competition in the market new high budget films release time we want to increase the rate of admission from 11.10.2018 to 25.10.2018 Class No. Of seats Existing rates Proposed rates Balcony 401 100 100+ 18(GST) = 118 Dress circle 227 60 80.00 27. From the aforesaid documents, it is evident that the representations relied upon by the Respondent relate to specific and limited periods an....
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....ax. 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. A reading of Sections 171 and 172 of the G.S.T. Act does not show any exception carved out in the event non-reduction in the price of the tickets, nor is the authority empowered to relax the conditions so enumerated under Section 171(1). This, in other words, also mean that the provision of Sections 171 (1) has to be strictly adhered to. In the aforesaid context, when we look at the impugned order in the aforementioned admitted factual backdrop, we do not find any illegality so committed by the respondent-Authority which has passed the impugned order in Case No. 22/2020, dated 07.10.2020. Therefore, we do not find any merit in the writ petition and the same deserves to be and is accordingly dismissed. No costs." (Emphasis added) 29. The aforesaid observations of the Hon'ble High Court are directly relevant to the contention raised by the Respondent in the present case. The Hon'ble High Court has categorically held that Sectio....
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.... cum-tax prices, and the commensurate selling prices after the reduction in the rate of GST were determined by retaining the pre-rate-reduction base prices and applying GST @ 12%. 35. The DGAP ultimately quantified the total profiteering attributable to the Respondent at Rs. 14,26,344/- (Rupees Fourteen Lakh Twenty-Six Thousand Three Hundred and Forty-Four only) for the period from 01.01.2019 to 31.08.2019. The category-wise profiteering was determined at Rs. 9,48,026/- in respect of Balcony tickets Rs. 3,70,939/- in respect of Dress Circle tickets and Rs. 1,07,369/-in respect of First-Class tickets. 36. The DGAP further observed that, on the basis of the details of outward supplies furnished by the Respondent, the relevant services had been supplied in the State of Telangana only. It was also observed that the recipients of the services were not identifiable, as no details of the individual consumers had been furnished. 37. We have examined the aforesaid computation in light of the findings recorded on Issue Nos. 1 and 2. The methodology adopted by the DGAP proceeds on the basis of the pre-rate-reduction base price and determines the corresponding commensurate selling pri....