TMI Blog2022 (5) TMI 842X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Rule 133 (3) (a) of the CGST Rules, 2017, the Respondent is therefore directed to reduce the prices of his tickets, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients. The Respondent is also directed to deposit the profiteered amount of Rs. 42,60,104/- along with the interest to be calculated @ 18% from the date when the above amount was collected by him from the recipients till the above amount is deposited. Since the recipients, in this case, are not identifiable, the Respondent is directed to deposit the amount of profiteering in two equal parts, of Rs. 21,30,052/- in the Central Consumer Welfare Fund (CWF) and Rs. 21,30,052/- in the Telangana State Consumer Welfare Fund as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017, along with interest @18%. The above amount shall be deposited within a period of 3 months from the date of receipt of this Order failing which the same shall be recovered by the jurisdictional Commissioner CGST/SGST as per the provisions of the CGST/SGST Act, 2017. Penalty - HELD THAT:- Respondent has denied the benefit of rate reduction to his customers/recipients in contraventi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DGAP on 06.05.2020, 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 Services by way of admission to exhibition of cinematography films supplied by the Respondent. The Standing Committee forwarded the following submission/documents of the Applicant No. 1. (i) Online complaint filed by the Applicant No. 1. (ii) Letter dated 06.12.2019 of the Respondent to the State Screening Committee on Anti-profiteering. 4. The DGAP has reported that on receipt of the reference from the Standing Committee on Anti-profiteering, a Notice of Investigation (NOI) dated 02.06.2020 under Rule 129 of the Rules was issued by the DGAP calling upon the Respondent to reply as to whether he admitted if the benefit of reduction in rate of tax had not been passed on to the recipients by way of commensurate reduction in prices and if so, to suo-moto determine the quantum thereof and indicate the same in his reply to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istory of Prices fixed by the Government. Thus, the price was fixed by the Government of Telangana only and had to be charged irrespective of the tax rates from time to time and the increased liability was to be borne by the cinema screens only. d) The Respondent submitted that he had collected prices fixed as per Order No. GO. Ms. No. 114, Home (Gen. A) Department, dt. 07.07.2012 and Order No. GO. Ms. No. 100, Home (Gen. A) Department, dt. 26.04.2013, wherein the Government of Telangana accorded permission for rate of admission to Class-I as Rs. 100 and for Class-II as Rs. 75/- at that time and ordered increase of tax free maintenance charge. e) Further the Respondent submitted that irrespective of the GST rate for the period 13.10.2018 to to-date, the price was the same of Rs. 150 and Rs. 130 for the Gold and Silver classes respectively. No GST was separately charged. The Respondent also submitted that ticket price was same and fixed when Entertainment Tax was @7%, 20% or 15%, as per the class of cinema notified by Government, as on 01.07.2017 when GST@18% was applicable i.e. Rs. 100/- or 75/- and revised price from 13.10.2018 to till date i.e. 150/- or 130/-, with so m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efective for the following reasons: i) There was no scheme laid down in the Act as to the (a) Methodology (b) How the party could verify the calculations and defended itself. ii) The Scheme did not envisage Controlled Industry where State Government fixed the price of the tickets and no GST was paid or payable. Also, the scheme did not distinguish free trade and controlled industry. Further, in controlled industry, the price did not give any breakup of basic price, GST etc. and GST was calculated proportionately. iii) The Scheme did not envisage the Methodology for fixing the Anti-profiteering calculation and period upto which the anti-profiteering provisions should be applied, since the same price could not rule during the life time of the Respondent. iv) Also, the commensurate reduction was not defined anywhere and thus, the measurement or calculations failed. As the Scheme was not finding in place in the Act, nor the Act defined the contours of the Scheme to be framed, there was no jurisdiction conferred on any authority. k) Also, the Respondent quoted that in the case of Rahul Sharma Vs Gyan Books, this Authority held that since the assessee charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the rate of GST on the Services by way of admission to exhibition of cinematograph films where price of admission ticket is above one hundred rupees was reduced from 28% to 18% w.e.f. 01.01.2019 and Services by way of admission exhibition of cinematograph films where price of admission ticket is one hundred rupees or less was reduced from 18% to 12% w.e.f. 01.01.2019 and if so, whether the benefit of such reduction in the rate of GST was passed on by the Respondent to the recipients, in terms of Section 171 of the CGST Act, 2017. 11. The DGAP has further stated that Section 171 (1) of CGST Act, 2017 which governs the anti-profiteering provisions under GST states that 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. Thus, the legal requirement was that in the event of a benefit of ITC or reduction in rate of tax, there must be a commensurate reduction in prices of the goods or services. Such reduction could obviously be only in terms of money, such that the final price payable by a consumer got reduced commensurate with the reduction in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 171 of the CGST Act, 2017 and the Rules made thereunder as the facts of each case were different for different sectors as well as in same sector also. Hence, no fixed mechanism could have been provided for in the Act or Rules. However, it was submitted that the Methodology and Procedure had been notified by the Authority vide its Notification dated 28.03.2018 under Rule 126 of the CGST Rules, 2017. Also, there was standard procedure of examining the anti-profiteering reference at various levels and after proper examination, the Standing Committee on Anti-profiteering decided to refer the matter to the DGAP for detailed investigation. Accordingly, a Notice under Rule 129 of the CGST Rules, 2017 was issued to the Respondent on 02.06.2020. Based on the facts and circumstances of the case, the investigation was carried out covering the period from 01.01.2019 to 30.04.2020, which was a reasonable period of time. As the Notice was issued on 02.06.2020, the period of investigation was taken upto April, 2020, as per the practice followed in the DGAP. 14. The DGAP has further stated that the Respondent's contention that the facts of case of Rahul Sharma Vs Gyan Books were appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -E 1 Gold 150 28% 117.19 150 18% 127.12 9.93 2 Silver 130 28% 101.56 130 1 8% 110.17 8.61 17. The DGAP has further stated that from the above Table- A it was apparent that the Respondent had increased the base price of both the admission tickets. Therefore, in terms of Section 171 of the CGST Act, 2017, benefit of GST rate reduction from 28% to 18% in respect of Services by way of admission to exhibition of cinematography films , was not passed on to the recipients. 18. Further the DGAP has submitted that having established the fact of profiteering, the next step was to quantify the same. The Respondent submitted that due to repairs maintenance and COVID-19, there were no transactions during the period from 31.01.2020 to 30.04.2020. On the basis of aforesaid pre/ post reduction in GST rates and the details of outward supplie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cinematograph films where price of admission ticket was one hundred rupees or above, from 28% to 18% w.e.f. 01.01.2019 and Services by way of admission to exhibition of cinematography films where price of admission ticket was one hundred rupees or less, from 18% to 12% w.e.f. 01.01.2019, appeared to be correct. From the Table 'B' above, it was quite clear that the base prices of the admission tickets was indeed increased, as a result of which the benefit of reduction in GST rate from 28% to 18% and 18% to 12% (w.e.f. 01.01.2019), was not passed on to the recipients by way of commensurate reduction in prices charged (including lower GST @ 18% 12%). The total amount of profiteering covering the period of 01.01.2019 to 30.04.2020, was 42,60,104/-. The recipients of the services were not identifiable as no such details of the consumers had been provided. 21. The DGAP has further concluled that that Section 171 (1) of the CGST Act, 2017, requiring that any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices , had been contravened by the Respondent in the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P having concluded post 01.01.2019 excess GST was included in the Price ought to have concluded wrongful excess collection of GST under Section 76 of CGST Act 2017 than under Section171 (3) and ordered for forfeiture. ix) That the DGAP had attempted to derive a new parameter of Base Price as per his own calculations ignoring that the Statute of Section 171 of CGST Act, 2017 also required the Price charged, the Statutorily Fixed Price by the State Government. x) That the DGAP had failed to note that Section 171 (3) was confiscatory in nature and hence was not satisfying the Article 19 (1)(g), Article 246, Article 300A etc., and that it was not a tax within the powers of Central Government or State Government or GST Council. xi) That the DGAP had also not noted that the Cinema Screen had discharged the GST liability from its Receipts and in full xii) That the DGAP had also not noted that the Scheme or machinery provisions of Computation of Profiteering was presently at the discretion of the DGAP without any computation methodology in the CGST Act, 2017 or the CGST Rules, 2017 and by innovating base price and thus had been administrative in character than unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was regulated by Telangana Government orders and the said orders were issued not subject acceptance by the DGAP. xxi) That the DGAP had not properly read the applicable law, Constitutional Provisions and the Scheme of Anti-Profiteering. The DGAP's rigid approach that Price should be the same for all the period the Section 171 of CGST Act, 2017 was on statute book lead to illegal, undesirable and unintended consequences and the same were beyond the powers of the DGAP/Central Government. xxii) That whether the product was exempted or not, where the price was the same before and after reduction of the tax rate, the Case of Rahul Sharma Vs. Gyan Books would be applicable. xxiii) That there was no merit in the Orders of the DGAP holding that the Cinema Screen had Profiteered. There was no jurisdiction conferred as per the extant law in the facts of his Cinema Screen case. xxiv) That the CGST Act, 2017 under Section 171 contemplated confiscation of the amount received and not levy of tax. xxv) That this was not a case of unjust enrichment of excess tax collected and paid less tax. xxvi) That it was also not a case of free enterprise that was free to fix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or this Authority since the price had been fixed under the orders of the Government and legally approved by the Hon'ble High Court and that the party was following the High Court orders. Thus, it was beyond the jurisdiction of this Authority, since the company was controlled by the State Government Orders. xxxiii)That what the Cinema Screen received was the price fixed by the Government of Telangana which was a fixed sum without any break up of basic price, taxes etc. Therefore for all purposes the price of cinema ticket was (i) Gold Class - Rs.148 per ticket, and (ii) Silver Class - Rs.128 per ticket w.e.f. 13-10-2018. Rs.2 per ticket was to be added towards statutory maintenance. There was no increase of basic price from the impugned date of 01-01-2019. xxxiv)That assuming without acknowledging for a moment, GST was included in the price fixed by the Government of Telangana, the GST included would be (i) Gold Class - Rs.148 per ticket - Rs.32.81 GST, and (ii) Silver Class - Rs.128 per ticket - Rs.28.44 GST, w.e.f. 13-10-2018 at the then prevailing rate of 28%.There was no price change till date. However, the DGAP Report said that GST included in the Price was Rs.22. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Deputy Commissioner (ST)-1, Economic Intelligence Unit, (iii) office of the Commissioner (State Tax), Commercial Taxes Department, Government of Telangana, vide their Notice No. RC. No. EIU / A1 / Movie Theatres/13/2019, dated 04.11.2019, (iv) by the State Level Screening Committee vide Ref. No. C.No. IV/16/07/2019-A.P, dated 28.11.2019 and (v) by The DGAP and this Authority from 02.06.2020 till date was clearly harassment and this was clearly against all the canons of equity. xxxix) That Standard Operating Procedure for Anti Profiteering list the following three parameters for enquiry:- Swelling up of ITC due to rate reduction. Abrupt increase in Net Profits during rate reduction. Enhancement of the base price immediately after announcement of GST rates. The above did not arise in their case due to rate reduction since there was no swelling up of ITC, abrupt increase in Net Profit or enhancement of the base price. That he understood base price was the price on which GST was charged. When no GST was charged/collected, the price Collected was the base price and it could not be derived by the DGAP. Rule 35 provided the mechanism for payment of GST i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and not separately charged or passed was like giving an amount to a person and finding him guilty of possessing the amount. Therefore, Government could not find fault of anti-profiteering with the Company for receiving the prescribed price only and was still incurring losses. xlv) The law or administrative scheme did not say the period upto which, from the date of change in GST rate, the anti profiteering provisions should be applied since the same price could not rule during the life time of the Company or during the period Anti- Profiteering provisions were on the Statute Book. xlvi) That the anti-profiteering provisions could not be applied with short sighted approach and the whole gamut of business should be considered including the inflation and increase of expenditure. xlvii) That the company had been continuously incurring losses despite promoters pumping resources in crores of rupees free of cost. The Company had incurred a loss of Rs.25.56 Lakhs in F.Y.2017-18 and Rs.158.09 Lakhs in F.Y.2018-19. For last quarter of the F.Y.2019-20 and in 2020-21 till date the cinema screens were under lock down and repaired and maintenance and for these years also there wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment. Further, the ticket price was the same as on 01.07.2017 also when GST applicable was 18% only in his case. Further, pre-01.01.2019, on 13.10.2018 in his case the Ticket price of Rs.148 and Rs.128 were fixed and they continued even today with so much increase in administration and running costs also. liv) That the Hon'ble High Court of Telangana approved the price subject to the condition that it was informed to State Government and Proportionate Taxes thereon were paid vide its orders in WP No.37873/2018 read with WP No.19046/2014. Iv) That there were no Government Orders issued under GST by Central Government regulating the Cinema Screen price by Central Government, since it did not have power to regulate cinema ticket prices. Ivi) That the ticket price was the base price/price and it was the same pre-01.01.2019 and post 01.01.2019.There was no clause in Government Orders that for any change in taxes the Cinema Ticket price should be increased or reduced. lvii) That penalty was prescribed under Sec.171(3A) of the CGST Act, 2017 and was introduced by Finance (No.2) Act, 2019 w.e.f. 01.01.2020. Prior to the same there was no penalty prescribed und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 13-10-2018 after 5 years 2 months and 20 days. In the mean time, the inflation or increase in expenditure was to the account of Cinema Screen resulting in losses. The rate of inflation between 2012 to 2018 was above 40% over 2012. That while revising the Cinema Ticket prices in 2018, Government had only provided for inflation in expenditure. lxv) That Penalty was not automatic but was discretionary in nature which was to be exercised keeping in view the relevant factors and the department was required to prove mensrea, i.e., consciousness on the part of assessee to evade the obligation / liability [ Dilip N Shroff V/s. JCIT, 291 ITR 521 ]. Further, the conditions stated in the section should exist. lxvi) That for the aforesaid reasons, the levy of penalty was unreasonable, unjustified, impermissible, and was not to be levied. 23. Clarifications were called from the DGAP on the above submissions of the Respondent. The DGAP vide his report dated 27.01.2021 has submitted his clarifications and has stated:- a. That the Respondent's contention that the Applicant No. 1 /the DGAP had not supplied the Cinema Ticket purchased to prove that the GST had been charged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d all the State Governments were part of the GST Council. GST leviable on of CGST Rules, 2017 had been framed under Section 164 of the said Act which had the sanction of the Parliament and the State Legislatures. It also showed that the delegated power to the Authority given under section 171 (3) of the said Act had been duly exercised by the Central Government by formulating the Rules, on the recommendation of the GST Council. Since the functions and powers to be exercised by the Authority had been approved by competent legislatures, the same were legal and binding on the Respondent. f. That Section 171 of the CGST Act, 2017 mandated that any benefit of reduction in the rate of tax or the benefit of ITC which accrued a supplier must be passed on to the consumers as both were concessions given by the Government and the suppliers were not entitled to appropriate such benefits by increasing their profit margin at the cost of the consumers. Such benefits must go to the consumers. While arriving at the quantification, the DGAP had to adopt a mathematical methodology to arrive at the amount profiteered. In the course of such calculations of profiteered amount the DGAP determined an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i. That the Respondent's contention that the DGAP had also not noted that the Cinema Screen had discharged the GST liability from its Receipts and in frill was not acceptable. The DGAP, in para 19 and 20 of the Report dated 26.11.2020 had discussed the calculation method wherein the GST element also was discussed. Further, the Respondent's plea that being a Cinema Screen, they were mandated to sell at prices, pre-determined by the State authorities, could not discharge them from their obligation to comply with the provisions of Section 171 of CGST Act, 2017 as being a registered person in GST law, they were legally and morally liable to pass on the benefit of reduction in rate of tax to the recipients. However, in the present case, although the Central Government on the recommendation of the GST council reduced the rate of tax on various products from 28% to 18% w.e.f. 01.01.2019, the Respondent increased the base price of the cinema tickets in such a way as to make the cum tax price exactly equal to the pre-rate reduction cum tax selling price and denied the benefit of such reduction in rate of tax to his customers and indulged in the violation of provisions of Section 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above benefits were passed on to the general public as per the provisions of Section 171 read with Rule 127 and 133 of the CGST Rules, 2017. The report of DGAP had restricted itself to the mandate given under Section 171 of the CGST Act, 2017, it did not interfere with the profit /loss or commercial decision of the Respondent. m. That the Respondent's contention that the Report presumed that price was a non-changing element and should remain the same so long the provisions of anti-profiteering were on statute book was incorrect. The DGAP had investigated the issue whether the benefit of the reduction in rate of taxes had been passed on to the customer or not. It was the duty of all the registered persons to pass on the benefit of reduction in tax rate to the customer by way of commensurate reduction in prices. The profiteering aspect was very much in vogue until the intended benefit by way of commensurate reduction in prices was passed on. Also, The DGAP or this Authority had not acted in any way as price controller or regulator as it did not have legislative intent to regulate when it came to price hike decisions. The supplier was absolutely free to exercise his right t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prices should not breach a certain threshold. The regulatory Orders nowhere restrict the Respondent to charge lesser amount than the threshold. The instance of M/s. AMB Cinema LLP was illustrated to bring home the concept of commensurate reduction in prices and it was not intended as a law. r. That the DGAP, in terms of the Rule 129 of the CGST Rules, 2017, was required to submit his findings to this Authority. It had only done his duty in investigation of the present case and submitted it's report to this Authority. Profiteering was strictly determined in terms of provisions of Section 171 of CGST Act, 2017 and the rules made thereunder. While determining profiteering the costing aspect was not taken into account. Only the benefit accrued on account of reduction in the rate of tax or benefit of ITC was the parameter on which the exercise of determination of profiteering was based. This approach of the DGAP had been consistent and the same had been upheld by this Authority. The Central Government, representing in the form of this Authority and the DGAP was well within its powers ensured that any reduction in rate of tax on any supply of goods or services or benefit of ITC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Statute controlling the functioning of the DGAP and this Authority did not require them to refer the matter to Telangana Government at the investigation stage. In terms of Rule 133 of the CGST Rules, 2017, this Authority gave ample opportunities to the interested parties to give their views before them. 24. In response to the above clarifications of the DGAP dated 27.01.2021, the Respondent vide letters dated 15.02.2021 and 27.02.2021 has reiterated the contentions of his earlier submissions dated 5.01.2021 detailed above and added that:- i) That the DGAP presumed that the Cinema Ticket price was inclusive of GST. ii) That the DGAP applied the mathematical formula of Rule 35 of CGST Rules for Price pre and post 01.01.2019 [Ticket price X GST Rate + (100+GST Rate)] on which date the applicable GST rate was reduced from 28% to 18%. iii) That the DGAP was wrong in taking the Cinema Ticket price at (i) Gold Class-Rs.150 per ticket instead of Rs.148, and (ii) Silver Class-Rs.130 per ticket instead of Rs.128, ignoring the Statutory Provision and Government Orders that Rs.2 per ticket was collected towards the statutory maintenance to be spent for the specified pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permitting such increase. xii) That the DGAP presumed on the contrary that GST was included in the Price and that it was not paid by the Supplier from its receipts. xiii) That the presumption go to the root of the issue and was contrary to the facts of the case. xiv) That certain amount of Tax was included in the price, the natural consequence was unjust enrichment for the given reduction in tax liability amount as against tax deemed to be included in the price and could only be considered as excess collection of tax and not profiteering under any circumstances could be alleged. xv) That the long gap in revision of prices without any linkage of taxes applicable also clearly show that the price was independent and could not be changed for variation in taxes. xvi) The presumption by the DGAP that the Supplier could reduce the price was not based on the cost benefit analysis. The Supplier was not a Charitable Organization but a Commercial / for Profit Organization and Government could not expect the Supplier to work on charitable lines or to incur losses in the course of operations. To Tax was the right of the Government under Article 265 of the Constitution. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34 46.36 2,77,90,232 44.94 2,00,12,737 44.61 SUB TOTAL 1,70,23,062 2,38,30,332 1,81,46,837 LESS: STATUTORY THEATRE MAINTENANCE 5,99,539 1.36 11,15,546 1.81 9,44,527 2.11 B NET THEATRE RECEIPTS 1,64,23,523 37.24 2,27,14,786 36.73 1,72,02,310 38.35 C INPUT TAX CREDIT 23,84,909 5.41 41,30,424 6.68 29,56,302 6.59 The above Table clearly shows the increa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised the following objection:- a. Section 171 (2) of the Act provides that the Central Government may constitute an Authority to examine whether 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 . Rule 133 (1) of the Rules provides that Order of the Authority - (1) The Authority shall, within a period of six months from the date of the receipt of the report from the DGAP determine whether a registered person has passed on the benefit of the reduction in the rate of tax on the supply of goods or services or the benefit of ITC to the recipient by way of commensurate reduction in prices . A combined reading of the Rule 133(1) and Sec. 171 (2) makes it clear that the proceedings of this Authority after the receipt of the DGAP's Report should be complete within a period of six months. b. That the Report of the DGAP was dated 26.11.2020. Therefore, the proceedings should be completed and Order should be issued within the six months, that is, on or before 26.04.2021. However, due to Covid Pendemic the Central Government (Government of India, Ministry of Finance, Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciple of interpretation that hardship or inconvenience caused could not be used a basis to alter the meaning of the language employed by the legislature if such meaning was clear upon a bare perusal of the statute. If the language was plain and hence allowed only on meaning, the same had to be given effect to, even if it caused hardship or possible injustice. [ Vide CIT (Ag) v. Keshab Chandra Mandal AIR 1950 SC 265 and D.D. Joshi v. Union of India (1983) 2 SCC 235]. Hence, jurisdiction conferred by the statute could be excercised subject to the limitation imposed by the statute. The Authority could not transgress the limits set out by the statute however admirable the intention might be. When an order suffered from want of jurisdiction, it was a nullity. f. That for kind consideration that the excercise of powers by this Authority after the limitation period was legally not permitted by the law maker and hence the proceedings were a nullity. Since the subject matter was specifically and under the Constitution of India reserved for the State Government and the State Government had exercised the said power also, the specific law would have application to other laws. Hence, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to rely upon his earlier written submissions and submitted a copies of tickets for pre rate reduction of GST and post rate reduction, with same final (including GST) price on both the tickets priced at 450/-. The tickets mentioned the CGST and SGST written on the ticket as 0 . 33. We have carefully heard the Respondent and the submissions of the Applicants and the Respondent as also the case record placed before us and it has been revealed that the Central and the State Governments had reduced the rates of GST on Services by way of admission to exhibition of cinematograph films where the price of admission ticket was above one hundred rupees from 28% to 18% w.e.f. 01.01.2019, vide Notification No. 27/2018- Central Tax (Rate) dated 31.12.2018, the benefit of which was required to be passed on to the recipients by the Respondent as per the provisions of Section 171 of the above Act. 34. On examining the various submissions placed on record, the Authority needs to determine as to whether there was any reduction in the GST rate and whether the benefit of reduction in the rate of tax was passed on or not to the recipients as provided under Section 171 of the CGST Act, 2017. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r GST @ 18%). The total amount of profiteering covering the period of 01.01.2019 to 30.04.2020, was 42,60,104/-. 35. The Authority finds that, one of the contentions of the Respondent is that the DGAP failed to appreciate the High Court Order fixing the Price while upholding the State Government Power to fix the Cinema Ticket prices through a new committee. In this regard the Authority finds that the State Government only fixes the maximum price at which a movie ticket can be sold. The cinema management is free to sell the tickets at the lower price. The Hon'ble High Court or the State Government come into picture only when the cinema management wants to increase the price of tickets beyond the maximum rate already fixed. Section 171 of the CGST Act, 2017 and Rules made thereunder is limited to the extent of passing of benefit of rate reduction and cannot or does not interfere with the powers of the Hon'ble High Court. Levy of GST is increased or decreased or fixed by the GST Council which is a Federal Constitutional body and all the State Governments are part of the GST Council. 36. The Respondent's submitted that the DGAP has failed to notice that the price was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Price as per their own calculations ignoring that the provisions of Section 171 of CGST Act, 2017. In this regard, The Authority finds that, as per Section 171 of the CGST Act, 2017, any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices. The price to be arrived at after commensurate reduction in rate of tax needs a base price for calculation. Such price required for calculation may be denoted by any term. The DGAP in his Report dated 26.11.2020 used the term 'base' price. Hence, The Authority finds that, the methodology adopted by the DGAP is reasonable and correct. 40. The Authority finds that, the Respondent has also contended that the DGAP has not noted that the scheme or machinery provisions of Computation of Profiteering is presently at the discretion of the DGAP without any computation methodology in the CGST Act, 2017 or the CGST Rules, 2017. In this regard it is to mention that the Methodology and Procedure was notified by this Authority vide its Notification dated 28.03.2018 under Rule 126 of the CGST Rules, 2017 which is also available on its website. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15th March 2020 till further order/s to be passed by this Court in present proceedings. Further, the Hon'ble Supreme Court, vide its subsequent Order dated 10.01.2022 has extended the period(s) of limitation till 28.02.2022 and the relevant portion of the said Order is as follows:- The Order dated 23.03.2020 is restored and in continuation of the subsequent Orders dated 08.03.2021, 27.04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general of special laws in respect of all judicial or quasi-judicial proceedings. Accordingly this Order having been passed today falls within the limitation prescribed under Rule 133 (1) of the CGST Rules, 2017. 43. The Respondent vide his submissions dated 28.04,2022 has submitted copies of Orders of the Hon'ble High Court for the State of Telangana State of Andhra Pradesh in Writ Petition No. 19046 of 2014 dated 31.10.2016, WP. No. 37873 of 2018 dated 12.10.2018, WP. No. 24293 of 2021 dated 30.09.2021. The Authority finds that, the said Orders of the Hon'ble High court are related to rate fixatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the benefit of rate reduction to his customers/recipients in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and resorted to profiteering and hence, committed an offence under section 171 (3A) of the CGST Act, 2017. Therefore, the Respondent is liable for the imposition of penalty under the provisions of the above Section. Accordingly, a notice be issued to him directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him. 46. Further, the Authority in terms of Rule 136 of the CGST Rules, 2017 directs the jurisdictional Commissioners of CGST/SGST, Telangana to monitor compliance with this Order under the supervision of the DGAP, by ensuring that the amount profiteered by the Respondent as ordered by the Authority is deposited in the respective Consumer Welfare Funds along with interest thereon. A report regarding compliance of this Order shall be submitted to this Authority by the DGAP within a period of four months from the date of receipt of this Order. 47. A copy each of this Order be supplied, free of cost, to the Applicant, the Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X
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