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TMI Blog2020 (12) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Tax (Rate) dated 31.12.2018. 2. Vide his Report, the DGAP has reported that Applicant No. 1 had alleged that the Respondent had not passed on the benefit of reduction in the GST rate on the aforesaid movie admission tickets, from 18% to 12% w.e.f. 01.01.2019, vide Notification No. 27/2018- Central Tax (Rate) dated 31.12.2018 and instead, increased the base prices to maintain the same cum-tax selling prices. Applicant No. 1 had also alleged in his letter dated 03.04.2019 that the Respondent was selling tickets of different categories priced at Rs. 100/- or less than 100/- (excluding Tax). However, the DGAP, on examination of the record of the monthly sale of tickets in each category, observed that in the month of March 2019 and May 2019, three different categories of tickets, i.e. other than the categories mentioned by Applicant No. 1 had been sold by the Respondent. Scrutiny of the records submitted by the Respondent also revealed that these three categories of tickets were not the matter of the complaint made by the above Applicant and the existence of these categories was also not reflected in the sales data for the pre-tax rate reduction period. As the comparable d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent to sell tickets at allowed prices, inclusive of taxes. Therefore, he had continued to sell the tickets, for the lower classes at Rs. 80/- and Rs. 50/-, whereas for the upper classes, he had reduced ticket prices because of the different GST tax rates in existence. (18% and 28%) (iii) He had faced losses as a result of the introduction of GST w.e.f. July 2017. Before the introduction of GST on 1st July 2017, his ticket rate was Rs. 120/- inclusive of entertainment tax. He was unable to arrive at Rs. 120/- inclusive of GST as the price of his movie ticket since the bandwidth of pricing at any price between Rs. 118/- (100+18%) and Rs. 129/- (101+28%) was made unavailable. Therefore, he was forced to sell the movie tickets at Rs. 2/- lesser than earlier, i.e. at Rs. 100+18%= Rs. 118/- resulting in substantial losses to him. (iv) He had changed the pricing a few times during this period of last 6 Months depending upon- a. Type of Movie (Starcast etc.) b. Number of days, the movie ran. c. If the movie was a hit or flop. (v) State Government was forcing the Respondent to provide free parking. The local municipal authorities had forced him not to charge for the parking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on record had been examined in detail and the main issue was whether the rate of GST on "Services by way of admission to exhibition of cinematography 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 rates of GST was passed on by the Respondent to the recipients, in terms of Section 171 of the Central Goods and Services Tax Act, 2017. 9. The DGAP also observed that the Central Government, on the recommendation of the GST Council, reduced the GST rate on the "Services by way of admission to exhibition of cinematograph films where price of admission ticket is one hundred rupees or less" from 18% to 12% w.e.f. 27.07.2018, vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018. This was a matter of fact which had not been contested by the Respondent. 10. The DGAP reiterated that Section 171 (1) of Central Goods and Services Tax Act, 2017 which governed the anti-profiteering provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted. The Respondent was once again sent a letter/email on 13.12.2019, requesting him to submit the reasons for the movie ticket prices in the month of March 2019 & May 2019. The Respondent vide email dated 13.12.2019 submitted that the ticket rate changes in March and May, in his case, should not attract any anti-profiteering penalties, as he had not profiteered. As the comparable data/rates of new categories during the months of March 2019 or May 2019 were not available during the last 4 months before the rate reduction, the profiteering for these categories had not been worked out. Hence the investigation was limited to the consequences of the reduction in the rate of GST from 18% to 12% only and for only three categories mentioned by Applicant No.1. 12. The DGAP also reported that the Respondent's contention that he did not fall in the category of beneficiaries due to input credit accrual, had not impacted the investigation as the same had neither been alleged by Applicant No.1 nor was part of the investigation report, therefore needed no clarification. Further, the Respondent had also contended that in terms of the State Governments' Cinematography Act his prices were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100/- and the cum tax price had been reduced from Rs. 118/- to Rs. 112/- resulting into reduction of Rs. 6/-. However, the Respondent had increased the base price of the admission ticket from Rs. 67.80 to 71.43 for the First class and from Rs. 42.37 to 44.64 for the Second Class. Thus it was observed that the actual cum tax prices of the tickets were not reduced though they should have been revised as Rs. 75.93 for First class and Rs. 47.45 for the second class but the Respondent continued to charge the pre rate reduction prices and maintained the actual cum tax prices by increasing the base prices of the tickets. Therefore, in terms of Section 171 of the Central Goods and Services Tax Act, 2017, the benefit of GST rate reduction from 18% to 12% in respect of "Services by way of admission to exhibition of cinematography films" was not passed on to the recipients in case of two categories of admission tickets. 15. The DGAP reported that based on aforesaid pre/ post reduction in GST rates and the details of outward supplies for the period 01.12.2018 to 30.06.2019 submitted by the Respondent, it was observed that profiteering during the period from January 2019 to June 2019 from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 2017 should not be fixed. 19. The first hearing was held on 27.01.2020 wherein Sh. Raj Tadla, Partner, appeared for the Respondent and furnished written submissions dated 27.01.2020, whereby the Respondent has contended as follows:- a. That from the date when the tax rate was reduced, he had charged the customers reduced prices. b. That since a movie ticket was a service and no stocking was required, he did not have any benefit of ITC due to tax rate changes and that he had forwarded the benefit of ITC accrued to his customers. c. That he kept changing the prices of the movie admission tickets depending on whether the movie was old or a new release; whether it was a well-performing movie with high viewership/ demand or otherwise. d. That he also kept changing his movie ticket prices depending on the day of the week, charging higher movie ticket prices for weekends and holidays e. That the movie ticket prices depended on the price at which he had procured the rights to exhibit the movie from its producer/distributor and the price of the movie was decided by him based on the demand for the movie. f. That the difference amount i.e. the amount that he was charged with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the costing of the product has not been looked into in the investigation. Further, the Respondent has three categories of admission tickets, and the cum tax prices of the admission tickets before 31.12.2018 were fixed for upper & lower balcony as Rs. 118/-, First Class as Rs. 80/- and Second Class as Rs. 50/-, The Respondent had reduced the price of upper & lower Balcony tickets from Rs. 118/- to Rs. 112/- but no price reduction was done in the case of the other two categories. Further, the contention that the amount which he has been alleged to have profiteered has been paid to the producer did not absolve the Respondent from the allegation of profiteering as ultimately the recipients/consumer had to pay the excess amount. Hence, the contention of the Respondent may not be accepted. 21. We have carefully heard the Respondent and perused 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% an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and hence, he did not have any benefit of ITC due to tax rate changes in the present case. In this connection, it would be relevant to mention that the DGAP has carried out the investigation in respect of the services provided by the Respondent and looked into the aspect of reduction in the price of movie tickets following the GST rate reduction from 18% to 12% as per the Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018. Therefore, the question of stocking of the goods does not arise in the present case. The Respondent has to pass on the benefit of reduction in the tax rate of GST not the benefit of additional ITC. Hence, the above contention made by the Respondent is not correct. 25. The Respondent has argued that the State Government has provided him with a range of ticket prices within which he kept changing the prices of the tickets based on various factors like new/old movies, age & performance of the movies. The above contention of the Respondent is not correct. In this connection, it was observed that as per the data made available by the Respondent to the DGAP during the investigation, he had not categorized/rated the movie ticket prices as per the above-menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of admission to exhibition of cinematography films where price of admission ticket is one hundred rupees or less" w.e.f. 01.01.2019, the Respondent had increased the base prices of his tickets immediately thereafter and did not pass on the resultant benefit by a commensurate reduction in the prices of his supplies at any point of time till 30.06.2019. In other words, the violation of the provisions of Section 171 of the CGST Act 2017 has continued unabated in this case and the offence continues to date. The Respondent has nowhere produced any evidence to prove from which date the benefit was passed on by him. The fact that the Respondent has not complied with Section-171of the CGST Act 2017 till 30.06.2019 implies that profiteering has to be computed for the entire period and hence we do not see any reason to accept this contention of the Respondent. We further observe that had the Respondent passed on the benefit before 30.06.2019, he would have been investigated only till that date. However, it has also been revealed from the Report of the DGAP that the Respondent has reduced the base prices of the tickets to Rs. 75/- and Rs. 45/- for the first class and the second class t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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