TMI Blog2023 (12) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... ST on the said profiteered amount. Thus, the profiteering amount is determined as Rs. 14,62,604/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017. The Respondent is therefore directed to reduce the prices of his tickets as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, 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. 14,62,604/- 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 of Rs. 7,31,302/- in the Central Consumer Welfare Fund (CWF) and Rs. 7,31,302/- in the Telangana State CWF respectively, as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017, along with 18% interest. The above amount shall be deposited within a period of 3 months from the date of this Order failing which the same shall be recovered by the Commissioner CGST/SGST as per the provisions of the CGST Act, 2017. Pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestigation 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. iii. The Standing Committee had forwarded the following submission/documents of the Applicant No. 1:- a) Anti-profiteering Application form (APAF-1). b) Letter dated 03.04.2019 of the Applicant No. 1 to the Standing Committee on Anti-profiteering. iv. The DGAP issued a Notice on 08.07.2019 under Rule 129 of the CGST Rules, 2017 to the Respondent after the receipt of the reference from the Standing Committee on Anti-profiteering, calling upon the Respondent to reply as to whether he admitted that 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 the Notice as well as furnish all supporting documents. Vide the said Notice, the Respondent was also given an oppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.00 70.00 71.43 12% 8.57 80.00 Upper Class 42.00 18% 8.00 50.00 53.58 12% 6.42 60.00 Lower Class 16.95 18% 3.05 20.00 26.79 12% 3.21 30.00 b) With the notification relating to reduction of GST rate on movie tickets from 18% to 12%, the price to be charged reduced to Rs. 85.42/- (base price 76.27+GST 9.15) but however he had increased the base price to Rs. 89.28/- from 10.01.2019 after obtaining all the necessary approvals from Asst. Commissioner of State Tax, Office of the Commissioner of police and Office of the Inspector of police. The prices of the movie admission tickets for 4 categories pre post 10.01.2019 have been given in Table-B below :- Table-B Name of Category/Class Price before 10.01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100 12.00 vii. Vide the aforementioned letters; the Respondent had submitted the following documents/information:- (a) Invoice-wise details of all outward taxable supplies of the movie admission tickets impacted by GST rate reduction w.e.f. 01.01.2019, during the period 01.12.2018 to 31.07.2019. (b) Price List of the aforesaid movie admission tickets, pre and post 01.01.2019. (c) Sample copies of the invoice/tickets, pre and post 01.01.2019. (d) GSTR-1 and GSTR-3B returns for the period December, 2018 to July, 2019. viii. The Applicant No. 1 had given the illustration with respect to reduction in rate of admission tickets where the price of admission was upto Rs. 100/- (One Hundred Rupees) only. Also the Respondent in his submissions has admitted that he had increased the base price from Rs. 76.27 to Rs. 80.36/- for Rs. 90/- ticket, from Rs. 59.33/- to Rs. 62.50/- for Rs. 70 ticket, from Rs. 42.371- to Rs. 44.64/- for Rs. 50/- ticket and from Rs. 16.95/- to Rs. 17.86/- for Rs. 20/- ticket. ix. The Central Government, on the recommendation of the GST Council, reduced the GST rate on the product Services by wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing by the Respondent, if any, for failing to pass on the benefit of reduction in rate of tax on Services by way of admission to exhibition of cinematography films where price of admission ticket was one hundred rupees or less was reduced from 18% to 12% w.e.f. 01.01.2019. From the sales data made available, it appeared that the Respondent increased the base prices of the admission tickets when the GST rate was reduced from 18% to 12% w.e.f. 01.01.2019 in the manner illustrated in Table-D below. xiii. The DGAP has claimed from the above Table- D that the Respondent had not only increased the base prices of all the admission tickets to maintain the same selling prices of the ticket but also increased the prices of all the admission tickets w.e.f. 10.01.2019 from Rs. 90/- to Rs. 100/- for Balcony ticket, from Rs. 70/- to Rs. 80/- for Dress Circle, from Rs. 50/- to Rs. 60/- for Upper Class and from Rs. 20/- to Rs. 30/- for Lower Class. Therefore, in terms of Section 171 of the CGST Act, 2017, benefit of GST rate reduction from 18% to 12% in respect of Services by way of admission to exhibition of cinematography films upto one hundred rupees , was not passed on to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Srinivas Panja, Proprietor represented the Respondent. Meanwhile, the Respondent had filed Writ Petition (Civil) No. 4568/2020 before Hon'ble High Court of Telangana. The proceedings were stayed by the Hon'ble Court in the present case. The Hon'ble Court vide order dated 27.10.2021 has disposed of the aforesaid Writ Petition directing the Respondent to submit his explanation in response to the erstwhile Authority's notice dated 13.12.2019. Accordingly, the Respondent vide his letter dated 10.12.2021 has filed his written submissions. Personal hearing in the matter was accorded to the Respondent and Applicants on 09.06.2022 via video-conferencing. Sh. K. Durga Prasad, Advocate, appeared on behalf of the Respondent. While, the Applicant No. 1 did not appear. Sh. Lal Bahadur, Assistant Commissioner appeared on behalf of DGAP. In total several opportunities of being heard have been provided by the erstwhile NAA and the Commission to the interested parties on 07.01.2020, 30.01.2020, 19.02.2020, 05.03.2020, 09.06.2022, 17.08.2023 and 09.11.2023. During the course of proceedings, the Respondent has filed his submissions dated 18.02.2020 wherein he has reiterated the submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the rates. The G.O. was set aside by the Hon'ble High Court on 31.10.2016 since then, the Government has not fixed the rates and every theatre owner who wanted to increase the rates was making an application to the Licensing Authority and was to approach the Hon'ble High Court for increase in rates. Finally, the Government of Telangana issued G.O. MS. No. 120 dated 21.12.2021 permitting the theatre owners to enhance the rates. In the meantime, the theatre owners made an application on 03.01.2019 for increase in rates for a new film and the said application was endorsed by the Licensing Authority and the same was filed as a document before this Authority also. The allegation made by the DGAP that the theatre owner had not reduced the ticket price on the basis of the reduction of the Tax rate was totally incorrect. The cinema ticket rate included the tax and after introduction of GST the theatre owners mentioned the tax separately and were paying the same. The G.O. which reduced the GST rate was issued from 01.01.2019 and the Respondent did not have any stock which attracted Profiteering. Every show was a new show, and every week new film was released and it was not a new c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice therefore, there is no alternative except to proceed against him ex-parte. This Commission has carefully perused all the submissions and the documents placed on record, and the arguments advanced by the Respondent. The Commission 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. Section 171 of the CGST Act provides as under: - (1). 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. (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 ITC 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. (3). The Authority referred to in sub-section (2) shall exercise such powers and discharge such functio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncrease the price of tickets beyond the maximum price as fixed by the State Authorities. Moreover, the Respondent has submitted a copy of the Government of Telangana G.O. MS. No. 120 dated 21.12.2021 permitting the theatre owners to enhance the rates which were effective from 21.12.2021 which is beyond the period of investigation i.e. from 01.01.2019 to 31.07.2019 considered by the DGAP to calculate profiteered amount. Therefore, the above plea of the Respondent is not maintainable. 9. The Commission finds that, as per the details and calculations given in Tables 'D' E' above, the Respondent has been profiteering by way of increasing the base prices of the tickets (Services) by not reducing the selling prices of the tickets (Services) commensurately, despite the rate reduction in GST rate on 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. From the Table above, it is evident that the base prices of the admission tickets were indeed increased, as a result of which the benefit of reduction in GST rate from 18% to 12% (w.e.f. 01.01.2019), was not passe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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