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2020 (12) TMI 92 - NAPA - GSTProfiteering - supply of Services by way of admission to exhibition of cinematograph films where the price of admission ticket is above one hundred rupees - despite a reduction in the rate of GST from 28% to 18% w.e.f. 01.01.2019. Applicant has alleged that the Respondent increased the base price of his movie tickets - benefit of reduction in the GST rate not passed on to his customers/ recipients - contravention of section 171 of CGST Act - HELD THAT - The report of the DGAP dated 12.06.2019, is acceptable, not only because it has been agreed to by both, the applicant No. 1 and the respondent, but also because the main issue of profiteering by the Respondent has already been addressed and settled by this PRINCIPAL COMMISSIONER, CENTRAL TAX CENTRAL EXCISE HYDERABAD, DIRECTOR-GENERAL OF ANTI-PROFITEERING, INDIRECT TAXES CUSTOMS. VERSUS PRASAD MEDIA CORPORATION PVT. LTD., 2020 (7) TMI 286 - NATIONAL ANTI-PROFITEERING AUTHORITY on the same matter, whereby the Respondent was found to have profiteered in terms of Section 171 of the CGST Act 2017. It is pertinent that the above Order was passed in pursuance of an earlier complaint filed by Principal Commissioner, Central Tax Central Excise Hyderabad, GST Commissionerate, GST Bhavan, LB Stadium Road, Basheerbagh, Hyderabad-500004 and the resultant investigation Report of the DGAP dated 25.10.2019 which covered the period from 01.01.2019 to 30.06.2019. The Respondent had therefore been 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 was passed on to the recipients. Further, the Respondent had been directed to deposit the profiteered amount of ₹ 30,13,058/- 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 was deposited, Since the recipients, in this case, were not identifiable, the Respondent had been directed to deposit the amount of profiteering of ₹ 15,06,529/-(along with interest thereon at the applicable rate) in the Central Consumer Welfare Fund (CWF) and ₹ 15,06,529/- (along with interest thereon at the applicable rate) in the Telangana State CWF as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017. In the present case, the investigation by the DGAP had revealed that the Application filed by Applicant No. 1 against the Respondent also covers the same issue and the same period as the previous case and that the Respondent had realized an additional amount of ₹ 11.73/- from Applicant No. 1 (inclusive of GST). It is also clear to us that this amount of ₹ 11.73/- stands already included in the total profiteering amount of ₹ 30,13,058/- determined against the Respondent vide its order PRINCIPAL COMMISSIONER, CENTRAL TAX CENTRAL EXCISE HYDERABAD, DIRECTOR-GENERAL OF ANTI-PROFITEERING, INDIRECT TAXES CUSTOMS. VERSUS PRASAD MEDIA CORPORATION PVT. LTD., 2020 (7) TMI 286 - NATIONAL ANTI-PROFITEERING AUTHORITY which had been ordered to be deposited in the CWFs because, at that time, no recipient could be identified for receiving the benefit. However, now that the entitlement of Applicant No.1 has been established, we hold that Applicant No. 1 is entitled to be passed on an amount of ₹ 11.73/- along with interest as applicable thereon. This Order is being passed today i.e. 27.11.2020 in terms of the Notification No. 65/2020-Central Tax dated 01.09.2020 issued by the Government of India, Ministry of Finance (Department of Revenue), Central Board of Indirect Taxes Customs under Section 168 A of the CGST Act, 2017 - Application disposed off.
Issues Involved:
1. Allegation of profiteering by not passing on the GST rate reduction benefit. 2. Investigation and findings by the Director-General of Anti-Profiteering (DGAP). 3. Quantification of the profiteered amount. 4. Respondent’s submissions and legal proceedings. 5. Final order and directions by the National Anti-Profiteering Authority (NAA). Issue-wise Detailed Analysis: 1. Allegation of Profiteering: The case originated from an application alleging that the Respondent did not pass on the benefit of GST rate reduction from 28% to 18% on movie tickets priced above Rs. 100, effective from 01.01.2019. The applicant claimed that the Respondent increased the base price of tickets, maintaining the total price unchanged, thus not passing on the tax reduction benefit. 2. Investigation and Findings by DGAP: The DGAP conducted an investigation and reported that the Respondent had been previously investigated for similar allegations. The earlier investigation confirmed profiteering of Rs. 30,13,058/- for the period from 01.01.2019 to 07.02.2019. The current investigation, based on a ticket dated 04.01.2019, confirmed that the Respondent had indeed profiteered by not reducing the ticket prices commensurately. 3. Quantification of the Profiteered Amount: The DGAP’s report detailed the computation of the excess amount charged. For the ticket in question, the base price was increased from Rs. 117.18 to Rs. 127.12 post-GST rate reduction, keeping the total price at Rs. 150/-. The commensurate price should have been Rs. 138.27, leading to an excess charge of Rs. 11.73/-. This amount was part of the previously determined profiteering sum of Rs. 30,13,058/-. 4. Respondent’s Submissions and Legal Proceedings: The Respondent argued that the issue was already settled in a previous order (No. 37/2020 dated 07.07.2020), which confirmed profiteering and directed the deposit of the profiteered amount in Consumer Welfare Funds (CWFs). The Respondent also mentioned a pending writ petition challenging the constitutional validity of the Anti-Profiteering provisions. The Delhi High Court, in an interim order, directed the Respondent to deposit the principal profiteered amount in installments while staying the interest and penalty proceedings. 5. Final Order and Directions by NAA: The NAA accepted the DGAP’s report, noting that both the applicant and the respondent agreed with the findings. The NAA reiterated that the issue of profiteering had already been addressed in the previous order. Since the amount of Rs. 11.73/- was included in the total profiteering sum, the applicant was entitled to this amount along with applicable interest. The NAA directed that Rs. 6/- be paid from both the Central and Telangana State CWFs to the applicant. The order was passed considering the delay due to the COVID-19 pandemic and in line with the relevant notifications and rules. Conclusion: The NAA upheld the findings of profiteering against the Respondent, confirming that the benefit of GST rate reduction was not passed on to the consumers. The applicant was awarded the excess amount charged along with interest, and the Respondent was directed to comply with the previous order regarding the deposit of the profiteered amount in CWFs.
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