9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (6) TMI 1076 - NAPA - GSTProfiteering - supply of Services by way of admission to exhibition of cinematography films - allegation is that the benefit of reduction in the GST rate on which was reduced w.e.f. 1.1.2019, vide Notification No. 27/2018- Central Tax (Rate) dated 31.12.2018 by way of commensurate reduction in prices, were not passed on - contravention of Section 171 of the CGST Act, 2017 - penalty - HELD THAT - 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' was reduced from 28% to 18% and Services by way of admission to exhibition of cinematograph films where the price of admission ticket was one hundred rupees or less was reduced from 18% to 12% w.e.f. 01.01.2019, vide Notification No. 27/2018- Central Tax (Rate) dated 31.12.2018. The benefit of reduction in GST rates was required to be passed on to the recipients by the Respondent as per the provisions of Section 171 of the Act. There is no dispute relating to the fact that the Respondent has increased the base prices of the admission tickets in respect of the regular category and continues to charge the cine-goers at the prevailing rates despite a reduction in the GST w.e.f. 1.1.2019 vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018. The Respondent in the written submissions as well as during the personal hearing has admitted the above-said liability of excess collection during the period 1.1.2019 to 30.4.2020. The Authority finds that the Respondent has been profiteering by way of increasing the base prices of the tickets (Services) by not reducing the selling price of the tickets (Services) commensurately in the regular category, despite the rate reduction in GST rate on Services by way of admission to exhibition of cinematograph films where the price of admission ticket was one hundred rupees or above, from 28% to 180/0 w.e.f. 01.01.2019. From the Table 'B' 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 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%). The total amount of profiteering covering the period of 01.01.2019 to 30.04.2020 for the 'Regular Category' was 12,83,999/-. This Authority based on the facts discussed above has found that the Respondent has clearly resorted to profiteering in respect of 'Regular Category' by way of either increasing the base prices of the service while maintaining the same selling prices or by way of not reducing the selling prices of the service commensurately, despite a reduction in GST rate on Services by way of admission to an exhibition of cinematograph films where the price of admission ticket is above one hundred rupees from 28% to 18% w.e.f. 01.01.2019 to 30.04.2020. On this account, the Respondent has realized an additional amount to the tune of Rs. 12,83,999/-from the recipients of 'Regular Category' which included both the profiteered amount and GST on the said profiteered amount. Thus the profiteering amount is determined as Rs. 12,83,999/-as per the provisions of Rule 133 (1) of the CGST Rules, 2017 in respect of 'Regular Category' only. The Respondent is therefore directed to reduce the prices of his tickets of regular category 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 12,83,999/- 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. Penalty - HELD THAT - The Authority finds that the Respondent has denied 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, he is liable for the imposition of a penalty under the provisions of the above Section. Accordingly, notice be issued to him directing him to explain why the penalty 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 for the profiteered amount collected from 01.01.2020 to 30.04.2020. Application disposed off.
Issues Involved:
1. Allegation of profiteering by not passing on the benefit of GST rate reduction. 2. Examination of the Respondent's contention regarding ticket pricing fixed by the State Government. 3. Determination of profiteering and quantification. 4. Examination of the Respondent's claim regarding the 'Exceptional Category' tickets. 5. Consideration of the Respondent's argument about revenue sharing with distributors. 6. Imposition of penalty under Section 171(3A) of the CGST Act, 2017. Detailed Analysis: 1. Allegation of Profiteering by Not Passing on the Benefit of GST Rate Reduction: The DGAP received two applications alleging that the Respondent did not reduce the prices of cinema tickets despite a reduction in GST rates from 28% to 18% and 18% to 12% effective from 01.01.2019. Instead, the Respondent increased the base prices to maintain the same cum-tax selling prices of the admission tickets. 2. Examination of the Respondent's Contention Regarding Ticket Pricing Fixed by the State Government: The Respondent argued that the prices of cinema tickets were fixed by the Government of Telangana and could not be altered irrespective of tax rates. However, the DGAP found that the Respondent was free to sell tickets at lower prices in the event of a tax reduction. The State Government only fixed the maximum rate, and the Respondent was required to pass on the benefit of tax reduction to consumers. 3. Determination of Profiteering and Quantification: The DGAP's investigation revealed that the Respondent increased the base prices of tickets post-GST rate reduction, thereby not passing on the benefit to consumers. The total profiteered amount was calculated as Rs. 97,02,945/- for the period from 01.01.2019 to 30.04.2020. The Respondent admitted liability for the 'Regular Category' seats but contested the 'Exceptional Category' tickets. 4. Examination of the Respondent's Claim Regarding the 'Exceptional Category' Tickets: The Respondent argued that the 'Exceptional Category' did not exist before 01.01.2019, and the ticket prices were fixed considering the prevailing GST rate of 18%. The DGAP found that the Respondent did not provide sufficient evidence to support this claim. The matter relating to the 'Exceptional Category' needs to be re-investigated by the DGAP. 5. Consideration of the Respondent's Argument About Revenue Sharing with Distributors: The Respondent contended that 49.65% of the revenue from ticket sales pertained to distributors. However, the DGAP found that the responsibility to comply with Section 171 of the CGST Act, 2017, lay with the Respondent, and the argument was rejected. 6. Imposition of Penalty Under Section 171(3A) of the CGST Act, 2017: The Respondent argued that no penalty should be imposed as the issue arose from a bona fide understanding of the law. However, the Authority found that the Respondent had denied the benefit of rate reduction to customers, thereby committing an offence under Section 171(3A) of the CGST Act, 2017. The Respondent is liable for a penalty for the profiteered amount determined for the period from 01.01.2020 to 30.04.2020. Orders: 1. The Respondent is directed to reduce the prices of regular category tickets as per the provisions of Rule 133(3)(a) of the CGST Rules, 2017. 2. The Respondent is to deposit the profiteered amount of Rs. 12,83,999/- along with interest at 18% from the date of collection till the deposit date. 3. The Respondent is to refund Rs. 11.73/- each to Applicant Nos. 1 & 2 with interest at 18%. 4. The remaining profiteered amount is to be deposited in the Central Consumer Welfare Fund (CWF) and Telangana State CWF. 5. The DGAP is directed to re-investigate the matter relating to the 'Exceptional Category' admission tickets. 6. The jurisdictional Commissioners of CGST/SGST Telangana are to monitor the compliance of this Order. Conclusion: The Authority found that the Respondent engaged in profiteering by not passing on the benefit of GST rate reduction to consumers for regular category tickets and directed appropriate actions including refunds, deposits, and re-investigation for the 'Exceptional Category' tickets.
|
