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2023 (3) TMI 371 - HC - GSTProfiteering - petitioner owns / runs multiplexes in various locations in India and the GST rates applicable to movie tickets had been reduced with effect from 01st January, 2019 - allegation is that benefit of input tax credit not passed on by way of commensurate reduction in the price - violation of principles of natural justice - HELD THAT - Keeping in view the orders passed by this Court in PHILLIPS INDIA LIMITED VERSUS UNION OF INDIA ORS. 2020 (6) TMI 626 - DELHI HIGH COURT as well as M/S. SAMSONITE SOUTH ASIA PVT. LTD. VERSUS UNION OF INDIA ORS. 2020 (10) TMI 1031 - DELHI HIGH COURT and M/S. PATANJALI AYURVED LTD. VERSUS UNION OF INDIA ORS. 2020 (7) TMI 614 - DELHI HIGH COURT , this Court directs the petitioner to deposit the principal profiteered amount i.e. Rs.2,66,99,340/- in six equated instalments commencing 1st December, 2022. The interest amount directed to be paid by the respondents as well as the penalty proceedings and further investigation by NAA in respect of cinema halls of petitioner for extended period of time as provided for in the impugned order are stayed till further orders.
Issues:
Challenge to order dated 6th July, 2022 by respondent No.2 and notices dated 25th July, 2022, 17th August, 2022 & 26th August, 2022 by respondent No. 3. Challenge to Section 171 of the CGST Act and Rules under Chapter XV of the CGST Rules. Challenge to Rule 129 of the CGST Rules. Application of Rule 133(5) retrospectively. Validity of impugned order and notice. Time limit for issuing order under the Rules. Analysis: The petitioner filed a writ petition challenging the order dated 6th July, 2022 by respondent No.2 and the subsequent notices issued by respondent No. 3. The petitioner sought to challenge Section 171 of the CGST Act, along with specific Rules under Chapter XV of the CGST Rules, particularly Rules 126, 127, and 133, as well as Rule 129 of the CGST Rules. The challenge was based on the grounds of being unconstitutional and violative of Articles 14 and 19(1)(g) of the Constitution of India, as well as violating the principles of natural justice. The petitioner, who owns and operates multiplexes in various locations in India, was alleged to have profiteered by not reducing the prices of movie tickets in line with the reduced GST rates effective from 01st January, 2019. The petitioner contended that the comparison made by respondents No.2 and 3 between the average ticket prices in December 2018 and those between January 2019 to February 2020 was flawed. They argued that factors such as increased capital expenditure and the variability of movie ticket prices were not taken into account, rendering the comparison arbitrary and illogical. The petitioner's counsel argued that Rule 133(5) should not be applied retrospectively. They claimed that the impugned order and notice lacked consideration of relevant materials and relied on irrelevant ones. Additionally, it was pointed out that the notice issued after the final order by respondent No.2 extended the scope of the inquiry impermissibly. Moreover, the petitioner contended that the impugned order was issued beyond the prescribed time limit under the Rules. The Court issued notices to the respondents, directing them to file counter-affidavits within two weeks. The Court also ordered the petitioner to deposit the principal profiteered amount in six equated installments, citing precedents from previous cases. Furthermore, the interest amount, penalty proceedings, and further investigations were stayed until further orders. The parties were instructed to submit short written submissions before the next hearing date, and the case was tagged with another petition for listing on 6th and 7th December, 2022.
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