2024 (11) TMI 187 - HC - GST

Profiteering in GST rates - supply of services by way of admission to exhibition of cinematography films - failure to pass on the benefit of reduction in Goods and Services Tax GST rates on movie admission tickets and increase in the base price to maintain a uniform base price cum-tax selling price - HELD THAT - The view as expressed by the CCI is clearly unexceptionable since a broad and maximum limit with respect to movie admission tickets that may have been formulated by a licensing authority would not detract from the statutory obligation which Section 171 of the CGST Act places upon the writ petitioner. Once it was conceded that during the period in question, the CGST rate had come to be reduced from 28% to 18%, it became mandatory for the petitioner to pass on the benefit of that reduction. There are no justification to interfere with the view expressed by the CCI in this regard. There are no ground to interfere with the order impugned - petition dismissed.

Summary

Issues:
1. Challenge to order of Competition Commission of India regarding profiteering in GST rates on movie admission tickets.

Analysis:
1. The petitioner challenged the Competition Commission of India's order dated 24 June 2024, alleging profiteering in connection with the supply of services related to admission to exhibition of cinematography films. The investigation was initiated based on a reference from the Standing Committee on Anti-Profiteering. The petitioner claimed that the prices charged were within limits prescribed by the District Collector under the Telangana Cinemas (Regulation) Act, 1955.

2. The CCI found that the petitioner failed to pass on the benefit of reduced GST rates on movie admission tickets, increasing base prices instead. The Commission noted that the period for investigation was from 01 January 2019 to 30 June 2019. The CCI emphasized the statutory obligation under Section 171 of the CGST Act for passing on benefits of rate reduction to consumers.

3. The CCI refuted the petitioner's arguments regarding the investigation being time-barred and the impact of GST on profits. It highlighted that the licensing authority's role is limited to fixing maximum prices, while GST compliance falls under the purview of the GST Council. The CCI dismissed the petitioner's reliance on a previous judgment, emphasizing the exclusive jurisdiction of the CCI under the Competition Act, 2002.

4. The High Court upheld the CCI's decision, stating that the petitioner was obligated to pass on the benefit of reduced GST rates. The Court emphasized that compliance with Section 171 of the CGST Act was mandatory, irrespective of maximum price limits set by licensing authorities. As no other contentions were raised, the Court dismissed the writ petition, affirming the CCI's order.

5. In conclusion, the High Court found the CCI's decision valid, emphasizing the statutory obligation to pass on GST rate reductions. The Court rejected the petitioner's arguments and upheld the CCI's order, leading to the dismissal of the writ petition.