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TMI Blog2020 (7) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... from 28% to 18% W.e.f. 01.01.2019. Along with the application, Applicant No. had also submitted the APAF-I Form, copies of cinema tickets issued in the pre and post rate reduction period and the details of the GST paid. 2. Vide his Report, the DGAP has reported that Applicant No. 1 had alleged that the base price of '2D Movie' tickets was increased by the Respondent from Rs. to Rs. 127.12/- and that of '3D Movie' tickets from Rs. 195.32/- to Rs. 211.86/- when the GST rate was reduced from to w.e.f. 01.01.2019. The above Applicant had also alleged that the Respondent has not passed on the benefit Of reduction in the GST rate from 28% to 18% which came into effect on 01.01.2019 Vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018 and that the Respondent had instead increased the base price of the tickets. Along with his application, the Applicant had enclosed copies of tickets dated 31.12.2018 & 01.01.2019 along with his application in APAF-I form. The aforesaid reference was examined by the Standing Committee on Anti-profiteering and it was decided to forward the same to the DGAP for a detailed investigation into the matter on receipt of the aforesaid reference from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T rate from 28% to 18% and that there was no benefit to him (d) in line with the reduction of movie ticket prices by other competing multiplexes in the city of Hyderabad, he had reduced his movie ticket prices proportionately to the reduction in the rate of GST from 28% to 18% with effect from 08.02.2019; that he had then started to absorb the additional burden with effect from 08.02.2019. (e) the rates of admission to his six-screen multiplex were fixed by the State Government at 150/- for screen nos. 1 to 5 and at Rs. 250/- for the Screen no. 6 (IMAX screen): that these rates were inclusive of all taxes; that the rate of tax before the rollout of GST, i.e., 17.30% Entertainment Tax was also lesser than the reduced rate of GST at 18%, and hence there no benefit to him that could have been passed on by him to his consumers end that he had not contravened the anti-profiteering provisions of the GST law. (f) he has also relied on the decision of this Authority given in the case of State-level Screening Committee on Anti-Profiteering, Kerala and another vs. Zeba Distributors [2018] 100 taxmann.com 327 (NAA) = 2018 (12) TMI 1001 - THE NATIONAL ANTI-PROFITEERING AUTHORITY wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t vide his notice dated 09.07.2019, the Respondent was informed that if any information/documents provided were confidential then, in terms of Rule 130 of the CGST Rules 2017, he could furnish a non-confidential summary of such information/documents that he wished to remain confidential. However, the Respondent did not classify any of the information/documents submitted by him as confidential. 6. The DGAP also reported that the main issues to be examined in the present matter were whether the GST rate on 'Services by way of admission to the exhibition of cinematograph films where the price of admission ticket was above one hundred rupees" was indeed reduced from 28% to 18% w.e.f. 01.01.2019 and if so, whether the benefit of such reduction in the rate of GST had been passed on by the Respondent to his recipients, in terms of Section 171 of the CGST Act, 2017. 7. On the above issues, the DGAP reported that the Central Government, on the recommendation of the GST Council, had indeed reduced the GST rate on "Services by way of admission to an exhibition of cinematograph films where the price of admission ticket wag above one hundred rupees" from 28% to 18% w.e.f. 01.01.2019, vide Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7/2018- Central Tax (Rate) dated 31.12.2018. (b) ln the ease of Ahuja Radios, the GST rate was reduced from 28% to 18% w.e.f. 15.11.2017 vide N/N 41/2017 (Central Tax Rate) dated 14.11.2017 on the impugned goads "PA Ceiling Speaker and "PA Wall Speaker". In that case, Ahuja Radios had maintained the same base prices (excluding GST) and charged a reduced rate of GST over the same base price resulting in a reduction in cum tax selling prices to be paid by his recipients. However, in the present case. the Respondent had increased the base price from Rs. 117.18/- to Rs- 127.12 per ticket for '2D Movies' and from Rs, 195.32/- to Rs. 211.86/- per tickets for '3D Movies'. (c) ln the ease of Fab India Overseas (P) Ltd., the matter to be decided was concerning a change in tax rates on the introduction of GST i.e. on 01.07.2017. However, the present case does not pertain to a change in the rate of tax from 01.07.2017 but w.e.f. 01.01.2019 and hence. the plea of the Respondent that the pre-GST roll-out prices ought to be compared with prices changed by him after 01.01.2019 was at complete variance with facts of the above-cited case. 9. The DGAP has also reported that the Respondent's con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividing the total taxable value by the aggregate number of tickets sold during that period i.e. pre-rate reduction, The said average base price of the movie ticket in the pre rate reduction period was then compared with the actual selling price of the tickets sold during post-GST rate reduction i.e, on or after 01.01.2019. as has been illustrated in Table-'A' below:- Table-'A' Sl.No. Description Factors Pre-GST Reduction (01.12.2018 to 31.12.2018) Post Rate Reduction (From 01.01.2019) Pre-Rate Reduction (01.12.2018 to 31.12.2018) Post Rate Reduction (From 01.04.2019) 1. Multiplex Screens No.'s A Screen 1 Screen 6 2. Screen Category B 2D 3D 3. Ticket MRP C 150/- 150/- 250/- 250/- 4. Total No. of tickets sold D 36,618 60,167 5. Total taxable value (after Discount) E 41,73,717/- 1,17,51,818/- 6. Average base price (without GST) F=(E/D) 117.18/- 195.32/- 7. GST Rate G 28% 18% 28% 18% 8. Actual Selling price (post rate reduction) (including GST) H=1.28% of F 150/- 250/- 9. Commensurate Selling price (post Rate reduction) (including GST) I=11.8% of F 138.27/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 230.4776/- 230.4776/- 9. The excess amount charged or Profiteering per Tickets I=G-H 11.7276/- - 19.5224 - 10. Total Profiteering J=C*I 20,22,120/- - 9,90,938 - 11. Total Profiteering (All Screens) (K) 30,13,058/- 13. The DGAP has also reported that the Respondent had increased the base prices of the movie tickets sold by him during the period from 01.01.2019 to 07.02.2019 to maintain the same selling prices (or MRP), thus making his customers/recipients pay the same total prices for the tickets, which they were paying before the reduction in the rate of tax end has thus denied the benefit of reduction in the rate of tax to his recipients. However, w.e.f. 08.02.2019 Respondent had revised his per ticket selling price from Rs. 150/- to Rs. 138/- for Screen 1 to 5 and from Rs. 250/- to Rs. 230/- for Screen 6 which was commensurate to the extent of reduction in the rate of tax from 28% to 18%. 14. The DGAP has further stated that the Respondent has submitted that he had sold 51,794 (2D Movie tickets) at a selling price of Rs. 200/- per ticket and 630 (3D movie tickets) at a Selling price of Rs. 300/- per tickets during 2 weeks in the month of May 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the increase in the tax structure; that however the above G.O. was not implemented but was kept in abeyance until further Orders by the Government Vide Memo No. 659 (P)/General/A1/2017 dated 30-06-2019. b. That the increase in GST aver the Entertainment Tax had to be borne by him by adjusting the base prices downwards to maintain the selling prices of the ticket at the earlier rates of Rs. 150/- and Rs. 250/- respectively; that representations apprising the Government of India of the above facts had resulted in the subsequent reduction of the rate of GST from 28% to 18% with effect from 01-01-2019; that even the reduced rate of GST was higher than the Entertainment Tax of 17.30% leviable during the pre GST period; that hence he did not reduce the selling prices of his movie tickets as no benefit had accrued to him. c. That the report of DGAP did not Contain findings on the above aspect, which had led to a distorted conclusion that benefit had accrued to him on account of GST rate reduction that should have been passed on by him to his consumers. That he wanted to rely on the decision of this Authority given in the case of Jijrushu N Bhattacharya Vs NP Foods case No. 9/2018, da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent case on the ground that the facts of these cases were different, It was submitted that though the facts were different, the rationale of these decisions of this Authority ought to have been applied to his case since in his case also there was no profit arising out of the reduction in the rate of GST which could have been passed on to the consumers of service. g. That no profit had arisen out of the reduction of the GST rate from 28% to 18% from 01-01-2019; that there were arithmetical mistakes in the calculation of profiteering by the DGAP since the correct amount of profiteering would have worked out to Rs. 25,53,454/- only as per the details given below:- S.No. Particular Screen 1 to 5 Screen 6 Total (Amount in Rs.) 1. Number of tickets sold during the period 01.01.2019 to 07 02.2019 172424 50759 2. Profiteering as computed by DGAP per ticket Rs. 11,7276 Rs. 19.5224 3. Profiteering as computed by the DGAP Rs. 20,22,120/- Rs. 9,90,938/- 30,13,058/- 4. As PMCPL has paid GST @ 18% on the entire ticket price of Rs. 150/-for screen t to 5 and an Rs. 250/- for screen 6, the amount of GST included in the profiteering amount per ticket compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teered under sub-section (1), such person shall be liable to pay penalty equivalent to ten per cent. of the amount so profiteered: Provided that no penalty shall be leviable if the profiteered amount is deposited within thirty days of the date of passing of the order by the Authority. Explanation.- For the purposes of this section, the expression "profiteered" shall mean the amount determined on account of not passing the benefit of reduction in rate of tax on supply of goods or services or both or the benefit of input tax credit to the recipient by way of commensurate reduction in the price of the goods or services or both." 21. The Respondent vide his submissions has contended that in the pre-GST era, Entertainment Tax @ 17.30% was included in the selling prices of the tickets and on the introduction of GST Act, the rate of GST on exhibition of films was fixed at 28% and hence, there was an increase of 10.70% over the existing Entertainment Tax. The State Government vide G.O.M. No, 100, Home (Geenral A) Department, dated 23.06.2017 had revised the rates of admission into multiplexes to Rs. 200/- and Rs. 300/- respectively inclusive of the tax rate from the existing rates of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would be appropriate to refer to the definition of the profiteered amount given In the Explanation attached to Section 171 which states as under:- "Explanation : For the purposes of this section, the expression shall mean the amount determined on account of not passing the benefit of reduction in rate of tax on supply of goods or Services or both or the benefit of ITC to the recipient by way of commensurate reduction the price of the goods or services or both," 24. The Respondent has relied upon the judgement of the Hon'ble Bombay High Court passed in the case of M/s. Hardcastle Restaurant Pvt. Ltd = 2019 (10) TMI 864 - BOMBAY HIGH COURT. vide which the Hon'ble High Court has held that "The issues that come up before the Anti-Profiteering Authority are complex. The Act and Rules provide no appeal. The Authority can impose a penalty and can cancel the registration. The term profiteering, under the Act and Rules, is used in a pejorative sense. Such a finding can severely dent the business reputation." In this regard, it would be relevant to mention that provisions of section 171 of the CGST Act, 2017. and the Rules 122-137 of the CGST Rules, 2017 which deal with profiteering, ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re GST MRP) invite of the increase in the tax rate of both the above products," Therefore, the anti-profiteering provisions contained in Section 171(1) of the CGST Act, 2017 were round to have not been contravened in the above mentioned case. Also in the case of State-level Screening Committee on Anti-Profiteering, Kerala and another vs. Ahuja Radios [2018] 100 taxmann.com 505 (NAA) = 2018 (12) TMI 1602 - NATIONAL ANTI-PROFITEERING AUTHORITY, the Authority held that "It is apparent form the perusal of the facts the cases that while there was reduction in the rate of tax on the above products from 28% to 18% w.e.f. 15.11.2017, vide Notification no 41/2017-Central Tax (Rate) dated 14.11.2017, but the base prices (excluding tax) of both the above products had remained the same and hence the allegation of profiteering is not established". However, in the present case. it has been revealed from the DGAP's Report that the Respondent has not reduced his base prices and has not passed on the benefit of rate reduction to his customers/recipients and thus. has contravened the provisions of Section 171 of the CGST Act, 2017, The facts of the Gases relied upon by the Respondent are different f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019 to 30.06.2019. on this account, the Respondent has realized an additional amount to the tune of Rs. 30,13,058/- from the recipients which included both the profiteered amount and GST on the said profiteered amount. Thus the profiteering is determined as Rs. 30,13,058/- 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. 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 is deposited. Since the recipients, in this case, are not identifiable, the Respondent is directed to deposit the amount of profiteering of Rs. 15,06,529/- in the Central Consumer Welfare Fund (CWF) and Rs. 15,06,529/- in the Telangana state 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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