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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 ..... - 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 ₹ 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 ₹ 15,06,529/- in the Central Consumer Welfare Fund (CWF) and ₹ 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 months from the date of receipt of this Order failing Which the same shall be recovered by the Commissioner SGST as per the provisions of the SGST Act, 2017. Penalty - HELD THAT:- The Respondent has denied the benefit of rate reduction to his customers/r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Standing Committee on Anti-profiteering on 28.082019, a notice under Rule 129 of the Rules was issued by the DGAP on 09.07.2019 Calling upon the Respondent to respond as to whether he admitted that he had not passed on the benefit of reduction in GST rate w.e.f. 01.01.2019 to his recipients by way of commensurate reduction in prices and, if so, to suo moto determine the quantum thereof and indicate the same in his reply to the notice as well as to furnish all documents in Support of his reply. The Respondent was also allowed to inspect the non-confidential evidence/information which formed the basis of the said notice, during the period from 17.07.2019 to 19.07.2019. However, the Respondent did not avail of the said opportunity. Applicant No. Vide e-mail dated 16.10.2019, was allowed to inspect the non-confidential document/reply furnished by the Respondent on 22.10.2019 or 23.10.2019, which the Applicant No. 1 did not avail The DGAP has reported that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 it was held that when there was no reduction of tax rate w.e.f. 01,07.2017. it did not qualify to be a case of profiteering, (g) he has also placed his reliance on the decision of this Authority given 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 wherein this Authority has held that there was no increase in the base price of PA ceiling speaker and Wall speakers when GST rate was lowered and thus there was no profiteering, that in his case too, the movie ticket prices remained unchanged at the pre-01.07.2017 level and that there has been no change in the ticket prices collected from the cinema Viewing public; that hence, his case was not one of profiteering. (h) that he has also relied on the decision of this Authority recorded in the case of Mandalika Sakunt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018: that the legal requirement under the GST law was abundantly clear that in the event of a benefit of ITC or reduction in the rate of tax, there must be commensurate reduction in the prices of the goods or services and that such reduction could only be in money terms so that the final price payable by a consumer got reduced; and that Section 171 simply did not permit a supplier of goods or services. any other means of passing on the benefit of input tax credit or reduction in the rate of tax to his recipients/consumers. 8. The DCAP has further reported that the contention of the Respondent that at the time of roll-out of GST, he had not increased the price of movie tickets in respect of his six-screen multiplex in any manner, i.e. whether proportionate to the higher rate of GST of 28% or otherwise could not be accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 contention that the prices of movie tickets were fixed by the appropriate authority in the State Department and that he had no power to reduce the same was flawed and unacceptable, since as per paca-4 of the G.O.Ms No. 199, Home (General A) Department dated 31.07.2017 cited by the Respondent, it did not fix the actual prices of movie-tickets to be changed but only stipulated the maximum rate of admission; and that the the Respondent had requested the state government authorities to enhance the rates of admission to his movie theatre/multiplex from ₹ 100/- to Rs- 150/- for 2D movies and from ₹ 200/- to ₹ 300/- for 3D movies, which was allowed by the relevant State Government Authority partially in as much as enhancement of the rate of admissions for 2D Movies was permitted from ₹ 100/- to ₹ 50/- The DGAP has added that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Post Rate Reduction (01.01.2019 to 07.02.2019) Post Rate Reduction (08.02.2019 to 30.06.2019) Pre-Rate Reduction (01.12.2018 to 31.12.2018) Post Rate Reduction (01.01.2019 to 07.02.2019) Post Rate Reduction (08.02.2019 to 30.06.2019) 1. Multiplex Screens No. s category A Screen 1 to 5 (2D) Screen 6 (IMAX) 2. Ticket MRP B 150/- 150/- 138/- 250/- 250/- 250/- 3. Total No. of tickets sold C 1,52,726 1,72,424 4,76,042 60,167 50,759 1,83,801 4. Total taxable value (after Discount) D 1,78,96,433 2,19,18,539 5,56,68,652 1,17,51,818/- 1,07,53,802 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 200/- per ticket and 630 (3D movie tickets) at a Selling price of ₹ 300/- per tickets during 2 weeks in the month of May 2019 for the movie Maharshi due to high demand as per Hon ble Telangana State High Court Order; that since those tickets were sold for a specific movie and then Movies ticket prices were reduced thereafter. these tickets were excluded from the computation of profiteering given in Table- B above; that based on the details of outward supplies of services, it was clear that the said service has been supplied by the Respondent in the State bf Telangana only. 15. The DGAP has finally reported that the allegation of profiteering by the Respondent by way of increasing the base prices of the movie tickets and by not reducing the price of movie tickets commensurately, despite a reduction in the GST rate thereon has been established as the Respondent has profiteered by an aggregate amount of ₹ 30,13,058/- inclusive of GST. 16. The investigation report was received by this Authority on 30.10.2019 and it was decided to accord an opportunity of hearing to the Applicants and the Respondent on 20.11.2019, Notice dated 01.11.2019 was also issued t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, dated 27-09-2018 = 2018 (10) TMI 1338 - NATIONAL ANTI-PROFITEERING AUTHORITY and contended that in that case the rate of GST was reduced from 18% to 5% (without ITC) following which the base price was increased from ₹ 130/- to ₹ 145/- by the Respondent to compensate for the loss of ITC and this Authority had finally held that there was no profiteering in that case; that the ratio of the said decision was squarely applicable to his case since in his case, even the reduced rate of GST @ 18% was more than the pre-GST Entertainment Tax leviable @17.30%; that consequently, it could be said that no benefit had accrued to him on account of reduction of the GST rate. d. That the term profiteering as per Black s Law Dictionary Connoted taking advantage of the unusual or exceptional circumstances to make excess profit Law Lexicon, Short Oxford Dictionary, and Chambers 20th Century Dictionary also have given similar definitions to the expression profiteering . The Taxmann s Dictiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 172424 50759 2. Profiteering as computed by DGAP per ticket ₹ 11,7276 ₹ 19.5224 3. Profiteering as computed by the DGAP ₹ 20,22,120/- ₹ 9,90,938/- 30,13,058/- 4. As PMCPL has paid GST @ 18% on the entire ticket price of ₹ 150/-for screen t to 5 and an ₹ 250/- for screen 6, the amount of GST included in the profiteering amount per ticket computed by the DGAP needed to reduced which worked out to be:- 11.7276*18/118=₹ 1,7889 19.5224*18/118=₹ 2,9779 5. The amount to be reduced on the total number of tickets sold during the said period. 1.7889*172424=₹ 3,08,449/- ₹ 2.9779*50759 ticket = ₹ 1,15,155/- 4,59,604/- 6. The profiteering amount if at all there is any, would be (3-4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 200/- and ₹ 300/- respectively inclusive of the tax rate from the existing rates of ₹ 150/- and ₹ 250/- respectively to match the increase in the tax structure. However, the above mentioned G.O. was not implemented and kept in abeyance until further Orders by the Government on 30.06.2017, i.e. before the GST rates were made effective from 01.07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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, are very clear in their intent The Parliament, the State Legislatures, the Central and the State Governments as well as the GST Council which is a federal, constitutional body in their wisdom have not thought it appropriate to provide fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avened 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 from his case and therefore, the same are of no help to him. 26. The Respondent has further contended that there were arithmetical mistakes in the calculation of the profiteering amount computed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount and GST on the said profiteered amount. Thus the profiteering is determined as ₹ 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 ₹ 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 ₹ 15,06,529/- in the Central Consumer Welfare Fund (CWF) and ₹ 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 months from the date of receipt of this Order failing Which the same shall be recovered by the Commissioner SGST as per the provisions of the SGST Act, 2017. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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