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TMI Blog2022 (5) TMI 1416X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 133 (1) of the CGST Rules 2017 and accordingly the Respondent is directed to commensurately reduce the prices of the three categories of movie tickets in line with the provisions of Section 171 (1) read with Rule 133 (3) (a) of the CGST Rules 2017. Further, since the customers/ recipients, in this case, are not identifiable, the Respondent are directed to deposit the profiteered amount of Rs. 1,31,754/- 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, in two equal parts, in the Central Consumer Welfare Fund (CWF) and the Telangana State CWF as per provisions of Section 171 (1) read with Rule 133 (3) (c) of the CGST Rules 2017. Penalty - HELD THAT:- It is revealed that vide Section 112 of the Finance Act, 2019 specific penalty provisions have been added for violation of the provisions of Section 171 (1) which have come in to force w.e.f. 01.01.2020, by inserting Section 171 (3A). Since, no penalty provisions were in existence between the period from 01.01.2019 to 30.09.2019 when the Respondent had violated the provisions of Section 171 (1), the penalty prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him to the Respondent in terms of Rule 129 of the CGST Rules 2017, calling upon the Respondent to reply as to whether he admitted that the benefit of reduction in GST rate, notified w.e.f. 01.01.2019, had not been passed on by him to his recipients by way of commensurate reduction in the prices of the movie tickets supplied by him, 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. Further, vide the said Notice, the Respondent was also allowed to inspect the non-confidential evidence /information furnished by Applicant No. 1 which formed the basis of the said Notice, either on 30.10.2019 or on 31.10.2019. However, the Respondent did not avail of the said opportunity. 4. The DGAP has further reported that despite receiving the above mentioned notice and several reminders that followed the notice, the Respondent did not submit the requisite records/ documents. Hence, summons dated 03.03.2020 were issued to the Respondent seeking submission of the requisite records/ documents by 12.03.2020. In response to the summons, neither did anyone appear on behalf of the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.02.2021. 7. The DGAP has also reported that in response to the Notice dated 23.10.2019 and subsequent reminders and summonses the Respondent submitted his reply vide emails/letters dated 03.12.2019, 09.12.2019, 16.12.2019 and 23.01.2020. Vide the aforementioned letters/e-mails, the Respondent only submitted the GSTR-3B returns for the period from December, 2018 to August, 2019. 8. The DGAP has also reported that vide e-mail dated 04.09.2020, Applicant No. 1 was also allowed to inspect the non-confidential documents/reply furnished by the Respondent, either on 09.09.2020 or 10.09 2020. The opportunity was availed by the Assistant Commissioner, CGST, Medchal Commissionerate on 10.09.2020 and the documents were inspected by him on behalf of Applicant No. 1. The DGAP has reported that it was observed that the Central Government, on the recommendation of the GST Council, reduced the GST rate on the Services by way of admission to exhibition of cinematography films where price of admission ticket was one hundred rupees or less from 18% to 12% w.e.f. 01.012019, vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018. 10. The DGAP has further reported that the refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commensurate with the reduction in the tax rate. This was the legally prescribed mechanism for passing on the benefit of ITC or reduction in the rate of tax to the recipients under the GST regime and there was no other method that a supplier could adopt to pass on such benefits. 13. The DGAP has reported that on examination of the details/documents submitted by the Applicant No. 1, Respondent and Jurisdictional office, it was observed that basically there were three categories of tickets (Balcony- Rs. 70, 1st Class- Rs. 50 Third Class- Rs. 10) sold by the Respondent during the pre as well as post rate reduction period effective from 01.01.2019 and the cum-tax price of these three categories of tickets remained same after the rate reduction which resulted in profiteering in terms of Section 171 of the Central Goods and Service Tax Act, 2017. 14. The DGAP has also stated that the Respondent was not maintaining the class/category-wise details of outward taxable supplies of movie admission tickets. Therefore, the methodology adopted by the DGAP to arrive at/compute profiteering in the subject case was in 'lump sum' of all the three categories of admission tickets. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e charged by the Respondent w.e.f. 01.01.2019 Actual Price charged by the Respondent w.e.f. 01.01.2019 Total Profiteering (In Rs.) (G=F-C) Taxable Turnover (A) GST@12% (B) Turnover including GST (C=A+B) Taxable Turnover (D) GST@12% (E) Turnover including GST (F=D+E) Jan-19 165000 19800 184800 165000 29700 194700 9900 Feb-19 107000 12840 119840 107000 19260 126260 6420 Mar-19 102000 12240 114240 102000 18360 120360 6120 Apr-19 195613 23474 219087 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs, it had been concluded by the DGAP that Section 171 (1) of the CGST Act, 2017, requiring that any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices , had been contravened in the present case by the Respondent. 19. The investigation report was received by this Authority on 29.09.2020 and it was decided to direct the Applicants and the Respondent to submit consolidated reply/written submissions by 15.10.2020 and any specific request for hearing if required. Notice dated 01.10.2020 was issued to the Respondent directing him to explain why the Report dated 28.09.2020 furnished by the DGAP should not be accepted and his liability for violation of the provisions of Section 171 of the CGST Act, 2017 should not be fixed. The Respondent vide his submissions dated 14.10.2020 has submitted that there was no variation in his price list before the commencement of GST, or after GST. The Respondent has also enclosed the copies of earlier letters submitted to the concerned offices/Inspectors in respect of the subject investigation with his submissions. 20. Supplementary Report w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ematograph films where the price of admission ticket was one hundred rupees or less 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 which was required to be passed on to the recipients by the Respondent as per the provisions of Section 171 of the above Act. 23. On examining the various submissions placed on record, this Authority needs to find whether there was any reduction in the GST rate and whether the benefit of reduction in the rate of tax was passed on or not to the recipients as provided under Section 171 of the CGST Act, 2017. 24. Section 171 of the CGST Act provides as under:- (1). Any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices. (2), The Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether ITCs availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um tax prices unchanged by appropriately increasing the base prices of all categories of admission tickets immediately after the tax rate had been reduced. 27. Further, this Authority takes note of the fact that the Respondent has not submitted any argument against the charges framed in the DGAP's report. Therefore we don't find any basis to differ from the findings of the DGAP that the Respondent had indeed contravened the provisions of Section 171 of the CGST Act 2017. 28. Based on the facts discussed above, it has been established that the Respondent has profiteered by way of increasing the base prices of his supplies of the three categories of movie tickets by maintaining the same selling prices of the movie admission tickets despite the reduction in GST rate on Services by way of admission to exhibition of cinematograph films where price of admission ticket is one hundred rupees or less from 18% to 12% w.e.f. 01.01.2019 to 30.06.2019. It is also clear to us that the Respondent has not passed on the benefit amounting to Rs. 1,31,754 (inclusive of GST) to his customers/recipients. Thus the profiteering is determined as Rs. 1,31,754/- as per the provisions of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of COVID-19 in the Country this order could not be passed on or before the above date. In this regard it would be relevant to mention that the Hon'ble Supreme Court in Miscellaneous Application No 21 of 2022 in MA 665 of 2021 in Suo Moto Writ Petition (Civil) No. 3 of 2020 vide its Order dated 10.01.2022 has directed that:- l. The order dated 23.03.2020 is restored and in continuation of the subsequent orders dated 08.03.2021, 27.04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. II. Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022. Ill. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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