DG Anti Profiteering Vs Jyothi Theatre (GSTAT)
The case concerns proceedings initiated based on a report by the Director General of Anti-Profiteering (DGAP) to determine whether the respondent violated Section 171 of the Central Goods and Services Tax (CGST) Act, 2017 by not passing on the benefit of GST rate reduction on cinema tickets. The GST rates on admission tickets were reduced with effect from 01.01.2019—from 28% to 18% for tickets above ₹100 and from 18% to 12% for tickets of ₹100 or less. An application alleging profiteering was received and referred for detailed investigation.
During the investigation, it was observed that the respondent continued charging the same gross ticket prices before and after the GST rate reduction. However, the base prices of tickets were increased post-reduction, thereby offsetting the benefit of lower tax rates. The DGAP found that instead of reducing the final ticket prices, the respondent adjusted base prices upward, resulting in retention of the tax benefit. Based on analysis of ticket categories and sales data for the period 01.01.2019 to 30.09.2019, profiteering was quantified at ₹19,86,640.
The respondent contested the findings, arguing that ticket prices were within the maximum limits prescribed by the State regulatory framework and were increased with due permissions and communications to the licensing authority. It was further contended that Section 171 requires only “commensurate” reduction, which allows consideration of factors such as increased operational costs. The respondent also claimed that maintenance charges collected per ticket were tax-free and should not be included in valuation. Additionally, it was argued that different movies and demand conditions were not properly considered, and that the DGAP failed to account for representations made seeking price revisions during specific periods.
