Principal Commissioner Vs Krishna Enterprises (Competition Commission of India)
Introduction: The Competition Commission of India recently addressed an anti-profiteering case involving Principal Commissioner Vs Krishna Enterprises. The case revolves around the imposition of penalties under Section 171(3A) of the Central Goods & Service Tax (CGST) Rules, 2017, specifically pertaining to the period before 01.10.2010.
Detailed Analysis: The investigation, initiated by the Director-General of Anti-Profiteering (DGAP), stemmed from an application filed by a concerned party. Allegations were made against Krishna Enterprises, stating that they did not pass on the benefit of a GST rate reduction on admission tickets to cinematography films. The reduction occurred from 18% to 12% starting on 01.01.2019, as per Notification No. 27/2018-Central tax (Rate) dated 31.12.2018.
The Applicant argued that Krishna Enterprises increased base prices to maintain the same cum-tax selling price, resulting in alleged profiteering. The investigation covered the period from 01.01.2019 to 30.09.2019.
Despite repeated notices, the Respondent did not fully cooperate, leading to summons and partial document submissions. The DGAP’s analysis focused on the discrepancy between pre and post-GST rate reduction ticket prices, concluding that the benefit was not passed on.
The DGAP presented tables illustrating alleged profiteering per ticket in different categories. The Respondent’s submissions, including information on special permissions for ticket price adjustments, were considered.
Conclusion: The DGAP determined that Krishna Enterprises failed to reduce ticket prices in line with the GST rate reduction. The Respondent increased base prices, denying consumers the benefit of the reduced tax rate. The profiteering amount was calculated at Rs. 7,19,187.
The Competition Commission of India, after careful consideration, directed Krishna Enterprises to reduce ticket prices in compliance with Rule 133(3)(a) of the CGST Rules, 2017. Additionally, the Respondent must deposit the profiteered amount of Rs. 7,19,187 with 18% interest in the Central Consumer Welfare Fund and Telangana State Consumer Welfare Fund, respectively, within three months.
FULL TEXT OF THE ORDER OF COMPETITION COMMISSION OF INDIA
1. The present Report dated 03.03.2020 has been received from the Director- General of Anti-Profiteering (DGAP) after a detailed investigation under Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules, 2017. The brief facts of the case and findings of investigation conducted by the DGAP are as under:-
i. A reference was received from the Standing Committee on Anti-profiteering on 09.10.2019, to conduct a detailed investigation in respect of an application filed by the Applicant No. 1, under Rule 128 of the CGST Rules, 2017, alleging profiteering by the Respondent in respect of supply of “Services by way of admission to exhibition of cinematography films”. The Applicant No. 1 had alleged that the Respondent did not pass on the benefit of reduction in the GST rate on the aforesaid movie admission tickets, from 18% to 12% w.e.f. 01.01.2019, vide Notification No. 27/2018-Central tax (Rate) dated 31.12.2018 and instead, increased the base price to maintain the same cum-tax selling price as detailed in Table-A’ below:-
Table-“A”
