Case Law Details
NY Cinemas LLP Vs Union of India & Ors (Delhi High Court)
Present writ petition has been filed challenging the order dated 6th July, 2022 passed by respondent No.2 and the notices dated 25th July, 2022, 17th August, 2022 & 26th August, 2022 issued by respondent No. 3.
Petitioner also seeks to challenge Section 171 of the CGST Act, Rules under Chapter XV of the CGST Rules particularly Rules 126, 127 and 133 as null and void and hold them to be unconstitutional being violative of Articles 14 and 19 (1) (g) of the Constitution of India; Rule 129 of the CGST Rules, as null and void for being violative of the principles of natural justice.
Learned senior counsel for the petitioner states that the petitioner has withdrawn the writ petition filed by it before Allahabad High Court. He states that vide the impugned order, respondent No.2 has erroneously determined that the petitioner has profiteered to the tune of Rs.2,66,99,340/-by not reducing the price of the goods or services supplied by it, in proportion to the tax rate reduction on account of introduction of the new GST rates.
Learned senior counsel for the petitioner states that the petitioner owns / runs multiplexes in various locations in India and the GST rates applicable to movie tickets had been reduced with effect from 01st January, 2019. He states that respondents No.2 and 3 determined that the petitioner had “profiteered” by comparing the average ticket prices in December 2018 to the prices between January 2019 to February 2020. He contends that the respondents No.2 and 3 completely ignored the fact that between December 2018 and February 2020, the petitioner’s capital expenditure had increased, and that movie ticket prices are highly variable and depend on a whole host of factors. He states that a simplistic comparison of average prices to determine ‘profiteering’ is illogical and arbitrary.
Learned senior counsel for the petitioner submits that Rule 133(5) cannot be applied retrospectively. He states that the impugned order and notice fail to consider relevant materials and rely on irrelevant materials. He further states that the impugned order erroneously applies sub-rule (3) of Rule 133. He points out that the impugned notice has been issued after final impugned order by respondent No.2 and amounts to impermissibly extending the scope of enquiry. He further states that the impugned order has been issued beyond the time limit prescribed under the Rules.
Issue notice.
Mr. Sushil Kumar Pandey, Advocate accepts notice on behalf of respondent No.1 and Mr. Zoheb Hossain, senior standing counsel accepts notice on behalf of respondent No.2 and Mr. Anurag Ojha, learned senior standing counsel for respondent Nos.3 & 4.
Let counter-affidavits be filed within a period of two weeks. Rejoinder affidavits, if any, be filed before the next date of hearing.
Keeping in view the orders passed by this Court in Phillips India Limited Vs. Union of India & Ors. [W.P.(C) No.3737/2020] as well as M/s Samsonite South Asia Pvt. Ltd. Vs. Union of India & Ors. [W.P.(C) No.4131/2020] and M/s Patanjali Ayurved Ltd. Vs. Union of India & Ors. [W.P.(C) No.4375/2020], this Court directs the petitioner to deposit the principal profiteered amount i.e. Rs.2,66,99,340/- in six equated instalments commencing 1st December, 2022.
The interest amount directed to be paid by the respondents as well as the penalty proceedings and further investigation by NAA in respect of cinema halls of petitioner for extended period of time as provided for in the impugned order are stayed till further orders. Learned counsel for the parties are directed to file their short written submissions not exceeding five pages each prior to the next date of hearing.
Tag the present writ petition along with W.P.(C) 10999/2018 and list on 6th and 7th December, 2022.
