Principal Commissioner Vs Devi 70 MM (NAA)
The National Anti-Profiteering Authority (NAA) directed the Directorate General of Anti-Profiteering to reinvestigate and recompute the quantum of profiteering against Devi Cinema.
It is a fact that the price of two categories i.e. the First and the Second class movie tickets has been reduced commensurately by the Respondent w.e.f. 11.03.2019. Since he has complied with the provisions of Section 171 of the CGST Act, 2017, the period from 11.03.2019 has no relevance from the perspective of Section 171 of the CGST Act, 2017, and hence, no profiteering can be established for the period after 11.03.2019. While taking this view, we take into cognizance of the fact that this Authority is not a price regulator. Thus, in this case, since the Respondent has increased the price of the movie tickets of the First and the Second class categories only in the month of May 2019, this price increase cannot be correlated to provisions of Section 171 of the CGST Act, 2017. It is also a fact that the DGAP has reported that in the post-tax-rate reduction period, the Respondent has maintained the same base prices in respect of the Upper and Lower Balcony categories of movie tickets and hence, we observe that there is no profiteering in the above category of these movie tickets. Therefore, though profiteering has been established against the Respondent in the categories of First class and Second class movie tickets, the computation of profiteering merits to be limited only up to 10.03.2019 as the Respondent had reduced the base prices commensurately for the First class and Second class movie tickets after 11.03.2019. No profiteering can thus arise for the period after 11.03.2019. Therefore, given the above, we find this case to be a fit case for recomputation of the amount of profiteering in line with the above observations.
29. Therefore, under the provisions of Rule 133(4) of the CGST Rules 2017, this Authority directs the DGAP to recompute the amount of profiteering in line with the observations made in the preceding paragraph. The DGAP is further directed to furnish his Report under Rule 129 (6) of the CGST Rules, 2017.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. The present Report dated 27.12.2019 has been received by this Authority from the Applicant No. 2, i.e. the Director-General of Anti-Profiteering (DGAP) after a detailed investigation in line with Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules, 2017. The brief facts of the present case are that the DGAP had received a reference from the Standing Committee on Anti- Profiteering on 28.06.2019 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 the supply of “Services by way of admission to exhibition of cinematograph films where the price of admission ticket was one hundred rupees or less” despite the reduction in the rate of GST from 18% to 12% w.e.f. 01.01.2019. Along with the application, Applicant No. 1 had also submitted the APAF-1 Form, copies of cinema tickets issued in the pre and post rate reduction period, and the details of the GST paid.
2. Vide his above Report, the DGAP has reported that Applicant No. 1 had alleged that the Respondent has not passed on the benefit of reduction in the GST rate on “Services by way of admission to exhibition of cinematograph films where price of admission ticket was one hundred rupees or less” from 18% to 12% which came into effect on 01.01.2019 vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018 and that the Respondent had instead increased the base price of the tickets. Along with the application, the Standing Committee has also forwarded the Annexure to APAF-1 confirming the fact of an increase in the base prices of the tickets and letter dated 31.12.2018 and 13.02.2019 of the Respondent to the State Standing Committee on Anti-Profiteering.
3. The DGAP has stated that on receipt of the aforesaid reference from the Standing Committee on Anti-profiteering, a notice under Rule 129 of the Rules was issued 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. The DGAP has reported that the period covered by the current investigation was from 01.01.2019 to 30.06.2019.
4. DGAP has reported that in response to the notice dated 09.07.2019, the Respondent submitted his replies vide e-mails/letters dated 24.07.2019, 27.11.2019, 04.12.2019 and inter-alia stated that:-
a. He had collected Rs. 118/-, 80/- and 50/- for three categories of tickets namely Upper and Lower (Balcony), First Class and Second Class respectively up to 31.12.2018 which included GST of 18% and had paid GST of Rs. 18/- on the basic amount of Rs. 100/- and Rs. 12.20/- on the basic amount of Rs. 67.80/-and Rs. 7.63/- on the basic amount of Rs. 42.37/- respectively and after 01.01.2019, the collected ticket prices were Rs. 112/-, 80/- and 50/- which include GST of 12%, and GST paid was Rs. 12/- on the basic amount of Rs. 100/- and 8.57/- on the basic amount of Rs.80/- and 5.35/- on Rs. 44.65/- respectively.
b. He did not get any benefit on Input Tax Credit accrued during tax rate changes as the tickets were sold, without any stocking of goods, and therefore, there was no chance of ITC being accumulated at periods of tax rate changes.
c. He did not benefit from the reduction in the tax rate since his ticket prices, inclusive of GST, remained the same before and after 01.01.2019, and that he was duly collecting and paying GST as per applicable rates from time to time.
d. He had reduced the base price of his tickets to Rs 75/- and Rs 45/- for first class and second class tickets, respectively, with effect from 11.03.2019 until 8.05.2019 during the post GST rate reduction period in support of which he furnished certain data which was as per the Table below:-
