Sh. Vikas Goyal Vs Piccadilly Square Movie Complex (NAA)
In this case Respondent did not commensurately reduce the price of the tickets despite reduction in the GST rate from 28% to 18% and from 18% to 12% respectively. The Respondent vide his various submissions has also not opposed the said fact of not reducing the prices in commensurate manner after reduction of tax rate and profiteering calculation and has agreed to deposit the profiteered amount, though he has raised certain objections. In view of the facts mentioned in the DGAP Report, the Authority find that the Respondent has contravened provisions of section 171 of the CGST Act, 2017 and the Authority agrees with the profiteering amount calculated by the DGAP.
The Respondent has also requested that the payment of alleged profiteering may be allowed in monthly instalments, without imposition of interest in this regard. He has also quoted the case of Samsung India Electronics (P.) Ltd. v. Union of India and Gaurav Sharma Food Industries Vs Union of India & Ors. The above quoted orders are interim orders and are yet to attain finality and are pending before the court of law. Further, the facts of present case are different from the above-referred case and hence they are not applicable. There are no specific provisions in the CGST Act or rules, which provide for payment of determined profiteered amount in instalments.
In view of the above facts, it is evident that the Respondent did not reduce the base prices of five categories of tickets in commensurate manner for the period from 01.01.2019 to 18.07.2019 and four categories for the period from 19.07.2019 to 31.01.2020 and has contravened the provisions of section 171 of the CGST Act. This Authority determines the profiteered amount as Rs. 9,74,638/- and Rs. 2,32,112/- for the period 01.01.2019 to 18.07.2019 and 19.07.2019 to 31.01.2020 respectively. Therefore, the total amount of profiteering covering the period of 01.01.2019 to 31.01.2020 is determined as Rs.12,06,750/49,74,638 + 2,32,112).
The Authority determines the total amount of profiteering as Rs. 12,06,750/- as per the provisions of Rule 133 (1) of the above Rules as has been computed vide above Table- B and Table- D. Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133 (3) (a) of the above Rules. The Respondent is also directed to deposit an amount of Rs. 12,06,750/- in the Consumer Welfare Fund of the Central and the State Government in the ratio of 50:50, as per the provisions of Rule 133 (3) (c) of the above Rules along with 18% interest payable from the dates from which the above amount was realised by the Respondent from his recipients till the date of its deposit. The above amount shall be deposited within a period of 3 months from the date of passing of this Order failing which it shall be recovered by the concerned Commissioners CGST/SGST.
FULL TEXT OF ORDER OF NATIONAL ANTI-PROFITEERING AUTHORITY
1. This Report dated 28.10.2020 has been received on 29.10.2020 from the Applicant No. 2 i.e. the Director General of Anti-Profiteering (DGAP) after detailed investigation under Rule 129 (6) of the Central Goods & Service Tax (CGST) Rules, 2017.The brief facts of the case are that the Applicant No. 1 had filed an application alleging that the Respondent has profiteered with respect to supply of “Services by way of admission to exhibition of cinematography films”.
2. 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 28% to 18% w.e.f. 01.01.2019, granted 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.
3. The DGAP in it’s report dated 28.10.2020 has stated that
i. The aforesaid Application was examined by the Standing Committee on Anti-profiteering, in his meeting held on 10.01.2020 whereby it was decided to forward the same to the DGAP to conduct a detailed investigation in the matter. Accordingly, a Notice under Rule 129 of the Rules was issued by the DGAP on 29.01.2020, calling upon the Respondent to reply as to whether he admit that the benefit of GST rate reduction had not been passed on to the Applicant No. 1 by way of commensurate reduction in price and if so, to suomoto determine the quantum thereof and indicate the same in his reply to the Notice as well as furnish all supporting documents. The Respondent and the Applicant No. 1 were also given opportunity to inspect the non-confidential evidences/information While the Applicant did not avail of the opportunity, the Respondent availed the said opportunity.
ii. The period covered by the current investigation was from 01.01.2019 to 31.01.2020. The time limit to complete the investigation was 24.07.2020. However, vide Notification No. 55/2020-Central Tax dated 27.06.2020, the time limit was extended upto the 31.08.2020 and then by Notification No. 65/2020- Central Tax dated 01.09.2020, the time limit for compliance was extended up to 30.11.2020. The National Anti-Profiteering Authority, vide it’s Order dated 26.08.2020 in terms of Rule 129(6) of the Rules allowed further extension of three months.
iii. Central Government, on the recommendation of the GST Council, reduced the GST rate on the product “Services by way of admission to exhibition of cinematography films where price of admission ticket was above one hundred rupees” from 28% to 18% and “Services by way of admission exhibition of cinematograph films where 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 . This was a matter of fact which has not been contested by the Respondent.
iv. The Respondent submitted his replies vide letters and e-mails dated 12.02.2019, 28.02.2019, 01.06.2020, 08.10.2020 and 20.10.2020. The replies of the Respondent are summed up as follows:-
a) That he had sold movie tickets in three categories: – Silver, Gold and Business Class, where the Respondent has changed prices of some tickets from the date of change in effective rate of tax i.e. 01.01.2019, whereas he changed price of other slabs from 19.07.2019 onwards.
b) That the Anti-profiteering Authority was constituted to check profiteering due to the advent of GST only and not for the subsequent rate reduction under GST. That the Authority was constituted for monitoring any profiteering by taxpayers and not as a price controlling authority.
c) The entire profiteering from increased base selling price w.e.f 01.01.2019 was not the share of Respondent and had been distributed among others.
v. The Respondent submitted the following documents/information:
a) Category-wise details of price of the tickets along with the number of tickets sold in each category during the period under consideration i.e. prior to change in effective rate of tax (December, 2018) and after the change in effective rate of tax (January, 2019 to 18th July, 2019) and (19th July, 2019 to January, 2020).
b) Price List of the aforesaid movie admission tickets, pre and post 01.01.2019.
c) Sample copies of the invoice/tickets, pre and post 01.01.2019.
d) GSTR-1 and GSTR-3B returns for the period December, 2018 to January, 2020.
vi. On examination of the details of sales data, complaint of the Applicant
No. 1 and various replies submitted by the Respondent, it was observed that five categories of tickets (Rs. 100/-, Rs. 125/-, Rs. 150/, Rs 250/- and Rs. 500/-) were sold by the Respondent during the pre and post rate reduction period effective from 01.01.2019. Hence, the investigation was limited to reduction in rate of GST from 28% to 18% and from 18% to 12% for all categories of admission tickets sold by the Respondent.
vii. In terms of Section 171(1) of Central Goods and Services Tax Act, 2017, the legal requirement was that in the event of benefit of ITC or reduction in rate of tax, there must be a commensurate reduction in prices of the goods or services.
viii. From the sales data made available by the Respondent, it was observed that although the price of Silver category ticket (Rs. 100/-) and price of Gold category tickets were reduced by the Respondent from 01.01.2019 and price of all other categories were reduced from 19.07.2020 but the Respondent did not reduce the price commensurately and increased the base prices of the admission ticket when the GST rate was reduced from 28% to 18% and 18% to 12% w.e.f. 01.01.2019 in the manner illustrated in Table-A’ below.
ix. As shown in the table above, the Respondent had increased the base price of admission ticket i.e. Silver seat from Rs. 84.75/- to 84.82/-, Silver Seat Rs 97.65/- to 105.93/-, Gold seat Rs.117.18/- to 118.64/-, Business seat Rs.195.31/- to 211.86/- and Business seat Rs. 390.63/-to 423.73/-. Therefore, in terms of Section 171 of the Central Goods and Services Tax Act, 2017, benefit of GST rate reduction from 28% to 18% and 18% to 12% in respect of “Services by way of admission to exhibition of cinematography films, was not passed on to the recipients.
x. On the basis of aforesaid pre/ post reduction in GST rates and the details of outward supplies for the period 01.12.2018 to 18.07.2019 submitted by the Respondent, it was observed that the Respondent profiteered during the period from 01.01.2019 to 18.07.2019 from the sale of tickets in five categories amounting to Rs. 10,109/- for Silver, Rs. 2,46,907/- for Silver, Rs. 4,46,840/-for Gold, Rs.1,50,790/- for Business and Rs. 1,19,992/ for Business. The total amount of net higher sale realization due to increase in the base price of the movie tickets, despite the reduction in GST rate from 28% to 18% & 18% to 12% or in other words, the profiteered amount comes to Rs. 9,74,638/-. The details of the computation are given in the Table “B” below.
Table-B
