M/s Inox Leisure was found guilty of profiteering for not reducing the prices in respect of the supply of services by way of admission to the exhibition of cinematography films where the price of admission ticket after reduction in the goods and services tax (GST) rate from 28% to 18%, by the National Anti-Profiteering Authority (NAA).

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But NAA has decided that it will not impose any penalty according to the provisions of penalty mentioned under Section 171 (3A) of the CGST Act, 2017 for violation of the above provisions has come into force with effect from January 1, 2020, and the infringement pertains to the period from January 1, 2019, to January 6, 2019.

An application was filed by the Applicant against the Respondent, M/s Inox Leisure alleging profiteering in respect of the supply of ‘Services by way of admission to the exhibition of cinematography films where the price of admission ticket was above one hundred rupees’ despite the reduction in the rate of GST from 28% to 18% with effect from January 1, 2020.

The Applicant alleged about the Respondent in its application that it was selling the movie tickets of the value of Rs. 250, Rs. 200 and Rs. 150 at the same prices after the reduction in the rate of GST from 28% to 18%, vide Notification No. 27/2018- Central Tax (Rate) dated December 31, 2018, and instead of this, the Respondent increased the base prices resulting in non-passing on of the benefit of rate reduction to his customers.

The DGAP says that the main issues that should get examined in this case are that whether the GST rate on “Services by way of admission to the exhibition of cinematography films where the price of admission ticket was above one hundred rupees” was reduced from 28% to 18% with effect from January 1, 2020, and if so, whether the benefit of such reduction in the rate of GST had been passed on by the Respondent to his recipients, in terms of Section 171 of the CGST Act, 2017.

DGAP also claimed that the Respondent had not reduced the selling prices commensurately of the movie tickets when the GST rate was reduced from 28% to 18%, vide Notification No. 27/2018- Central Tax (Rate) dated December 31, 2018, and hence profiteered an amount of Rs.11.73 per ticket in the Executive (2D) category and Rs 21.88/- per ticket in the Royal (3D) category.

Because of these things only the benefit of reduction in GST rate was not being passed on to the recipients by way of commensurate reduction in the prices, in terms of Section 171 of the CGST Act. 2017.

Dr B.N. Sharma headed the authority and said that the profiteered amount is to be determined as Rs.4,20,731 for the period from January 1, 2019, to January 6, 2019, as per the provisions of Section 171 (1) read with Rule 133 (1) of the CGST Rules, 2017.

And for the period starting from January 7, 2019, the Respondent has reduced his prices commensurately so NAA noted that in terms of Rule 133 (3) (a) of the above Rules no further direction is required to be passed on this account.

At last National Anti-Profiteering Authority (NAA) said, “Since the recipients of the benefit as determined above are not identifiable, the Respondent has voluntarily deposited the profiteered amount of Rs. 4,20,731 along with interest of Rs. 10,065/- in the CWFs of the Central and the State Government in accordance with the provisions of Rule 133 (3) (c) of the CGST Rules, 2017.”

With Warm Regards,

CL Bureau.

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