NAA finds Inox Leisure Guilty of Profiteering, No Penalty imposed [Read Order]

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

However, the NAA decided not to impose any penalty as the penalty prescribed 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 supply of ‘Services by way of admission to 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.

In the application, it was alleged that the Respondent was selling the movie tickets of 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 had increased the base prices resulting in non-passing on of the benefit of rate reduction to his customers.

The DGAP has reported that the main issues to be examined in the present matter were whether the GST rate on “Services by way of admission to the exhibition of cinematograph films where the price of admission ticket was above one hundred rupees” was reduced from 28% to 18% with effect from January 1, 2020and 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.

The DGAP has 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.

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

The Authority headed by Dr. B.N. Sharma said that the profiteered amount is 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.

The NAA also noted that the Respondent has reduced his prices commensurately with effect from January 7, 2019 in terms of Rule 133 (3) (a) of the above Rules therefore, no further direction is required to be passed on this account.

“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,” the NAA said.