The main issues to be examined in the present matter were whether the GST rate on Services by way of admission to an exhibition of cinematography films where the price of the admission ticket is above one hundred rupees was reduced from 28% to 18% with effect from January 1, 2019, and Services by way of admission exhibition of cinematograph films where the price of the admission ticket is one hundred rupees or less was reduced from 18% to 12% 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.
The Respondent, M/s Shiva Parvathi Theater has resorted to profiteering by way of either increasing the base prices of the service while maintaining the same selling prices or by way of not reducing the selling prices of the service commensurately, despite a reduction in GST rate on “Services by way of admission to an exhibition of cinematograph films where the price of the admission ticket is one hundred rupees or less” from 18% to 12%.
On this account, the Respondent has realized an additional amount to the tune of Rs.5,31.625 from the recipients which included both the profiteered amount and GST on the said profiteered amount. Thus the profiteering is determined as Rs. 5,31,625/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017.
The NAA noted that the Respondent has denied the benefit of rate reduction to his customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has committed an offense for violation of the provisions of Section 171(1) during the period from and therefore, he is apparently liable for imposition of penalty under the provisions of the above Section.
However, perusal of the provision of Section 171 (3A) of the CGST Act, 2017 under which penalty has been prescribed shows that Section 171 (3A) of the Act has been inserted in the CGST Act, 2017 with effect from January 1, 2020, vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from January 1, 2019 to June 30, 2019, when the Respondent had committed the violation and hence, the penalty prescribed under Section 171 (3A) of the Act cannot be imposed on the Respondent retrospectively.
The Authority headed by Dr. B.N. Sharma directed the Respondent to reduce the prices of his tickets as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients.
The Respondent is also directed to deposit the profiteered amount of Rs. 5,31,625 along with the 18% interest from the date when the amount was collected by him from the recipients till the amount is deposited.
Since the recipients, in this case, are not identifiable, the NAA directed the respondent to deposit the amount of profiteering of Rs.5,31,625 in the Central Consumer Welfare Fund (CWF) and the Telangana State CWF in two equal parts as per the provisions of Rule 133(3)(c) of the CGST Rules, 2017, along with 18% interest.
“The above amount shall be deposited within a period of 3 months from the date of receipt of this Order failing which the same shall be recovered by the Commissioner CGST/SGST as per the provisions of the SGST Act, 2017,” the NAA said.Subscribe Taxscan AdFree to view the Judgment