Cinema Hall Must Pass GST Rate Cut to Moviegoers: GSTAT Upholds Rs. 11.88 Lakh Anti-Profiteering Demand

Cinema Hall Must Pass GST Rate Cut to Moviegoers: GSTAT Upholds Rs. 11.88 Lakh Anti-Profiteering Demand

Bhavya Construction Pvt. Ltd., which operates Bramaramba Cinema Hall (70 MM) at Hyderabad, was investigated for alleged anti-profiteering following the reduction of GST rates on cinema tickets with effect from 01.01.2019. Despite the rate cut from 28% to 18% on tickets above Rs. 100 and from 18% to 12% on tickets priced at Rs. 100 or below, the cinema continued to charge the same gross ticket prices.

The Director General of Anti-Profiteering (DGAP) found that instead of reducing ticket prices, the respondent increased the base price, thereby retaining the tax benefit meant for consumers. For the period from 01.01.2019 to 30.06.2019, profiteering was quantified at Rs. 11,88,482 (inclusive of GST).

Main Issue: Whether the respondent contravened Section 171 of the CGST Act by not passing on the benefit of GST rate reduction on cinema tickets to consumers through commensurate price reduction.

Tribunal Held: The GST Appellate Tribunal held that assessee failed to pass on the benefit of GST rate reduction and had profiteered Rs. 11,88,482. The Tribunal rejected the respondent’s defences based on state cinema regulation, alleged approval of higher ticket prices, movie-wise computation, absence of a statutory methodology, and exclusion of GST component from profiteering.

The respondent was directed to deposit the profiteered amount within 30 days, Rs. 5,94,241 to the Central Consumer Welfare Fund and Rs. 5,94,241 to the Telangana State Consumer Welfare Fund (or entirely to the Central Fund if the State Fund is unavailable). No interest was ordered, as the relevant provision applied prospectively, and no penalty was imposed as Section 171(3A) came into force after the violation period.

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