GSTAT Directs Hyderabad Cinema Operator To Deposit ₹81,722 For Failing To Pass On GST Rate Cut Benefit

The Principal Bench of the GST Appellate Tribunal (GSTAT) on 19 September directed Hyderabad-based cinema operator Devi 70MM to deposit Rs. 81,722 towards profiteering for failing to pass on the benefit of the reduction in GST on cinema admission tickets priced at Rs. 100 or below, which was reduced from 18% to 12% with effect from 1 January 2019.

A Single Member Bench comprising Judicial Member Justice Mayank Kumar Jain held that a cinema operator must pass on the benefit of a GST rate reduction to viewers by correspondingly reducing ticket prices.

The Directorate General of Anti-Profiteering (DGAP) found that although Devi 70MM continued charging Rs. 80 for First Class and Rs. 50 for Second Class tickets, it increased the base prices after the GST rate reduction. It calculated profiteering of Rs. 25,453.78 on First Class tickets and Rs. 56,268.62 on Second Class tickets, totalling Rs. 81,722 including GST, for the period from 1 January to 10 March 2019.

The Tribunal found that the theatre had not produced evidence to establish that it had passed on the benefit of the tax reduction from 1 January 2019. It also rejected the contention that factors such as the performance of movies, weekends, holidays and demand justified retaining the existing ticket prices.

Accordingly, the GSTAT accepted the DGAP's report and directed Devi 70MM to deposit Rs. 81,722 along with 18% interest. Half the amount, along with interest, is to be deposited in the Central Consumer Welfare Fund and the remaining half in the Telangana State Consumer Welfare Fund.

No penalty was imposed.