The New Delhi Principal Bench of the Goods and Services Tax Appellate Tribunal (GSTAT) has said that theatres cannot keep the benefit of Goods and Services Tax (GST) rate reduction by raising the base price of movie tickets and upheld a Rs 14,26,344 anti-profiteering demand.
The rate of GST on admission to cinematograph films was reduced to 12% from 18% (where the ticket price was Rs. 100 or less) w.e.f. January 1, 2019. The matter arose when the Directorate General of Anti-Profiteering (DGAP) alleged that Arjun Theatre (the respondent) persistently levied the same final ticket prices by surging the base prices instead of lessening the amount submitted by customers.
From January 1, 2019 to August 31, 2019, the DGAP investigated the period and computed profiteering of Rs. 9,48,026 on Balcony tickets, Rs. 3,70,939 on Dress Circle tickets and Rs. 1,07,369 on First Class tickets.
The counsel of the respondent said that theatre owners were allowed by the Telangana High Court to collect their proposed fares after notifying the concerned authorities. The theatre had fixed and communicated its ticket rates within those directions and that no breach of Section 171 of the CGST Act was there.
The counsel of the revenue stated that Section 171 mandates the tax rate reduction to be passed on to the consumers via commensurate reduction in prices. It said that even after the GST rate reduction, the unchanged final ticket price specifies that the base price had risen.
The bench, including A. Venu Prasad (Technical Member), said that the theatre could not neutralise the benefit of the GST reduction by raising its base price.
“Where the supplier increases the base price so as to neutralise the effect of the reduction in the rate of tax and continues to charge the same cum-tax price, the benefit arising from such reduction is effectively retained by the supplier instead of being passed on to the recipient.”
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The tribunal has mentioned that the permission to charge proposed fares under the Telangana High Court orders is not above the independent obligation u/s 171 to pass on the GST benefit. There is no error in the calculation of DGPA.
The GSTAT received the DGAP report and directed the respondent to deposit INR 14,26,344 with 18 percent interest. The customers could not be determined, so the amount and interest were ordered to be equally divided among the Central and Telangana State Consumer Welfare Funds. Since the investigation period was before January 1, 2020, no penalty was levied.
| Case Title | DGAP Vs Arjun Theatre 70MM |
| Case No. | NAPA/8/PB/2025 |
| GSTIN | 36AAFFR5148H1Z2 |
| Delhi PB GSTAT | Read Order |
