Economy

PVR Hyderabad did not pass benefit of GST reduction, says National Anti-Profiteering Authority

Our Bureau New Delhi | Updated on August 28, 2020

A file picture of a PVR multiplex   -  REUTERS

The National Anti-profiteering Authority has held that PVR Hyderabad profiteered by not lowering the price post reduction of Goods & Services Tax (GST). However, no penalty has been imposed.

Post the introduction of GST, NAA was set up to determine whether the reductions in tax rates and the benefits of the input tax credit were being passed on to consumers by way of reduced prices.

After going through all facts and investigation report, NAA said: “It is clear that the Respondent (PVR Hyderabad) contravened the provisions of section 171 (1) of the CGST Act, 2017.”

This section says any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices. Violation of this section prescribes penalty which needs to be deposited with Consumer Welfare Fund.

The Authority said that violation has come into force with effect from January 1, 2020 and the infringement pertains to the period of January 1, 2019 to January 6, 2019 and the Respondent has also deposited the profiteered amount (₹13.72 lakh) along with interest (₹35,865) therefore “no penalty s proposed to be imposed on the Respondent.”

The allegation was that the Respondent had sold tickets of value of ₹250, ₹200 and ₹150 at the same prices prior to and after the GST rate reduction to 18 per cent from 28 per cent with effect from January 1, 2019. It was also alleged that the company increased the base price.

“Profiteering on Multiplex was a consequence of the rate reduction and only few businesses reduced the ticket price on time. This industry issue needs attention as one wrong decision could have a multiplier effect on different players and multiple locations,” said Abhishek A Rastogi, partner at Khaitan and Co, who is arguing plethora of anti-Profiteerig writs for different sectors.

Further he added that in the absence of methodology, the Constitutional validity must be argued so that even this sector gets heard on the legal grounds.

Published on August 28, 2020

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