Cinema Operator Liable for Retaining GST Rate Cut Benefit

The Principal Bench of the Goods and Services Tax Appellate Tribunal (GSTAT), Delhi, on May 27, 2026, held that a cinema operator had profited by failing to pass on the benefit of a reduction in the GST rate on cinema admission tickets to consumers. The Tribunal directed the respondent to deposit Rs 9.67 lakh, along with interest, in the Consumer Welfare Funds after finding that ticket prices were not reduced despite a cut in GST from 18% to 12%.

A Bench comprising Technical Member Sh. A. Venu Prasad upheld the findings of the Directorate General of Anti-Profiteering (DGAP) against ASR Cinema LLP.

The proceedings arose from a complaint alleging that ASR Cinema LLP did not pass on the benefit of the GST rate reduction on cinema tickets priced at Rs 100 or less. Pursuant to Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018, the GST rate on such tickets was reduced from 18% to 12% with effect from January 1, 2019. It was alleged that instead of reducing ticket prices, the respondent increased the base price of tickets and retained the same cum-tax selling price.

The DGAP investigated the matter for the period from January 1, 2019, to September 30, 2019. Since the respondent failed to furnish complete information despite repeated opportunities, the investigation was conducted on the basis of available statutory returns and records. The DGAP found that the respondent had increased the base prices across various ticket categories after the GST rate reduction, thereby neutralising the benefit intended for consumers.

The Tribunal observed that Section 171 of the CGST Act mandates that any reduction in the rate of tax must be passed on to recipients through a commensurate reduction in prices and that suppliers cannot retain the benefit arising from a tax cut.

The respondent did not appear before the Tribunal or file any submissions despite multiple notices and opportunities. Consequently, the matter was decided ex parte on the basis of the material available on record.

The Tribunal rejected any justification based on orders of the Telangana High Court permitting theatres to collect proposed fares. It held that such permissions could not override the statutory obligation under Section 171 of the CGST Act. The Tribunal further noted that the benefit of GST reduction had to be passed on to consumers irrespective of the ticket pricing framework applicable under state laws.

The Tribunal held that maintaining the same ticket price after the reduction of GST by increasing the base price amounted to profiteering, as consumers were deprived of the tax benefit intended by the Government.

After examining the DGAP’s computation, the Tribunal accepted the profiteered amount at Rs 9.67 lakh, comprising Rs 8.63 lakh as excess base realisation and Rs 1.03 lakh towards GST collected on such excess realisation.

The Tribunal, however, declined to impose any penalty under Section 171(3A) of the CGST Act, observing that the penalty provision came into force only from January 1, 2020, whereas the period of profiteering in the present case was prior to that date.

Thus, the GSTAT confirmed the profiteering determination and directed the respondent to deposit the amount along with applicable interest within 60 days.

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