PVR, NY Cinemas probed for not passing on GST perks

The Director-General of Anti-Profiteering (DGAP) has begun investigations into NY Cinemas, PVR Cinemas and the Prasads Multiplex chain for allegedly profiteering from the Goods & Services Tax (GST) rate cuts, an official privy to the development said.

NY Cinemas, promoted by actor Ajay Devgn, has a presence in small Uttar Pradesh towns bordering on Delhi, while Prasads Multiplexes dot Hyderabad; PVR operates cinemas across 21 states and union territories. "The three chains didn't pass on the benefits of the rate reduction to patrons as they continued to charge them the rate applicable before January 1," the official said.

GST Council had reduced the prices of the tickets by 10% starting January 1, 2019, to make cinema viewing affordable. The tax on the tickets costing above Rs 100 was lowered to 18% from 28%, whereas for the cheaper tickets, it came down to 12% from 18%.

The probe has been initiated on the basis of complaints received by the respective state anti-profiteering committees from cinema-goers. Preliminary investigations were carried out by the state committees, which found merit in the grievances and sent these to the national committee. Subsequently, the national standing committee referred the cases to the DGAP for a detailed investigation.

"We have provided all the requisite details to the department with all supporting documents and proofs, establishing the fact that there has been no case of 'anti-profiteering'," Rajeev Sharma, CEO of NY Cinemas said in an e-mail response. "Besides, excess tax collected, if any, was deposited along with regular monthly returns with the Government Treasury. We have not made any extra profit at the cost of consumers/moviegoers." Despite several attempts, PVR Cinemas and Prasads Multiplex did not reply to the queries sent by DNA.

As per the anti-profiteering provisions under the Central GST Act, 2017 (Section 171), benefits flowing from all tax cuts or from input tax credit have to be passed on to consumers by way of commensurate reduction in prices. The National Anti-Profiteering Authority (NAA) has been set up under the GST regime to protect consumers' interest, with the DGAP as its investigation arm. A complaint redressal mechanism is in place, which includes state-level screening committees and a national standing committee. The NAA works under the administrative control of the Finance ministry.

The state screening committees, after collecting prima facie evidence, send a report to the national standing committee, which then refers the case to the DGAP for investigation. DGAP gets three months, extendable by another three months, to submit its report to the NAA, which issues with the final order.

If the anti-profiteering watchdog finds these multiplex chains guilty of profiteering, it can ask the company to reduce prices from retrospective effect, return the due amount to the customer, impose a penalty or in extreme cases, may even cancel the firm's registration. In the event the customers cannot be identified, the NAA can also ask the erring company to deposit the amount with the Consumer Welfare Fund (CWF) of the government.