Two Hyderabad cinemas have been ordered to deposit nearly ₹11 lakh, along with 18% annual interest, into consumer welfare funds after the GST Appellate Tribunal found that they failed to pass on a tax reduction to moviegoers in 2019.
In separate orders pronounced on September 19, the tribunal upheld the director general of Anti-Profiteering’s findings against Alankar Cinema in Langar House and Devi 70MM in Chikkadapally. The cases relate to the reduction of GST on cinema tickets priced at ₹100 or less, from 18% to 12%, which took effect on January 1, 2019.
The tribunal held that cinemas could not use their pricing discretion to retain the benefit of the tax reduction. It relied on Section 171 of the Central Goods and Services Tax Act, which requires suppliers to pass on reductions in tax rates to consumers through a corresponding reduction in prices.
For Alankar Cinema, the investigation found that tax-inclusive ticket prices remained at ₹100, ₹60 and ₹30 even after the GST cut. The cinema raised the base prices instead. Its balcony ticket base price, for example, increased from ₹84.70 to ₹89.20. The director general of Anti-Profiteering calculated the amount retained as ₹10.1 lakh between January 1 and October 31, 2019.
Alankar argued that its prices were regulated by state government and high court orders and that it faced rising electricity, security and maintenance expenses. It also contended that it sold no physical goods, issued no invoices and retained no input tax credit benefit. The tribunal rejected these objections, holding that state-prescribed price ceilings did not exempt the cinema from passing on a GST reduction.
The Devi 70MM case involved ticket prices of ₹80 and ₹50, which the cinema retained by increasing the base prices. No profiteering was calculated for its ₹118 balcony tickets. After the cinema voluntarily reduced prices between March 11 and May 8, 2019, the investigation was limited to the period from January 1 to March 10. The amount determined for that period was ₹81,722, inclusive of GST.
Devi 70MM attributed its pricing decisions to factors including film popularity, star cast, weekends and holidays. The tribunal rejected those grounds as well. It also noted that the cinema had not been penalised. In Alankar’s case, the tribunal held that Section 171(3A), which became effective on January 1, 2020, could not be applied retrospectively to the 2019 transactions.
Under the orders, each cinema must deposit half of its determined amount, with interest, in the Central Consumer Welfare Fund and the other half in Telangana’s consumer welfare fund. The ruling places the responsibility for passing on indirect-tax reductions directly on cinema operators, even where ticket prices are subject to external ceilings or commercial cost pressures.
