PVR guilty of profiteering in Telangana, no penalty required: NAA

MUMBAI: The National Anti-Profiteering Authority has found multiplex chain PVR guilty of profiteering by not reducing ticket prices in Telangana after reduction in the goods and services tax (GST) rate from 28% to 18% last year.

However, the NAA decided not to impose any penalty as the company, on its own accord, voluntarily deposited the amount of Rs 13.72 lakh, along with interest of Rs 36 thousand, to the Consumer Welfare Fund (CWF), in accordance with the provisions of CGST rules.

“We had reduced ticket prices from January 7th onwards, and for the first six days, we deposited the money suo moto,” Nitin Sood, CFO, PVR told ET. “The order of the NAA is actually in our favour, where they have acknowledged that the company had deposited the amount and there is no need for any further penalty.”

The matter dates back to last year, when the new GST rates for cinema exhibition came into play. The GST council had lowered taxes on tickets of up to Rs 100 to 12% from earlier 18% and for tickets priced at over Rs 100 to 18%, from earlier 28%.

As the ticket price in the state of Telengana was capped at Rs 150 by the government, cinemas had asked for clarity on the issue.

“The entire profiteering on multiplex businesses has been a subject matter of debate. While a few players reduced the ticket price pretty much on time, those who missed the reduction will have to determine the quantum of profiteering and will need to challenge the constitutional validity of the anti-profiteering provision, especially in absence of any methodology for the entertainment sector,” said Abhishek A Rastogi, partner at Khaitan and Co.