Court Examines Entertainment Tax Benefit Continuity Post-GST Implementation

Case Name:

GNG ENTERPRISES vs. STATE OF U.P. (GST HC Cases)

Key Takeaways:

The case highlights the complexity of transitioning from pre-GST tax schemes to the GST regime.

It underscores the importance of clear notifications regarding the continuation or revocation of pre-existing tax benefits.

The court's decision to seek clarification emphasizes the need for proper interpretation of saving clauses in new tax laws.

Issue: Does the entertainment tax benefit scheme granted to the petitioner under the U.P. Entertainments and Betting Tax Act, 1979 continue to be valid after the implementation of GST and the repeal of the said Act?

Facts:

GNG Enterprises is a partnership firm engaged in constructing and developing multiplex theaters in Saharanpur.

On September 3, 2015, a scheme was formulated under the U.P. Entertainments and Betting Tax Act, 1979, valid until March 31, 2020.

This scheme allowed multiplex owners to collect and retain entertainment tax at varying percentages over five years.

On July 20, 2015, the Entertainment Tax Officer/Collector of Saharanpur permitted the petitioner to retain entertainment tax as per the scheme.

The CGST Act, 2017 and U.P. GST Act, 2017 were implemented on July 1, 2017, repealing the U.P. Entertainments and Betting Tax Act, 1979.

Arguments: Petitioner's Argument:

The petitioner, through counsel Abhishek Rastogi, argued that under Section 174 of the U.P. GST Act, 2017, there was no notification repealing the benefit conferred by the scheme.

Therefore, the petitioner claimed entitlement to collect and retain entertainment tax as per the scheme until March 31, 2020.

Revenue's Argument:

The revenue department's arguments were not explicitly stated in the provided information.

Key Legal Precedents: The judgment does not mention any specific legal precedents. However, it refers to Section 174 of the Uttar Pradesh Goods and Services Tax Act, 2017, which contains a saving clause for rights, privileges, obligations, or liabilities acquired under the repealed Act.

Judgement: The court did not make a final decision in this hearing. Instead, it:

Directed the respondents to file a counter affidavit within one month.

Allowed the petitioner two weeks thereafter to file a rejoinder affidavit.

Specifically asked the respondents to answer whether the scheme granting tax benefits to the petitioner was still continuing or had been revoked either automatically or by any fresh notification.

Listed the petition for admission/final disposal on September 18, 2017.

Allowed the petitioner to amend the petition if advised.

FAQs:

Q: What was the entertainment tax benefit scheme? A: It was a scheme formulated under the U.P. Entertainments and Betting Tax Act, 1979, allowing multiplex owners to collect and retain entertainment tax at varying percentages over five years.

Q: When was GST implemented in this case? A: The CGST Act, 2017 and U.P. GST Act, 2017 were implemented on July 1, 2017.

Q: What is the significance of Section 174 of the U.P. GST Act, 2017? A: It contains a saving clause that preserves certain rights, privileges, obligations, or liabilities acquired under the repealed Act, unless specifically rescinded or revoked.

Q: Did the court make a final decision in this hearing? A: No, the court issued notices to the revenue department seeking clarification on whether the tax benefit scheme was still in effect or had been revoked.

Q: When was the case scheduled for further hearing? A: The petition was listed for admission/final disposal on September 18, 2017.

Petitioner is a partnership firm engaged in the business of construction and development of entertainment facilities including Multiplex theatres in district Saharanpur. Under the U.P. Entertainments and Betting Tax Act, 1979 (hereinafter referred to as the Act) an scheme was formulated on 3rd September, 2015, which was valid up to 31st March, 2020 permitting the Multiplex owners to collect entertainment tax and to retain 100% of the first year, 75% in the second and third year and 50% in the forth and fifth year. On the basis of the said scheme, the Entertainment Tax Officer /Collector, Saharapur vide order dated 20.07.2015 specifically permitted the

petitioner to retain the entertainment tax to the above extent so as to enable it to recover the cost of construction of the Multiplex.

During the subsistence of the above scheme, the C.GS.T. and

U.P.G.S.T. Acts have been implemented w.e.f. 01.07.2017 and

the Act has been repealed vide Section 174 of U.P. G.S.T. Act

with the saving clause that it will not effect any right, privilege,

obligation or liability acquired, accrued or incurred under the

repealed Act provided the tax exemption granted under the

repealed Act by any notification has not been rescinded or

revoked by a fresh notification on or after the enforcement of

the G.S.T.

The submission of Sri Abhishek Rastogi, learned counsel for

the petitioner is that in view of Section 174 of the U.P.G.S.T. as

there is no notification repealing the benefit conferred upon the

petitioner under the scheme of the Act, he is entitle to collect

entertainment tax as in the past upto 31st March, 2020 and to

retain the percentage of it in accordance with the scheme.

Learned Standing Counsel appearing for the respondents No. 1

and 3 and Sri Krishna Agarwal, who has accepted notice on

behalf of respondent No.2 are directed to file counter affidavit

within one month. Two weeks thereafter are allowed to the

petitioner for filing rejoinder affidavit. They would specifically

answer if the scheme granting tax benefit to the petitioner is

still continuing or stand revoked either automatically or by any

fresh notification.

List this petition for admission/final disposal 18.09.2017.

The petitioner is free suitably amend the petition if advised.

Order Date :- 28.7.2017

piyush