Entertainment Tax Retention Upheld for Multiplex Owner Under GST Transition

Case Name:

M/s. Multiplex Cinevision Pvt. Ltd. Vs. State of UP And 2 Others

Writ Tax No. 751 of 2018

Key Takeaways:

- The old entertainment tax benefits can continue under GST if not explicitly revoked.

- Section 174 of U.P.G.S.T. Act preserves rights from repealed laws unless specifically cancelled.

- The court's decision highlights the importance of clear notifications during tax law transitions.

Issue:

The main question here is: Can the multiplex company continue to collect and retain entertainment tax under the old scheme after GST was implemented?

Facts:

- There's this company, M/S. MULTIPLEX CINEVISION PVT. LTD., that builds and runs multiplexes in Meerut.

- Back in 2015, the U.P. government came up with a sweet deal for multiplex owners. They could collect entertainment tax and keep 100% of it in the first year, 75% in the second and third years, and 50% in the fourth and fifth years. This was supposed to last until March 31, 2020.

- On November 24, 2013, the District Magistrate in Meerut gave our multiplex company the green light to keep this tax money to help cover their construction costs.

- But then, plot twist! On July 1, 2017, GST came into the picture and the old entertainment tax law was repealed.

Arguments:

The multiplex company's lawyer argued that since there wasn't any new notification cancelling their tax benefit under the old scheme, they should be allowed to keep collecting and retaining the entertainment tax until November 24, 2018, as originally planned.

Key Legal Precedents:

The key legal point here is Section 174 of the U.P.G.S.T. Act. This section says that even though the old law is gone, any rights or benefits under it stay valid unless they're specifically cancelled by a new notification after GST came in.

Judgement:

The court didn't make a final decision yet. Instead, they:

- Asked the government representatives to file a counter-affidavit within a month.

- Gave the multiplex company two weeks after that to file a rejoinder affidavit.

- Specifically asked the government to clarify if the tax benefit scheme for the company is still valid or if it's been cancelled automatically or by any new notification.

FAQs:

Q1: Did the court make a final decision?

A1: Not yet. They've asked for more information before making a final call.

Q2: Can the multiplex company keep collecting entertainment tax?

A2: For now, it seems they can, but the final decision is pending.

Q3: What's the significance of Section 174 of U.P.G.S.T. Act?

A3: It's crucial because it allows old benefits to continue unless specifically cancelled, which is the main argument for the multiplex company.

Q4: When will the final decision be made?

A4: The court listed the case for admission/final disposal in July 2018, but we don't have information on the final outcome from this document.

Q5: What impact could this case have?

A5: It could set a precedent for how tax benefits under old laws are treated during the transition to GST, especially when there's no explicit cancellation of these benefits.

Petitioner is a Company incorporated under the provisions of the Companies Act engaged in the business of construction and development of entertainment facilities including Multiplex theatres in district Meerut. 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 District Magistrate, Meerut vide order dated 24.11.2013 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 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 up to 24.11.2018 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 Vaibhav Tripathi, 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 in July, 2018 along with Writ Petition No. 518 of 2017.

Order Date :- 8.5.2018