IN THE HIGH COURT OF BOMBAY
Writ Petition No. 1800 of 2019
M/s BRAMHA CORP LTD
STATE OF MAHARASHTRA
THROUGH OFFICE OF
THE GOVERNMENT PLEADER AND ORS
M S Sanklecha & S C Gupte, JJ
Dated: July 16, 2019
Appellant Rep by: Mr Siddharth R Ronghe
Respondent Rep by: Mr R P Kadam, AGP & Mr S P Bharti
Luxury Tax – Petitioner seeks a direction to the Respondent State of Maharashtra to honour its commitment to grant luxury tax exemption under the Act of 1987 for the period 5 April 2017 to 31 March 2027 – Petitioner contends that this waiver was an incentive for the petitioner to establish hotel within the State of Maharashtra, however, upon introduction of GST Act, 2017, the luxury tax was subsumed in GST and thus the benefit granted to the petitioner under the eligibility/entitlement certificate dated 5 April 2017 and 22 June 2016 could not be given effect to.
Held: A similar issue had come up before the Bench in the case of Adlabs Entertainment Ltd. which dealt with entertaintent tax waiver under the erstwhile regime before the introduction of GST and the High Court had vide its order dated 21 st December 2018 – 2018-TIOL-2933-HC-MUM-GST directed the State government to constitute a high level committee to consider the said petitioner’s representation as has been done by some other States and consequently the high level Committee had by its report dated 6 th March 2019 recommended to refund the quantum of SGST paid by the petitioner during the period of incentive as per the Entitlement Certificate issued to them – Respondents do not dispute that the facts in this case are similar/identical to those in the case of Adlabs Entertainment Ltd. (supra) – The only distinction being that the waiver sought is of luxury tax and in the earlier case, the waiver was of entertainment tax – If the Committee report has been accepted, the State Government should take a policy decision so that the benefit can be extended to all similarly situated parties – For the purpose of taking instructions, AGP for the State, seeks time – petition is adjourned by a period of two weeks to be listed along with Original Side Writ Petition No.3027 of 2018 – to be heard on 30 July 2019: HC [para 2 to 7]
This petition under Article 226 of the Constitution of India seeks a direction to Respondent No.1 – State of Maharashtra to honour its commitment to grant luxury tax exemption under the Luxury Tax Act, 1987 as is evident for the Eligibility and Entitlement Certificate dated 5 April 2017 for the period 1 April 2017 to 31 March 2027. This by issuing a necessary notification so as to grant the Petitioner the benefit of luxury tax, which had been waived by the State of Maharashtra. This waiver was an incentive for the Petitioner to establish hotel within the State of Maharashtra. However, upon introduction of the Goods & Service Tax Act, 2017 (GST), the luxury tax was subsumed into the GST. Thus, the benefit granted under the eligibility/entitlement certificate dated 5 April 2017 and 22 June 2016 could not be given effect to and even though the Petitioner had set up a hotel on the basis of the representation made by the State Government.
2. A similar issue had come up before us in Adlabs Entertainment Ltd. vs. U.O.I. (Writ Petition No.3027 of 2018) = 2018-TIOL-2933-HC-MUM-GST, which dealt with a similar issue viz. entertainment tax waiver under the erstwhile regime before the introduction of the GST. We had, in the above case, by order dated 21 December 2018, directed the State Government to constitute a high level committee to consider the Petitioner’s representation seeking the benefit of the incentive given under the erstwhile regime of waiving the entertainment taxes, as has been done by some other States.
3. Consequent to the above order, the high level committee of the State Government consisting of Development Commissioner (Industries), Secretary (Tourism) & Principal Secretary (Finance Reforms), by its report dated 6 March 2019, has recommended as under:
“Recommendation of the Committee is as under:
– Indirect Tax system in India changed from multiple taxes to one single Tax i.e; GST from 1st July 2017. Under G.S.T. Regime, there is no specific provision to grant exemption from levy of Tax to any class of dealers. Hence exemption sought by the Petitioner, from State GST cannot be granted.
– Instead of entertainment duly which was exempted under Tourism Policy of the State, the Petitioner is liable to pay SGST and CGST. It is true that incentive in the form of exemption from entertainment duty was granted to the Petitioner. The Petitioner would have factored the likely financial concession accrued, while assessing the financial viability of the Theme park and Water park. The sudden denial of such entitlement as a consequence of switch over to GST framework, would have definitely impacted the viability of the said project. Hence it is recommended to refund the quantum of SGST paid by the Petitioner during the period of incentive as per the Entitlement Certificate issued by the Tourism Department under the old policy. However, the incentive period may not be extended. Such an arrangement will enable the Government to adhere to the earlier commitment given to the unit, so that viability of the project is not disturbed as a consequence of the change in tax regime.
– Similar policy of refund of SGST to the eligible industrial units is implemented by the Industries Department under Industrial Promotion Subsidy (IPS) scheme. It is recommended to follow the same by the Tourism Department while implementing the refund scheme.”
4. The Respondents do not dispute that the facts in this case are similar/identical to those in the case of Adlabs Entertainment Ltd. (supra). The only distinction, if any, in this case, the waiver was of luxury tax and in the earlier case, the waiver was of entertainment tax. Both of the taxes stand subsumed in the GST. The State Government may have taken a view on the report dated 6 March 2019 of the high level committee. If the same has been accepted, the State Government should take a policy decision so that the benefit can be extended to all similarly situated parties.
5. For the purpose of taking instructions, Mr. Kadam, learned AGP for the State, seeks time and requests this petition be heard along with Original Side Writ Petition No.3027 of 2018 = 2018-TIOL-2933-HC-MUM-GST, i.e. Adlabs Entertainment Ltd. (supra).
6. In the above view, this petition is adjourned by a period of two weeks to be listed along with Original Side Writ Petition No.3027 of 2018 = 2018-TIOL-2933-HC-MUM-GST.
7. Stand over to 30 July 2019.