Bombay HC asks Govt to form a High-Level Committee to grant Entertainment Tax Benefits under GST [Read Order]

Water theme Park- Entertainment Tax - GST

A two-judge bench of the Bombay High Court has directed the State Government to constitute a high-level committee to study the issues and to grant relief to the entertainment sector after the entertainment tax benefits have been abolished after the launch of the new Goods and Services Tax ( GST ) regime.

The petitioner has set up a theme park and water park at Khalapur, Maharashtra by making a sizable capital investment. Under the old tax regime, the petitioners were liable to pay 15% GST and they availed certain tax benefits in the nature of entertainment tax waiver. The petitioners claimed that on account of heavy capital investment needed, the petitioner was granted such incentive and as a result, the petitioner would have an advantage over other entities in the same business who did not enjoy such incentive of tax waiver.

It was submitted that after the GST rollout, the entertainment tax was subsumed, as a result of which, the incentive offered to the petitioner no longer survived and the petitioner would now have to pay tax @ 18% of GST at par with other entities. According to the petitioner, this made the petitioner’s business totally unviable. The petitioner had borrowed funds from banks and financial institutions for making a capital investment which the petitioner was unable to repay on time.

It was contended that the petitioner was granted incentive under the state tourism policy and they are unable to recover even its capital investment because the entire tax structure changed with the advent of GST.

The petitioner pointed out that under similar circumstances, the States of Rajasthan and Uttar Pradesh had taken steps to grant partial relief to the similar industries.


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Under similar circumstances, the State of Rajasthan has issued notification granting partial relief to the similar industries. Learned counsel states that even the State of Uttar Pradesh is in the process of issuing a similar notification. It is, therefore, requested that the State Government should examine this aspect and give relief to that extent possible. Learned counsel for the petitioner submitted that if the industry would go sick, besides the capital investment going waste, it will also render a larger number of people directly or indirectly employed in the industry jobless.

Justices M S Sanklecha and Akil Kureshi noticed the fact that the Maharashtra Tourism Development Corporation has also written to the Government taking up the cause of the petitioner.

The division bench held that the issue is required to be examined at the highest level before the Government.

“We request the Government i.e the Chief Secretary to constitute a High-Level Committee which would besides others, comprise of Principal Secretary of Finance and the Secretary of Tourism Department. An authorized representative of the petitioner may also be given a chance of representation and if needed, be given personal hearing by such committee. The petitioner would make a representation to the Committee through Secretary of Tourism which may be done latest by 5.1.2019,” the bench said.

“The conclusions of the Committee in the form of recommendations may be placed before the Government. The same may also be placed before the Court on the next date of hearing,” the bench added.

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