2010 (7) TMI 918 - HC - VAT and Sales Tax

Grant-in-aid reduced from 100 per cent to 75 per cent - Held that - The writ petition succeeds and is allowed. It is held that the Government order dated July 14, 1992, would not be applicable to the petitioner. The condition mentioned in the order dated July 16, 1993 (filed as annexure 9 to the petition) in so far as it grants the benefit of grant-in-aid to the extent of 75 per cent of the entertainment tax in the first two years is quashed and we hold that the petitioner is entitled for grant-in-aid of 100 per cent of the amount of entertainment tax in the first two years. The various orders, which are impugned, namely, July 22, 1993, September 13, 1993 and September 22, 1993 cannot be sustained and are hereby quashed.

Summary

Issues:
1. Interpretation of government order dated July 18, 1989 regarding grant-in-aid for cinema halls in rural areas.
2. Application of the principle of promissory estoppel in the context of subsequent amendments to the government order.
3. Determination of eligibility criteria for grant-in-aid under the scheme.
4. Comparison with previous judgments and their relevance to the current case.

Analysis:

1. The petitioner applied for constructing a cinema hall in a rural area based on a government order dated July 18, 1989, offering 100% rebate on entertainment tax. Subsequently, the order was amended in 1992, reducing the tax rebate to 75% for three years. The District Magistrate granted permission to construct the cinema hall, but later reduced the grant-in-aid from 100% to 75% based on the amended circular.

2. The petitioner argued for the application of promissory estoppel, claiming entitlement to the original grant-in-aid despite the subsequent amendment. Citing a previous judgment, the petitioner contended that moving the application within the stipulated period based on the original circular should preserve the right to the initial incentives, especially since there was no communication about the reduction in grant-in-aid.

3. The eligibility criteria under the scheme specified that benefits would be provided to those who applied before April 1, 1989, and obtained a license between April 1, 1990, and March 31, 1995. The petitioner completed construction in December 1994 and obtained the license in February 1995, meeting the requirements of the original government order from 1989.

4. Previous judgments, including one involving a similar issue with a cinema hall, were referenced to support the petitioner's claim. The court analyzed these precedents and held that the petitioner was entitled to the 100% exemption for the first two years as per the original government order from 1989, disregarding the subsequent amendment reducing the grant-in-aid.

In conclusion, the court allowed the writ petition, quashed the impugned orders reducing the grant-in-aid, and directed a reconsideration of the case in line with the observations made. The judgment emphasized the application of the original government order's provisions and the principle of promissory estoppel in ensuring the petitioner's entitlement to the initial incentives despite subsequent amendments.