2018 (12) TMI 1353 - HC - GST

Repayment of borrowed funds - entertainment tax - 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 - appeal allowed by way of remand.

Summary

Issues:
1. Impact of GST on incentives offered under state tourism policy.
2. Viability of petitioner's business post-GST implementation.
3. Request for relief from State Government due to changes in tax structure.

Analysis:
1. The petitioner, a limited company operating a theme park and water park in Maharashtra, received incentives under the state tourism policy, including an entertainment tax waiver when the tax rate was 15%. However, with the introduction of GST at 18%, the entertainment tax was subsumed, leading to the petitioner losing the previous incentive advantage over competitors. This change made the petitioner's business financially unviable, affecting its ability to repay borrowed funds for capital investment.

2. The petitioner argued that the altered tax structure post-GST affected its ability to recover capital investment and maintain business viability. Comparisons were drawn with relief measures taken by other states like Rajasthan and Uttar Pradesh for similar industries facing similar challenges. Concerns were raised about the potential negative impact on employment if the industry suffered due to the changed tax regime. The Maharashtra Tourism Development Corporation also supported the petitioner's cause, highlighting the broader implications of the issue.

3. The High Court acknowledged the gravity of the situation and directed the State Government to address the matter at the highest level. A High-Level Committee, including key officials from finance and tourism departments, was to be constituted to review the petitioner's case. The petitioner was granted the opportunity to make representations to the Committee, emphasizing the need for a prompt resolution. The Committee's recommendations were to be presented to the Government and subsequently to the Court for further consideration on the next hearing date scheduled for 21st February 2019.