2019 (7) TMI 1228 - HC - GST

Benefit of waiver earlier granted for Entertainment/Luxury Tax in GST regime - eligibility and entitlement Certificate dated 5 April 2017 for the period 1 April 2017 to 31 March 2027 - HELD THAT - 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. The Respondents do not dispute that the facts in this case are similar/identical to those in the case of ADLABS ENTERTAINMENT LIMITED VERSUS UNION OF INDIA 2018 (12) TMI 1353 - BOMBAY HIGH COURT . 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. For the purpose of taking instructions, Mr. Kadam, learned AGP for the State, seeks time and requests this petition be heard along with ADLABS ENTERTAINMENT LIMITED VERSUS UNION OF INDIA (supra). - adjourned by a period of two weeks - Stand over to 30 July 2019.

Summary

Issues:
1. Interpretation of luxury tax exemption under the Luxury Tax Act, 1987 post-GST implementation.
2. Impact of GST on incentives granted by the State Government.
3. Recommendation of high level committee regarding refund of SGST.
4. Similarity between luxury tax waiver and entertainment tax waiver under GST regime.

Analysis:
1. The petitioner sought direction for honoring luxury tax exemption commitment post-GST implementation, based on an Eligibility and Entitlement Certificate. The waiver was an incentive for establishing a hotel in Maharashtra, affected by the GST subsuming luxury tax.
2. Referring to a similar case involving entertainment tax waiver pre-GST, the court directed the State Government to consider the petitioner's representation for waiving entertainment taxes, emphasizing the impact of sudden denial on project viability due to the tax regime change.
3. The high level committee recommended refunding SGST paid during the incentive period as per the old policy, without extending the incentive period, to maintain project viability and adhere to earlier commitments.
4. Acknowledging similarity between luxury tax waiver in the current case and entertainment tax waiver in the previous case, the court awaited the State Government's policy decision based on the committee's report to extend benefits to similarly situated parties.
5. The State sought time to provide instructions and requested the petition to be heard alongside the previous case, leading to an adjournment for two weeks to align both petitions for further consideration.

This detailed analysis highlights the legal nuances and implications of the judgment, focusing on the interpretation of tax exemptions, impact of GST on incentives, and the recommendations for refunding SGST to maintain project viability in light of the changing tax regime.