2019 (9) TMI 507 - HC - VAT and Sales Tax

Grant of Luxury Tax exemption - period 1 April 2017 to 31 March 2027 - HELD THAT - Learned Counsel appearing for the State, seeks twelve weeks time to enable the State Government to take a view on the recommendations of High Power Committee. We expect the State Government would take a decision within twelve weeks on the recommendations of High Power Committee and if accepted also decide, whether to extend the benefit as suggested by the High Power Committee, across the board to all similarly situated parties. This would bring about certainty and help in equal application of the decision on all similarly situated parties. Adjourned to 22 November 2019.

Summary

Issues:
1. Interpretation of luxury tax exemption under the Luxury Tax Act, 1987 in light of the Goods & Service Tax Act, 2017 (GST).
2. Consideration of recommendations by the high level committee regarding the waiver of luxury tax.
3. Extension of benefits to all similarly situated parties following the decision on the recommendations.

Analysis:
1. The judgment concerns a writ petition seeking direction for the State of Maharashtra to honor its commitment to grant luxury tax exemption under the Luxury Tax Act, 1987, as per an Eligibility and Entitlement Certificate. The petitioner established a hotel based on this representation but faced challenges due to the subsuming of luxury tax into GST. The court referred to a similar case involving entertainment tax waiver and directed the State to consider the petitioner's representation for waiver benefits.

2. A high level committee recommended refunding the State Goods and Services Tax (SGST) paid by the petitioner during the incentive period, acknowledging the impact of the sudden denial of entitlement due to the GST framework switch. The committee suggested a refund scheme to adhere to the earlier commitment without extending the incentive period, ensuring project viability. The court noted the similarity between this case and the previous one, emphasizing the need for the State to make a policy decision based on the committee's recommendations for all similarly situated parties.

3. The court adjourned the petition to be heard alongside the previous case for coherence. The State sought time to consider the recommendations and decide on extending benefits to all similarly situated parties. The court emphasized the importance of certainty and equal application of decisions to avoid discrepancies among affected parties, setting a deadline for the State to make a decision on the recommendations and benefit extension.

This detailed analysis of the judgment highlights the legal complexities surrounding the interpretation of tax exemptions, the impact of regulatory changes, and the necessity for consistent application of benefits to similarly situated parties.