Case Title | Bramha Corp Ltd. Vs State Of Maharashtra |
Court | Bombay High Court |
Honorable Judges | Justice S.C. Gupte Justice M.S.Sanklecha |
Citation | 2019 (07) GSTPanacea 23 HC Bombay Writ Petition No. 1800 Of 2019 |
Judgement Date | 16-July-2019 |
This petition, filed under Article 226 of the Constitution of India, requests the State of Maharashtra (Respondent No. 1) to fulfill its commitment to grant a luxury tax exemption as outlined in an Eligibility and Entitlement Certificate dated April 5, 2017. This certificate was valid from April 1, 2017, to March 31, 2027. The petitioner seeks a directive for the issuance of a necessary notification by the state government to extend the luxury tax exemption, which was initially promised to the petitioner to incentivize the establishment of a hotel within Maharashtra.
The crux of the issue arises from the introduction of the Goods and Services Tax (GST) Act in 2017, which resulted in the subsuming of the luxury tax into the GST regime. Consequently, the benefit originally granted to the petitioner under the aforementioned certificate has been affected. The petitioner contends that despite the introduction of GST, the state government is obligated to honor its commitment made prior to the GST implementation.
In summary, the petitioner asserts that the State of Maharashtra must uphold its commitment to grant the luxury tax exemption as per the eligibility certificate, despite the changes brought about by the implementation of the GST Act.
The summary you provided seems to outline a legal case involving a petitioner who had set up a hotel based on representations made by the State Government regarding certain incentives or waivers. However, these representations made in 2017 and on June 22, 2016 were not given effect to, leading to a dispute.
In a similar case, Adlabs Entertainment Ltd. vs. U.O.I. (Writ Petition No.3027 of 2018), which dealt with entertainment tax waivers before the introduction of the Goods and Services Tax (GST), the court had directed the State Government to form a high-level committee to consider the petitioner’s representation seeking similar benefits that had been provided by other states.
Following this direction, the State Government constituted a high-level committee consisting of the Development Commissioner (Industries), Secretary (Tourism), and Principal Secretary (Finance Reforms). This committee, in its report dated March 6, 2019, made recommendations.
The committee noted that the indirect tax system in India had transitioned from multiple taxes to the single GST from July 1, 2017. Under the GST regime, there was no specific provision to grant exemptions from the levy of tax to any class of dealers. Consequently, the exemption sought by the petitioner from State GST could not be granted.
Instead, the committee suggested alternatives, such as focusing on tourism development rather than seeking exemptions from entertainment duty, which was exempted under tourism.
This summary indicates the legal complexities surrounding the petitioner’s request for tax exemptions and the challenges posed by the transition to the GST regime. It highlights the recommendations made by the committee and the legal framework under which the petitioner’s case was considered.
The petitioner in this case is liable to pay State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST) due to the state policy. While the petitioner did receive an incentive in the form of an exemption from entertainment duty, this exemption played a crucial role in the financial assessment of the viability of establishing a Theme Park and Water Park. The sudden denial of this entitlement due to the transition to the Goods and Services Tax (GST) framework has significantly impacted the project’s financial viability. Therefore, it is suggested that the SGST paid by the petitioner during the incentive period be refunded in accordance with the Entitlement Certificate issued by the Tourism Department under the previous policy. However, extending the incentive period is not recommended. This approach allows the government to uphold its earlier commitment to the petitioner while ensuring that the project’s viability is not disrupted by the change in the tax regime.
Additionally, it is proposed to adopt a similar policy of refunding SGST to eligible industrial units under the Industrial Promotion Subsidy (IPS) scheme implemented by the Industries Department. This would ensure consistency in refund mechanisms across different sectors.
The respondents acknowledge that the facts of this case closely resemble those of Adlabs Entertainment Ltd., where the waiver was related to entertainment tax. Although the waiver in the present case pertains to luxury tax, both taxes have been subsumed into the GST. The State Government may have considered a report dated March 6, 2019, which highlights the issue at a high level.