GST regime: How can you tax a service twice? ask Bhopal cinema hall owners

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BHOPAL: Cinema hall owners are questioning the legality of a recent cabinet decision in which state government had decided to allow urban local bodies impose entertainment tax, which used to be collected by the commercial tax department till the goods & services tax (GAT) regime came into existence.

The decision empowers the general councils of respective urban bodies to decide the entertainment tax to be levied in areas under their jurisdiction. But with the rider that the maximum limit of tax will be decided by the state government.

Before GST regime, commercial tax department of the state used to collect 20% entertainment tax on films and other services placed under entertainment category. However, it’s being charged at 18% under GST.

Reacting to the proposal, secretary, Bhopal Cine Association, Azizuddin, said, “this can’t be done. It’s illegal. We are already paying 18% GST on each cinema ticket sold. How can there be two taxes for one service? Let them notify it. We will challenge it in court.

Principal secretary, commercial tax, Manoj Shrivastava, however, seemed convinced that it can be done and the cabinet decision doesn’t violate the one taxation code in any manner. “We are giving up collection of entertainment tax and urban bodies will take it up. I don’t think there is any legal hassle in this,” he said. He further said a draft Bill to effect this change is ready with the urban administration department.

When apprised of Cinema hall owners’ argument that no additional tax can be imposed on them when they are being taxed under GST, he said “there was entertainment tax and VAT earlier also.” “Who says there can’t be multiple taxes on one commodity or service. For example, you have diversion tax, property tax and nazul tax on land”, he added.

However, Karuna Singhade, commercial tax officer, who was in-charge of entertainment tax collection at Bhopal before GST came into force, clarified that there was entertainment tax and VAT both applicable on cinema hall owners but the former was applicable on cinema tickets and VAT on edibles sold from within the cinema hall premises.’ We used to charge them 20% entertainment tax and 5% VAT on edibles and maintained their accounts separately. She said tax on cinema hall owners entailed huge revenue for the state government. “It was about Rs 25 crore annually in Bhopal only.”

A top official of the urban administration department when contacted for comments said “If cinema hall owners have any objection, we can consider keeping the urban body tax at a level that they don’t have to pay anything extra. “If they were paying 20 percent entertainment tax earlier and 18 percent now, the urban body tax could be two percent. It will also help urban bodies mop up resources”, he said on the condition of anonymity. And, it’s not only cinema halls but includes other entertainment shows as well including cricket matches and all, he added.

Eminent lawyer, Deepesh Joshi, however, dismissed arguments of officials stating that under GST Act, nothing which is being taxed under GST could be taxed by state government or any other agency. That’s why it is called one tax regime. They can impose cess on petrol or diesel because it’s not under GST but a service being taxed under GST can’t be taxed. It would be absolutely illegal”, he asserted.

Source:- https://timesofindia.indiatimes.com (TNN | Updated: Feb 13, 2018, 08:25 IST)

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