Bombay High Court Seeks Decision In 2 Months On Imagicaa's Plea For Tax Incentive Under State Tourism Policy

Observing that extension of tax incentives granted to Imagicaaworld Entertainment Limited involves a policy decision requiring inter-ministerial dialogue, the Bombay High Court has directed the Union of India, the State of Maharashtra, and other concerned authorities to take a decision on the company's pending representation within two months.

A Division Bench of Justices G.S. Kulkarni and Aarti Sathe was hearing a writ petition filed by Imagicaaworld Entertainment Limited, which operates the “Imagicaa” theme park and “Aquamagica” water park at Khalapur in Raigad district. The project had been recognised as a “Mega Project” under the State's Tourism Policy 2006.

The company was granted Entertainment Tax (ET) exemption of approximately Rs 825 crore under Entitlement Certificates issued by the Maharashtra Tourism Development Corporation in 2013 and 2015 for a period of ten years. With the introduction of GST from 1 July 2017, ET was subsumed and the tax rate increased from 15% to 18%.

Pursuant to recommendations of a High-Level Committee and a Government Resolution dated 4 March 2020, the State provided for refund of SGST paid by the company. However, the Petitioner contended that since the effective SGST component was 9% as against the earlier 15% ET rate, it could not fully realise the investment-linked incentive.

The parks remained shut during the Covid-19 pandemic. Although the incentive period was extended by two years from 1 March 2020 to 31 March 2022, the issue relating to the reduced tax rate impact remained unaddressed.

The company made a detailed representation dated 11 January 2024 seeking extension of the entitlement period. As no decision was taken, it approached the High Court.

Recording the submissions, the bench observed:

“We are of the opinion that in the peculiar circumstances and considering the nature of the project as involved a policy decision would be required to be taken which involves dialogue between Ministries, specifically the Ministry of Tourism/Department of Tourism and Cultural Affairs and the Ministry of Finance. Further both the said Ministries and other concerned Ministries after collaboration need to take an appropriate decision, in respect of the Petitioner's case as set on in the representation. We thus leave it to the concerned Ministries to take an appropriate decision, after giving an opportunity to the Petitioner to be heard and be represented before the concerned Ministries to take an appropriate decision, after giving an opportunity to the Petitioner to be heard and be represented before the concerned Ministry”

The court directed that the representation be decided within two months, granted the Petitioner an opportunity of hearing, and clarified that it had not expressed any opinion on the merits of the rival claims.

For Petitioner: Advocates Abhishek Rastogi, Pooja Rastogi, Meenal Songire and Aarya More.

For Respondents: Advocates Ram Ochani and Niyati Mankad for Respondent Nos. 1 and 2; Advocates Jyoti Chavan, Additional Government Pleader, and Amar Mishra, Assistant Government Pleader, for the State; Advocate Amol Ghurde instructed by Advocate Pramod Kathane for Respondent No. 5.