In 2017, the Kerala government had decided to scrap the ‘entertainment tax’ after the GST came into force.

Demand for cinema tax arbitrary and illegal Kerala HC stays collection
news Cinema Tuesday, April 02, 2019 - 09:50

The Kerala High Court on Monday ordered for a stay on collecting entertainment tax from movie-goers, theatre owners and distributors. The court issued the ordered after hearing two petitions against the entertainment tax, filed by the Film Exhibitors Uniter Organisation of Kerala (FEOUK) and the Kerala Film Chamber of Commerce (KFCC).

In its order, the court asked if a 2017 government order discontinuing entertainment tax was subsisting or not. Issuing a stay, the court, in its order, stated that the demand for collection of the tax is arbitrary and illegal.

The order stated that the demand for entertainment tax would remain illegal as long as the discontinuation of the collection of entertainment tax subsists.

The court also said that the government pleader had been given time to inform about the state government’s stance when the case had come up for admission hearing on March 19 and 20. But, the government sought time again.

In 2017, the Kerala government had decided to scrap the ‘entertainment tax’ after the GST came into force. However, in the 2019 budget, the government announced that it planned to re-introduce a 10 percent tax. Termed the Local Body Entertainment tax (LBET), this tax will be collected by local administrative bodies -  Corporations, Municipalities and Panchayats - and will be levied in addition to the current 18 % GST on tickets.

Explaining the reason for re-introducing the tax, Finance Minister Thomas Isaac had said that following the GST, the government did not want to impose a local tax as that would amount to double taxation. However, with the GST being reduced to 18 percent from 28 percent, states like Tamil Nadu reintroduced the LBET, inspiring Kerala Government to follow the same method.

Following this, the Thiruvananthapuram Corporation has decided to levy the entertainment tax from April 1.

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