TMI Blog2017 (12) TMI 816X X X X Extracts X X X X X X X X Extracts X X X X ..... added that government with a view to commemorate the birth centenary of late Shri V. Shantaram decided to grant concession in entertainment duty to Multiplex Theatre Complexes to promote construction of new cinema houses in the State. The aforesaid object is clear and unequivocal. The object of the grant of the subsidy was in order that persons come forward to construct Multiplex Theatre Complexes, the idea being that exemption from entertainment duty for a period of three years and partial remission for a period of two years should go towards helping the industry to set up such highly capital intensive entertainment centers. This being the case, it is difficult to accept Mr. Narasimha's argument that it is only the immediate object and not the larger object which must be kept in mind in that the subsidy scheme kicks in only post construction, that is when cinema tickets are actually sold. We hasten to add that the object of the scheme is only one -there is no larger or immediate object. That the object is carried out in a particular manner is irrelevant, as has been held in both Ponni Sugar [2008 (9) TMI 14 - SUPREME COURT ]and Sahney Steel [1997 (9) TMI 3 - SUPREME Court]. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of entertainment duty @ 25% for the subsequent two years. The object of introducing the necessary amendments in the Bombay Entertainments Duty Act to effectuate the aforesaid subsidy scheme was first done by way of an ordinance before 4th December, 2001, which ultimately became part of an Amendment Act. The statement of objects and reasons for introducing the aforesaid scheme reads as follows: 1. As a result of the onslaught of Cable Television and advancement in the field of Information Technology, the average occupancy in cinema theatres has fallen considerably and hardly any new theatres have been started in the recent past. Public at large these days prefer to see movies at home. Keeping in view this scenario, a concept of Complete Family Entertainment Centre, more popularly known as Multiplex Theatre Complex has emerged. These Multiplex Theatre Complexes offer various entertainment facilities for the entire family under a single roof. However, these complexes are highly capital intensive, their gestation period is also quite long, and therefore, need Government support and incentive in entertainment duty. 2. Government has, therefore, with a view to comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this sub-section: (i) the date on which the Multiplex Theatre complex is opened to the public for admission shall be deemed to be the date of commencement of the Multiplex Theatre Complex; (ii) the change in the management of Multiplex Theatre Complex, or the change in the name of the complex shall not be construed as a fresh commencement of the Multiplex Theatre Compex. (b) The concession in duty as provided under clause (a) shall be available to the proprietor of the Multiplex Theatre Complex subject to following terms and conditions, namely;- (i) The proprietor shall not charge less payment for admission than the prevailing highest rate for admission at any given time, in any of the cinema theatres in the District in which the complex is situated, till the period of concession under clause (a) is over; (ii) one theatre in the complex shall be reserved for a total period of not less than one month, in a year, exclusively for Marathi Cinemas; (iii) the proprietor of a complex shall not levy the service charge, till the period of concession under clause (a) is over. After the concession period is over, the proprietor may levy service charges as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore summarize our conclusion that broadly speaking the subsidy can be of two types: (i) for the purpose of helping the growth of an industry; (ii) For the purpose of supplementing the profits of an industry. 10.1 To ascertain whether in a particular case the subsidy in question fall under the category (I) or (ii) one has to carefully examine the form as well as substance of the impugned scheme. We have done that exercise, and on close examination undisputedly it was noticed that the scheme in question had fallen in the first category i.e. for the purpose of helping the growth of an industry. Though the collection was in the form of an entertainment Duty via sale of tickets for a limited period but its utilization was predetermined and granted with an assurance to cover up the cost of construction. Once it is demonstrated before us that too undisputedly that it was not attributed in any manner towards supplementing of day-to-day expenditure or in the furtherance of the profits than it cannot be said to be in the character of a revenue receipt. Contrary to this it was in the nature of a capital receipt being an incentive to supplement the construction expenditure o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmission and stated that on facts, this was a case similar to Sahney Steel. On the other hand, he distinguished the judgment in Ponni Sugars (supra) stating that on the facts of that case, in paragraph 10, in particular, it was very clearly held that the benefit of the scheme had to be utilised only for re-payment of loan. Therefore, it was obviously capital in nature, and not revenue. On the other hand, Shri Jahangir Mistry, learned senior counsel appearing for the respondents, and Shri S.Ganesh, learned senior counsel appearing for some of the respondents, have argued that if Sahney Steel is to be read in its entirety, the judgment on facts supports the proposition that it is only the purpose of the scheme that is the test for finding out whether the scheme is, in fact, capital or revenue in nature. The source of funds for the scheme and the form of the scheme are irrelevant and if it is clear that the purpose is in order that capital expenses be met out of the subsidy granted in the scheme, then the object of the scheme points to receipt of funds being capital in nature. They both stressed the fact that the statement of object and reasons specifically state that multiplexes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uite immaterial. The Court went on, thereafter, to give a telling example in para 19 of the aforesaid judgment, which is set out herein below:- For example, if the scheme was that the assessee will be given refund of sales tax on purchase of machinery as well as on raw materials to enable the assessee to acquire new plants and machinery for further expansion of its manufacturing capacity in a backward area, the entire subsidy must be held to be a capital receipt in the hands of the assessee. It will not be open to the Revenue to contend that the refund of sales tax paid on raw materials or finished products must be treated as revenue receipt in the hands of the assessee. In both the cases, the Government is paying out of public funds to the assessee for a definite purpose. If the purpose is to help the assessee to set up its business or complete a project as in Seaham Harbour Dock Co. case, the monies must be treated as to have been received for capital purpose. But if monies are given to the assessee for assisting him in carrying out the business operation and the money is given only after and conditional upon commencement of production, such subsidies must be treated a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en referred to the background of the incentive scheme and to the fact that the Sampat Committee was set up to examine the question relating to the economic viability of new sugar factories. The Court then found in para 9 of the judgment that the Sampat Committee referred to the fact that the increase in the cost of new sugar factories was because of increase in the cost of plant and machinery. The Committee then stated that five possible incentives for making a sugar plant economically viable could be provided. It is two of such incentives referred to that was the subject-matter for decision before this Court. In Para 10 this Court found: We have examined in this case the 1980 and 1987 Schemes. Essentially all the four Schemes are similar except in the matter of details. Four factors exist in the said Schemes, which are as follows: (i) Benefit of the incentive subsidy was available only to new units and to substantially expanded units, not to supplement the trade receipts. (ii) The minimum investment specified was ₹ 4 crores for new units and ₹ 2 crores for expansion units. (ii) Increase in the free sale sugar quota depended upon increase in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsidy is equally immaterial. Applying the aforesaid test contained in both Sahney Steel as well as Ponni Sugar, we are of the view that the object, as stated in the statement of objects and reasons, of the amendment ordinance was that since the average occupancy in cinema theatres has fallen considerably and hardly any new theatres have been started in the recent past, the concept of a Complete Family Entertainment Centre, more popularly known as Multiplex Theatre Complex, has emerged. These complexes offer various entertainment facilities for the entire family as a whole. It was noticed that these complexes are highly capital intensive and their gestation period is quite long and therefore, they need Government support in the form of incentives qua entertainment duty. It was also added that government with a view to commemorate the birth centenary of late Shri V. Shantaram decided to grant concession in entertainment duty to Multiplex Theatre Complexes to promote construction of new cinema houses in the State. The aforesaid object is clear and unequivocal. The object of the grant of the subsidy was in order that persons come forward to construct Multiplex Theatre Complexes, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference. In coming to the West Bengal cases, we find that the West Bengal Finance Act, 2003 which amended the Bengal Amusements Tax Act of 1922 also provided: The Bengal Amusements Tax Act, 1922. The provision seeks to provide, in order to encourage development of multiplex theatre complex, a very modern and highly capital-intensive entertainment centre, financial assistance to the proprietors of such complex by allowing them to retain, by way of subsidy, the amount of entertainment tax collected against the value of ticket for admission to such multiplex theatre complex for a period not exceeding four years; Since the subsidy scheme in the West Bengal case is similar to the scheme in the Maharashtra case being to encourage development of Multiplex Theatre Complexes which are capital intensive in nature, and since the subsidy scheme in that case is also similar to the Maharashtra cases, in that the amount of entertainment tax collected was to be retained by the new Multiplex Theatre Complexes for a period not exceeding four years, we are of the view that West Bengal cases must follow the judgment that has been just delivered in the Maharashtra case. Accordingly ..... 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