HC issues notice to TN govt on plea over theatre rates

The Madras High Court today admitted a petition challenging a Tamil Nadu government circular enabling theatre-owners to automatically increase the admission rate to the maximum amount in the event of tax exemption for a movie.
When the petition against the May 6, 2014 circular issued by the Commissioner, Commercial Taxes Department, came up for hearing, Justice S. Vaidyanathan issued a notice to the government returnable by February 27.
Petitioner K.J. Saravanan of the city submitted that a government order was issued on July 22, 2006 to exempt movies which are named in Tamil from entertainment tax with the aim of attracting viewers in large numbers so that the theatre owner, distributor and producers were not put to loss.

While so, the circular was issued to overcome a batch of cases filed before the High Court, he said.
The circular is purposely vague and ambiguous and does not clarify the real issue as to whether the admission fee fixed by the authorities is inclusive of entertainment tax. It was not clear when the entertainment tax is exempted whether the theatre owners can increase the admission fee proportionate to the rate of tax, he said.
"The consumer ultimately ends up paying the same amount as the price of the ticket for an exempted movie as they would pay to a non-exempted movie," he said adding thus the very object of the government to exempt a movie from payment of entertainment tax stands defeated.

The circular enables the theatre owners to fix the admission rates which include the entertainment tax when a movie is exempted from it and such benefit had to be passed on to the viewer and not the theatre owner.
Hence the petitioner prayed to quash the circular and sought a direction to the state government to fix the rate of tickets for admission in each class in each theatre so that the rate prescribed was inclusive of entertainment tax.
Consequently, when the tax is exempted the reduced price of admission after giving the benefit of tax exemption to the viewer should be printed on the tickets and used by theatre owners.