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28 Ahmedabad multiplexes slapped with ‘spirit of law’ tax

Wednesday, 18 July 2012 - 3:39pm IST | Place: Ahmedabad | Agency: dna

They will pay 20% of their ticket price, which is 15-20 times more than what they pay now.

In a strange ‘reinterpretation’ of video licensing rules, the Ahmedabad collectorate’s entertainment tax department has ordered 28 out of the 90 video theatres in the city to obtain cinema licenses or pay ‘loose entertainment tax’. This is expected to increase the department’s income by Rs12 crore as ‘loose entertainment tax’ means 20% of the ticket price and not the fixed tax which video theatres had to pay so far.

“Going by the letter of the law, video theatres have a right to pay fixed entertainment tax but they don’t have this right if you keep the spirit of the law in mind. The reason is that their ticket rates and the facilities they provide are all comparable to that of cinema halls,” said Vijay Nehra, Ahmedabad district collector.

Video theatre owners, however, have a very different story to tell. Sources say that video theatre owners will now have to pay 15-20 times more than what they were paying till now. Yet they had agreed to do as told by the entertainment tax department simply to avoid confrontation. The department had earlier issued notices to the city’s video license holders and threatened to seal their theatres for violating norms, the sources alleged.

There are around 20 single screen theatres and 13 multiplexes in the city holding cinema licences. These theatres pay entertainment tax based on revenue from ticket sales. On the other hand, the 90 video theaters of the city pay fixed entertainment tax of around Rs6,000 per month.

Entertainment tax department had found that some of the video license holders were providing cinema hall facilities to viewers.

“The department has reinterpreted the rules of video licensing. A theatre holding a video license cannot screen new movies received through satellite signals. It can screen movies using only their DVDs,” said Manubhai Patel, owner of Wide Angle.

Ashok Purohit, owner of City Pulse theatre, also said that rules had been changed and that under the new rules, they will have to pay more tax. He, however, added that movie buffs will not be impacted as there was no immediate plan to increase ticket prices.

City Gold at Ambli, Shyamal Crossroads and Bapunagar with four screens each; Cine Pride at Saijpur with three screens; City Pulse at Raipur with four screens; Revolution at CTM with four screens; Wide Angle on SG Highway with one screen; K Sera Sera with two screens; and Shyam Gold and BPCL at Bareja with one screen each will now pay 20% of their ticket revenue to the government. These will sell tickets stamped by entertainment tax department.

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