Ahmedabad theatre owners fail to pay Rs1 crore service tax on rent

Four theatres that rented out their premises to Big Cinemas, a division of Reliance Mediawork, have been issued a show cause notice by the Ahmedabad Commissionerate-III for non-payment of service tax.

The matter pertains to alleged failure on the part of the owners of the premises to pay service tax on the rent collected from Big Cinemas.

A source said the department has put forward a demand of close to Rs1 crore which, according to them, is to be paid by the four theatres. One more theatre owner is under the scanner but is yet to be issued a show cause notice.

R World Leisure Ltd in Adalaj, Gandhinagar, which had rented out its premises to Big Cinemas has been issued a notice of R50 lakh by way of service tax.

The owners of City Point in Patan have been presented a demand of Rs20.43 lakh while Rs24.38 lakh has been demanded from two theatres in Deesa. These two theatres were identified as Surmandir (Rs16.68 lakh), and Krishna Multiplex also known as Raj Mandir Cinema (Rs7.7 lakh).

Sources in the department said all the owners of the rented premises claimed that they were not liable to pay service tax as they were yet to be paid rent by Big Cinemas. Officials at Big Cinemas when contacted were unavailable for their comments. 

Another theatre identified as Mahalaxmi in Palanpur is also under the scanner but is yet to be issued a show cause notice. All the premises were rented out to Big Cinemas. The service tax notice was issued for the 2009-10 and 2010-11 period.