The Rajasthan Investment Promotion Scheme announced in October 2014, had given exemption from entertainment tax up to 50 % to multiplexes, water, and theme parks, among other sectors for 7 years.
Businesses have moved courts against the Rajasthan government’s decision to not extend benefits earlier promised under the state investment promotion scheme, after the goods and services (GST) rollout.
The high court at Jodhpur and its Jaipur bench have sent notices to the Union government, the Rajasthan government and the GST Council in these cases.
The Rajasthan Investment Promotion Scheme announced in October 2014, had given exemption from entertainment tax up to 50 percent to multiplexes, water, and theme parks, among other sectors for seven years.
There was the exemption from entry tax for companies making the investment of more than Rs 7.5 billion on capital goods.
Similarly, relief from state value-added tax in various sectors, to boost investments and create jobs.
However, after GST rollout, these benefits have been taken away. Though the state Budget, presented in February, announced the extension of these, no notification has come, said the people who have filed cases against the discontinuation of the scheme.
Abhishek Rastogi partner with Khaitan & Co, who argued the writ petitions, said the businesses made investments on promises of the government.
They have legitimate expectations that these promises will continue.
“Any deviation by the state government will be tested in courts, based on the principle of promissory estoppel,” he said.
The principle means if a party changes position substantially on a promise, the other party can petition to enforce the promise, even if the essential elements of a contract are not present.