The division bench of the Hyderabad High Court recently given nod to the Andhra Pradesh Government’s decision to levy 10% Entertainment Tax on Telugu films and 24% tax on Non-Telugu films produced outside the State.
The bench was hearing a petition filed by Mr. Rajan Sharma challenging vires of the notification issued by the then AP government on April 22, 2008 granting exemption from the payment of entertainment tax to certain categories of the films, under Section 19-A of the AP Entertainment Tax Act, 1939.
The petitioner contended that such a classification is unreasonable and unconstitutional. Taxation on the basis of place of production amounts to unreasonable classification, he contended.
The bench, comprising of Justice V Ramasubramanian and Justice J Uma Devi was dismissing the petition filed by Aashirvad Films, represented by its proprietor Rajan Sharma,
Dismissing the petition, the bench declared that “such a classification cannot be stated to be unreasonable or arbitrary. It has a clear nexus with the object sought to be achieved namely to promote trade and commerce and improve the employment potential. Therefore, the classification does not fall foul of Article 14 of the Constitution.”
Relying on SC judgment in Video Electronics Pvt Ltd case, the bench said “this is due to the fact that government had imposed uniform rate of tax on all the films irrespective of language. But it has created two different types of classifications – those produced in the state and those produced outside and secondly the area in which theatres are located.”
