Multiplexes in some states are in for a rude shock as they are being sent recovery notices by the respective state governments for contravention of the five-year continuation condition. Various state governments granted incentives in the form of tax holidays to multiplexes on the condition that the multiplexes would continue operations for five years from the end of the exemption period. However, due to the COVID-19 pandemic lockdown, many multiplexes could not complete their uninterrupted run for five years after the tax holiday period. Although there was intent to continue the business once the environment was conducive to exhibit films, a few state governments have started the recovery process of the sops granted, on the ground of breach of contract by multiplexes.
States such as Uttar Pradesh, Maharashtra, Haryana, West Bengal, Tamil Nadu and Karnataka had given concessions to multiplexes.
Some multiplexes in Uttar Pradesh have challenged this recovery in the Allahabad high court, saying that the properties were forced to remain closed during the pandemic due to a government order. They are arguing that the principle of force majeure should come into play in this situation and the sops should continue as it was the intention of the multiplexes to continue the business and they had not surrendered the licence to exhibit films. It may be mentioned here that several state governments have yet to refund the entertainment tax which got subsumed into GST. In fact, after the introduction of GST, a number of multiplexes have filed petitions in various high courts, seeking refund of entertainment tax as promised to them under the tax holiday scheme of the concerned state.