Tourism tax exemption cannot be curtailed by a later VAT regime when the incentive period remains unexpired.

A tourism incentive exemption promised under G.O.Ms.No.6 was treated as part of the investment package for a new IMAX theatre and entertainment complex, and the prior grant of exemption for earlier assessment periods supported continuation for the remaining five-year period. The Court accepted that a subsequent shift from the Andhra Pradesh General Sales Tax Act, 1957 to the value added tax regime did not justify curtailing the promised tax benefit before expiry of the eligible period. The petitioner was therefore entitled to the balance exemption period, and the authorities were directed to extend the benefit and refund any amount payable within the specified time.

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Issues: Whether the petitioner was entitled to continue to receive sales tax exemption for the remaining period of five years under G.O.Ms.No.6 dated 18.12.1998, notwithstanding the change in the tax regime.

Analysis: The petition was filed under Article 226 seeking enforcement of the exemption promised to new tourism projects. The petitioner had set up the IMAX theatre and entertainment complex pursuant to the State's tourism policy and had already been granted the exemption for earlier assessment periods. The denial of the benefit for the balance period was tested against the object and spirit of G.O.Ms.No.6, which was issued to attract investment in the tourism sector by granting tax incentives. The Court accepted that the exemption was part of the incentive package extended to the petitioner and that the subsequent change from the Andhra Pradesh General Sales Tax Act, 1957 to the value added tax regime did not justify curtailing the promised benefit for the full eligible period.

Conclusion: The petitioner was held entitled to sales tax exemption for the remaining balance period of five years, and the respondents were directed to grant the benefit and refund any amount payable within the specified time.

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