Mumbai: Distributors and exhibitors in Rajasthan will go on an indefinite strike from 5 September in retaliation to the notice issued to few distributors regarding payment to be made towards Value Added Tax (VAT) on movies. No Bollywood or Hollywood movie will be released in Rajasthan until this VAT issue is resolved.
In July 2006, the BJP government in Rajasthan levied 12.5 percent VAT. But there was no clarity on whether this VAT was to be implemented on the cinema industry because it already pays the entertainment tax. In July this year the government sent notices to four prominent distributors in Rajasthan to pay a cumulated sum of Rs 8 crore which is outstanding as VAT for the period of 2006 – 2007, with a lock-in period of 60 days that ended on 4 September.
The distributors are Sanjay Chatter of Marudhar Entertainment who distributes Eros and Studio 18 movies, Sunil Bansal of Jai Pictures who distributes Yash Raj Films, Anil Thadani of A. A. Films and Rooprajat Films.
Central Cine Circuit Association (CCCA) president Santosh Singh Jain said, "It is absolutely unjustified to ask the distributors to pay 12.5 percent VAT for 2006- 07."
The cinema community in Rajasthan has therefore united to call on a strike to put forth their plea to the government after not having received any attention despite repeated attempts. The CCCA officials are scheduled to meet government officials.
Yash Raj’s distributor in Rajasthan Sunil Bansal said, "Since the beginning there was no clarity if VAT will be borne by the cinema industry. And now after two years, from where do we generate the money the government is asking for? VAT has to be borne by the end consumer, so now from where do we get this money for 2006 and 2007. We distributors can not bear the burden of VAT and nor can the exhibitors. It is unjust to ask us for this money over and above the entertainment tax from distributors, exhibitors and audience. VAT is not even levied in any other state, then why in Rajasthan?"
Earlier 4 percent VAT was levied in Maharashtra too, but this never got implied as the cinema community in Maharashtra was successful in getting a stay order. All other states are exempt from paying VAT on entertainment.
Inox Leisure COO Alok Tandon says, "This strike will drastically impact the cinemas and the industry in Rajasthan." Exhibition companies have to bear heavy rentals to run the cinemas. Now even without any content to run these, companies will have to pay the rentals for as many days as the strike is on.
Some of the movies slated to release in the month of September are UTV’s Wednesday and Welcome to Sajjanpur, Eros’ Hijack, Warner Brothers’ Saas Bahu Aur Sensex, Percept’s Ru Ba Ru, Reliance’s Hulla, and also Tahaan and The Last Lear.
Considering that Shraadh and Ramzan season are going on in September and no big ticket movies are releasing in this period, this strike will not have a huge monetary dent on the collections of movies.