2011 (1) TMI 1267 - HC - VAT and Sales Tax

Whether such activities providing facilities for swimming games of billiards pool etc. carried out by the persons who are participating in the sports or such like activity are liable to entertainment duty under the Punjab Entertainments Duty Act 1955? Held that - here cannot be any variation in the levying of rate of entertainment duty on the basis of the decision having been taken by the Excise and Taxation Commissioner. Unless the procedure laid down as aforesaid is complied with the rate of levy of entertainment duty could not have been varied. Still further even if any decision has been taken there cannot be any estoppel against the statute. Consequently the said argument is without any merit. Prior to June 29 2001 the entertainment duty at 125 per cent would be payable but thereafter it would be payable at 25 per cent. The notifications dated September 1 1977 and June 29 2001 provide that the State Government has published the notification in exercise of the powers conferred by sub-section (1) of section 3 read with first proviso of sub-section (2) of section 3 of the Act. Meaning thereby that the publication of a draft notification has been dispensed with for fixation of rate of entertainment duty. Thus the argument that the draft notification was not published is not tenable as the same was expressly dispensed with.

Summary

Issues Involved:
1. Levy of entertainment duty on Go-Karting and other activities under the Punjab Entertainments Duty Act, 1955.
2. Competence of the State Legislature to define "entertainment" and levy duty.
3. Validity of the rate of entertainment duty and its reduction.
4. Procedural compliance for notification of entertainment duty rates.

Detailed Analysis:

1. Levy of Entertainment Duty on Go-Karting and Other Activities:
The primary issue was whether activities such as Go-Karting, bowling alley, video games, billiards, pool table, and swimming pool at resorts, which are accessible to members who pay subscription fees, are liable to entertainment duty under the Punjab Entertainments Duty Act, 1955. The petitioners argued that entertainment duty should be paid by viewers, not participants. However, the court referred to the definition of "entertainment" in the Act, which includes any exhibition, performance, amusement, game, sport, or race where admission is paid. It was established that activities like Go-Karting, where participants pay to play and entertain themselves, fall under this definition and are thus subject to entertainment duty. The court cited the Supreme Court's decision in Geeta Enterprises v. State of U.P., which held that playing video games on a machine is an entertainment liable to duty, to support its conclusion.

2. Competence of the State Legislature:
The court affirmed that the State Legislature is fully competent under entries 33 and 62 of List II of the Seventh Schedule to the Constitution to define "entertainment" and levy entertainment duty. The definition of "entertainment" in the Act is inclusive, allowing it to cover various types of entertainment similar to those explicitly mentioned.

3. Validity of the Rate of Entertainment Duty and Its Reduction:
The petitioners contended that a meeting of Excise and Taxation Officers decided to charge a 20% entertainment duty, which should apply instead of the higher rates. The court rejected this argument, stating that any variation in duty rates must follow the procedure outlined in Section 3 of the Act. The Excise and Taxation Commissioner has no authority to unilaterally reduce the rate. The court also clarified that the entertainment duty was 125% before June 29, 2001, and was reduced to 25% thereafter, as per the notification.

4. Procedural Compliance for Notification of Entertainment Duty Rates:
The petitioners argued that the notification imposing 125% duty was not properly published, as required by Section 3 of the Act. The court noted that the original file for the notification dated September 1, 1977, was not available, but the notification itself indicated that the draft publication was dispensed with, as allowed by the proviso to Section 3(2). The court held that the recitals in the notification are presumed correct, and official acts done in the course of business are deemed valid. Consequently, the argument regarding the lack of draft publication was dismissed.

Conclusion:
The court concluded that the activities in question are liable to entertainment duty under the Act. The State Legislature's competence to define and levy duty was upheld. The procedural compliance for the notification of duty rates was deemed satisfactory. As a result, the petitions challenging the levy of entertainment duty were dismissed.