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1990 (11) TMI 406 - HC - VAT and Sales Tax
Issues:
Whether the State authorities can collect entertainment tax on charges for lift facility at a cinema theatre. Analysis: The petitioner, a partner of a registered partnership firm operating a cinema house, introduced a nominal charge of 10 paise per passenger for using the lift facility provided at their theatre. The State authorities challenged this charge under the Gujarat Entertainment Tax Act, 1977. The petitioner argued that the lift charge was not for admission to entertainment but for lift usage. The court analyzed the relevant provisions of the Act, focusing on Section 3(1), which levies tax on payments for admission to entertainment. The court highlighted that the payment must be for admission to entertainment, as per the Act's provisions, and cannot be levied for any other facility not constituting entertainment. The court delved into the definitions provided in the Act, emphasizing that entertainment includes exhibitions, performances, amusements, games, or sports for which persons are admitted for payment. It noted that the payment for admission must be connected to the entertainment provided. In this case, the payment for lift usage was not for admission to the auditorium where entertainment was held but for using the lift facility. The court highlighted that the payment was not compulsory for all cinegoers and was not a condition for attending the entertainment. Therefore, the court concluded that the lift charge was not a payment for admission to entertainment, as required by the Act. The court ruled in favor of the petitioner, stating that the State's insistence on collecting entertainment tax on the lift charge was illegal and without jurisdiction. The court granted a permanent injunction restraining the State authorities from levying and collecting entertainment tax on the lift charge. The court also allowed the petitioner to appropriate the deposits of lift charges kept in a separate bank account for their own use. The alternative submission to declare the Act's provisions as ultra vires was not granted as it became irrelevant in light of the main relief provided to the petitioner.
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