1982 (3) TMI 261 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the term 'entertainment' under the U.P. Entertainment and Betting Act, 1979 in the context of Video Game Machines.

Analysis:
The petitioners argued that Video Game Machines do not provide entertainment as defined under the U.P. Entertainment and Betting Act, 1979, as they are primarily exercises of skill and intelligence, not meant for amusement or entertainment. They contended that since there is no admission fee for these games, the notification imposing entertainment tax on them is illegal and without jurisdiction. The petitioners sought to quash the notification and restrain the respondents from enforcing the Act's provisions related to Video Games.

On the other hand, the respondents asserted that Video Games constitute entertainment under the Act as they involve skill, provide pleasure and amusement to players, and require payment for admission to play. They argued that the Act's provisions apply to Video Games, and the notification imposing entertainment tax on them is valid.

The court examined the relevant sections of the Act, particularly Section 3, which empowers the State Government to levy entertainment tax on payments for admission to any entertainment. The definition of 'admission to an entertainment' includes admission to any place where entertainment is held, and 'entertainment' encompasses games, among other activities, to which persons are admitted for payment.

The court emphasized that the Act's definition of 'entertainment' and 'admission to entertainment' should be interpreted broadly. Referring to legal precedents and dictionary definitions, the court concluded that Video Games, despite involving skill and mental exercise, fall within the ambit of entertainment as they provide pleasure and amusement to players. The court rejected the petitioners' argument that entertainment must involve a public performance and separate entertainer and entertained parties, stating that the inclusive definition of entertainment in the Act encompasses various forms of amusement.

Ultimately, the court upheld the validity of the notification imposing entertainment tax on Video Games, ruling that payment for admission to play these games constitutes payment for entertainment under the Act. Consequently, the court dismissed the petitions, affirming the applicability of the Act's provisions to Video Games and upholding the legality of the entertainment tax on them.