1982 (2) TMI 317 - HC - Income Tax

Summary

Issues involved:
The judgment involves the interpretation of the Madhya Pradesh Entertainments Duty and Advertisement Tax Act, 1936 regarding the liability to pay entertainment duty for running a Video Games Parlour.

Summary:

Issue 1: Interpretation of the term 'entertainment' under the Act
The petitioners, running a Video Games Parlour, challenged notices demanding entertainment duty. The Act defines 'entertainment' as any exhibition, performance, amusement, game, or sport for which persons are admitted for payment. The question was whether coins inserted in the slot for playing games constitute payment for admission to entertainment. The definition of 'entertainment' is inclusive, and the tax is on the spectator who witnesses amusement or entertainment. The court held that the payment made by a person to play games in the parlour is not payment for admission to entertainment as contemplated by the Act. The petitioners do not receive payment for admission to entertainment when collecting amounts inserted by players. Therefore, no duty is payable under Section 3 of the Act for such payments, and the notices of demand were quashed.

Issue 2: Scope of charging section and liability of the proprietor
The charging section of the Act requires every proprietor of an entertainment to pay duty for admission. The court emphasized that for an activity to be considered entertainment, it must likely amuse or entertain a person. In the case of the Video Games Parlour, visitors derive entertainment from their own performance in playing the games, not from the exhibition or performance offered by the petitioners. The court ruled that the activity of the petitioners should be likely to amuse or entertain a person to fall under the charging section. As visitors do not see or hear anything entertaining upon entering the parlour, and only derive thrill from their own performance, no duty is payable by the petitioners under the Act.

Conclusion:
The High Court of Madhya Pradesh quashed the notices of demand issued by the respondent, stating that the petitioners are not liable to pay entertainment duty under the Act. Each party was directed to bear their own costs, and any security amount was to be refunded to the petitioners.