2015 (4) TMI 608 - HC - VAT and Sales Tax

Levy of entertainment tax - penalty levied under Section 6-A(4) - Levy of tickets sold for DLF/IPL/2010 - Held that - Section 3(1-A) provides for payment for admission excluding the amount of tax to such entertainment, entertainments tax at the rate of ten per cent, if such payment for admission, excluding the amount of tax is less than ₹ 50/-, no tax is leviable under Section 3. However, sub-Section (2) of Section 3 makes it clear that every complimentary ticket issued by the Proprietor of an entertainment, even if no amount is received by the holder of such ticket, the Proprietor of an entertainment is deemed to have received the amount mentioned for admission to the entertainment according to the class of seat or accommodation which the holder of such ticket is entitled to occupy or use. - if the assessee arranges his affairs in such a manner so as to attract no tax, no fault would be found with the assessee. In fact, after this order, it is submitted that in order to avoid such consequences in future, the assessee has given up giving complimentary tickets to the members and VVIPs printing at the rate of ₹ 25/- and ₹ 49/- and they are printed at actual prices and paying taxes for the subsequent years. Therefore, it cannot be said that there is any intention much less the malafide intention for avoiding payment of tax. The assessee would be entitled to this benefit only for the period 2010. That is precisely what the Tribunal has held. Hence, for the assessment year 2010, we do not find any error committed by the Tribunal in passing the impugned order. - Decided against Revenue.

Summary

Issues:
Challenge to order deleting entertainment tax on specific tickets and penalty.

Analysis:
The Revenue challenged an order by the Karnataka Appellate Tribunal that partially allowed appeals by deleting entertainment tax on tickets priced at Rs. 25 and Rs. 49, along with associated penalties. The case revolved around cricket matches organized at a stadium, where tickets priced at Rs. 25 and Rs. 49 were pre-stamped by the Entertainment Tax Officer. The Deputy Commissioner alleged tax evasion due to providing facilities equivalent to higher-priced tickets. The First Appellate Authority upheld the tax levy, but the Tribunal reversed it.

The Revenue argued that facilities provided justified tax on Rs. 25 and Rs. 49 tickets, alleging tax evasion. On the other hand, the assessee contended that once tickets were pre-stamped, authorities couldn't revalue them higher. They argued that Section 3, a charging provision, didn't support the tax levy.

The questions of law raised included whether the Tribunal rightly deleted tax on Rs. 25 and Rs. 49 tickets, whether revaluing these tickets was justifiable, and if tax applied due to avoiding payment. Section 3 outlined the tax on payments for admission to entertainments, specifying rates and exemptions. Notably, Section 3(1-A) imposed a ten percent tax on payments below Rs. 50, with exceptions for complimentary tickets under Section 3(2).

The Court interpreted the law, emphasizing that if the value of a ticket was below Rs. 50, Section 3 didn't apply, even for complimentary tickets. The assessee's actions, though aimed at tax avoidance, were within the legal framework. The Tribunal's decision was upheld, noting the assessee's compliance for subsequent years. The judgment favored the assessee for the 2010 assessment, clarifying it wasn't a precedent for future years.

In conclusion, the revision petitions were dismissed as the Tribunal's decision was upheld. The judgment clarified the legal interpretation for the specific case, emphasizing compliance for subsequent years and the absence of malicious intent for tax avoidance.