1984 (2) TMI 362 - HC - Indian Laws

Summary

Issues Involved:

1. Constitutionality of the entertainment tax provisions in the Bombay Entertainment Duty (Amendment) Ordinance, 1983.
2. Basis for the levy of entertainment duty.
3. Validity of the consolidated sum or lump sum tax on touring cinemas and video exhibitions.
4. Definition and scope of "payment for admission" under the Principal Act and the Ordinance.

Detailed Analysis:

1. Constitutionality of the entertainment tax provisions in the Bombay Entertainment Duty (Amendment) Ordinance, 1983:

The petitioners challenged the provisions of the Bombay Entertainment Duty (Amendment) Ordinance, 1983, arguing that the tax imposed was illegal and ultra vires the Constitution. The Ordinance sought to amend the Bombay Entertainment Duty Act, 1923, by introducing new forms of entertainment tax, including consolidated sums and lump sums for touring cinemas and video exhibitions. The court examined whether these amendments constituted a valid tax on entertainment under Item 62 in List II of the Seventh Schedule of the Constitution.

2. Basis for the levy of entertainment duty:

Before the amendment, Section 3 of the Principal Act provided for the levy of entertainment duty on all payments for admission to any entertainment. The amendment introduced by the Ordinance maintained this provision but also added new bases for the levy, including consolidated sums for touring cinemas and lump sums for video exhibitions. The court noted that the basis for calculating the consolidated sum for touring cinemas was the gross collection capacity on the maximum number of shows permitted, rather than the actual number of shows conducted or the actual payments made for admission.

3. Validity of the consolidated sum or lump sum tax on touring cinemas and video exhibitions:

The court found that the new basis for the levy of entertainment duty on touring cinemas and video exhibitions was not a tax on actual entertainment but rather on a hypothetical or notional basis. The consolidated sum for touring cinemas was based on the maximum number of shows permitted, assuming all seats were occupied, while the lump sum for video exhibitions was based on a similar hypothetical calculation. The court held that this was not a valid tax on entertainment, as it did not take into account the actual entertainment held or the actual payments made for admission.

4. Definition and scope of "payment for admission" under the Principal Act and the Ordinance:

The court examined the definition of "payment for admission" under Section 2(b) of the Principal Act, which included any payment made for attending or continuing to attend an entertainment. The court found that the amendments introduced by the Ordinance did not align with this definition, as they imposed a tax based on gross collection capacity or lump sum rather than actual payments for admission. The court held that the provisions of clauses (c) and (d) of Section 3(1) of the Principal Act, as amended by the Ordinance, were inconsistent with the concept of entertainment duty and therefore invalid.

Conclusion:

The court concluded that the provisions of clauses (c) and (d) of Section 3(1) of the Bombay Entertainment Duty Act, 1923, as amended by the Maharashtra Ordinance No. XXII of 1983, were ultra vires the Constitution and invalid. The court declared these clauses invalid and allowed the petitions, entitling the petitioners to a refund of any amounts paid under these provisions. The judgment emphasized that a valid tax on entertainment must be based on actual entertainment held and actual payments made for admission, rather than hypothetical or notional calculations.