2017 (1) TMI 1769 - HC - Indian Laws

Levy of Entertainment Duty - billiards tables - principles of mutuality - HELD THAT - The public is neither invited to use the tables nor is permitted to use them. The billiards tables are provided only for the members of the petitioner-Club with a view to achieve the object of the club of providing social entertainment and physical and mental recreation. The Entertainment Tax Inspector has levied the duty on the premise that the petitioner runs a pool parlour in the club where the billiards tables are provided. Under Section 2(b-2) of the Act a pool parlour would be a place of entertainment where tables are provided for playing a pool-game for which payment is necessary. It is not the case of the respondents that payment is made by the public for using the billiards tables for the pool-game. The billiards tables in the petitioner-Club would not be a game or sport to which persons are admitted for payment and hence the same cannot be considered as entertainment for which duty is leviable under Section 3 of the Act. Since the action of the Entertainment Tax Inspector of initiating proceedings against the petitioner-club for payment of entertainment duty is bad in law the impugned demand notices are hereby quashed and set aside - Appeal allowed.

Summary

Issues:
Challenge to proceedings initiated by Entertainment Tax Inspector demanding entertainment duty for billiards tables.

Analysis:
The petitioner, a registered society providing social entertainment and recreation facilities, challenged the demand for entertainment duty by the Entertainment Tax Inspector for billiards tables. The petitioner argued that as a club operating on mutual principles, the facilities were exclusively for members, not for the public. The petitioner contended that the provisions of the Maharashtra Entertainments Duty Act did not apply to them as they did not charge admission fees for the billiards tables. The petitioner relied on the principle of mutuality and cited the judgment of M/s. Geeta Enterprises to support their case.

The petitioner's counsel highlighted that the Entertainment Tax Inspector lacked jurisdiction to demand entertainment duty as the club was not operating a pool parlour for public entertainment. The counsel argued that as per the Act, entertainment duty is payable when persons are admitted to entertainment on payment, which was not the case with the billiards tables provided by the club exclusively for its members. The club's rules restricted the use of facilities to members, guests, and service members only, emphasizing the private nature of the club's activities.

In response, the Additional Government Pleader supported the actions of the Entertainment Tax Inspector, asserting that the monthly charges paid by club members for using facilities, including the billiards tables, constituted payment for admission to entertainment. The Government Pleader argued that since the club operated a pool parlour where billiards tables were available for a fee, the demand for entertainment duty was justified.

The Court examined the definitions of "entertainment," "pool-game," and "pool parlour" under the Act. It emphasized that for entertainment to be subject to duty, admission had to be on payment. The Court found that the billiards tables at the club were not open to the public for payment and were exclusively for members, their guests, and service members. The Court applied the test from the M/s. Geeta Enterprises judgment, concluding that the club's activities did not meet the criteria for public entertainment as required by the Act. As the club did not derive monetary benefit from members' use of billiards tables, the Court quashed the demand for entertainment duty, ruling in favor of the petitioner.

In conclusion, the Court held that the Entertainment Tax Inspector's actions were legally unfounded, and the demand notices for entertainment duty were set aside. The Court ruled in favor of the petitioner, emphasizing the private, non-commercial nature of the club's activities and the absence of public admission for payment to the billiards tables.