2018 (7) TMI 1699 - SC - VAT and Sales Tax

Levy of Entertainment tax - gate receipts of the musical program - Section 3 of the Gujarat Entertainments Tax Act, 1977 - Held that - Section 3 of the Act is the charging section whereas Section 3A of the Act makes certain forms of entertainments non-taxable. If a form of entertainment is not taxable under Section 3A of the Act we do not see how the requirement of exemption and necessity to conform to the requirement of exemption can apply to a non-taxable form of entertainment. All kinds of musical programmes, without any qualification, have been sought to be taken out of the purview of the charging section by incorporation of Section 3A. If that is so, there is no no substance in the arguments advanced on behalf of the State; neither it can be agreed with the reasoning of the High Court. The High Court could not have imposed the requirement of the entertainment to be for educational, cultural or charitable purpose when the form of entertainment in question is included in Schedule III to the Act - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of Section 3 and Section 3A of the Gujarat Entertainments Tax Act, 1977.
2. Applicability of exemptions under Section 29 for entertainment tax.
3. Determining the nature of musical concerts for taxation purposes.

Analysis:
The judgment revolves around the interpretation of Sections 3, 3A, and 29 of the Gujarat Entertainments Tax Act, 1977. The appellant, an Event Organizer, organized a live musical concert and contested the imposition of entertainment tax on gate receipts. The High Court ruled against the appellant, leading to the appeal. Section 3 is the charging section, while Section 3A excludes certain entertainments from taxation. The key issue was whether the musical concert fell within the exemption criteria of Section 29, which includes purposes like cultural promotion. The High Court rejected the appellant's claim, stating the concert was commercial, not cultural.

The respondent argued that Section 3A aimed to expedite exemptions under Section 29 and contended that a musical concert did not qualify as a "musical work" as per the Copyright Act, 1957. They also claimed that the common understanding of "music" did not encompass live concerts. However, the Supreme Court disagreed, emphasizing that Section 3A exempts all musical programs without restrictions. The Court found no merit in the State's arguments or the High Court's reasoning. Since musical programs were explicitly listed in Schedule III, the Court concluded that the High Court erred in imposing additional criteria for exemption. Consequently, the Supreme Court set aside the High Court's order and allowed the appeal, ruling in favor of the appellant.