2020 (2) TMI 860 - SC - Indian Laws

Interpretation of statute - Sections 3(1)(b), 3(2) and subsections 5(a) and (b) of the Bombay Entertainments Duty Act, 1923 - rate of entertainment tax payable by the respondents - admission and entertainment to the amusement park - High Court held that entertainment duty to be levied for the amusement park is 50% of 15% i.e. 7.5% under Section 3(2) of the Act, therefore, in terms of Section 3(5)(a) and (b) of the Act, the entertainment duty is 50% of 7.5% i.e. 3.75%. The High Court held that such interpretation is on the basis of a cumulative reading of the provisions of the Act. HELD THAT - There are no merit in the argument raised by learned counsel for the writ petitioners. In respect of first three years falling in Section 3(5)(a) of the Act, there is no dispute, as no duty is payable. The controversy revolves around the levy of entertainment duty for the fourth and fifth year and subsequently from the sixth year onwards. Sub-clause (ii) of Section 3(5)(a) contemplates that duty @50% under clause (b) of sub-section (1) or, as the case may be, sub-section (2) of Section 3 would be payable. In respect of the first part of sub-clause (ii) of Section 3(5)(a) of the Act, there can possibly be no dispute as the entertainment duty is 50% of 15% leviable under Section 3(1)(b) of the Act. The argument that when a lumpsum amount is paid as a right of admission for all rides and games, then it becomes admission to series of entertainment, is not tenable. The writ petitioners issue one ticket including one or more rides or games situated in one compound. It is not the case of the writ petitioners that for every ride or game, it is charging separately - The admission to entertainment in terms of Section 2(d) of the Act includes all rides and games which are provided by the service provider. Once an admission ticket is granted, it is not in terms of Section 3(2) of the Act but only in terms of Section 3(1)(b) of the Act. Section 3(2) of the Act has no applicability for a visitor to an amusement park who does not fall in any of the four categories mentioned in Section 3(2) of the Act. Since, the activities undertaken by the writ petitioners are not failing part of Section 3(2) of the Act, therefore, they are not entitled to rebate of 50% provided to specified category of persons in Section 3(2) of the Act - Since Section 3(2) is not applicable to all amusement parks for all other activities, therefore, the entertainment duty in terms of Section 3(5)(a) of the Act alone would be leviable. The duty under Section 3(2) of the Act would be leviable only in respect of specified categories mentioned therein. The judgment of the High Court that in terms of Section 3(5)(a) of the Act, the entertainment duty is 50% of the duty payable under Section 3(2) of the Act, cannot be agreed upon - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Rate of entertainment duty payable by the petitioners for the period from 16th September, 1994 to 24th December, 1994.
2. Rate of duty payable for the period commencing 25th December, 1994.
3. Validity of the action of the respondents in seeking to recover duty payable during 25th December, 1989 to 23rd August, 1990 already adjusted against refund payable to the petitioners.

Issue-wise Detailed Analysis:

1. Rate of entertainment duty payable by the petitioners for the period from 16th September, 1994 to 24th December, 1994:

The High Court interpreted Sections 3(1)(b), 3(2), and subsections 5(a) and (b) of the Bombay Entertainments Duty Act, 1923. The High Court held that the entertainment duty for the petitioners would be 3.75% for the fourth and fifth years and 7.5% from the sixth year onwards. The petitioners argued that the duty should be 3.75% based on a cumulative reading of the Act's provisions. However, the Supreme Court found that the petitioners did not fall under the specific categories mentioned in Section 3(2) of the Act, which includes payments made as a lump sum for a series of entertainments or during a certain period of time. Therefore, the Supreme Court concluded that the entertainment duty should be 15% as per Section 3(1)(b) of the Act and not 3.75%.

2. Rate of duty payable for the period commencing 25th December, 1994:

The petitioners argued that the duty should be 7.5% for the period commencing 25th December, 1994, based on Section 3(2) of the Act, which provides for a 50% reduction in the duty rate for lump sum payments for a series of entertainments. The High Court agreed with this interpretation. However, the Supreme Court disagreed, stating that the petitioners did not fall under the specific categories mentioned in Section 3(2) of the Act. The Supreme Court emphasized that the duty rate should be 15% as per Section 3(1)(b) of the Act, and the petitioners were not entitled to the 50% reduction provided under Section 3(2).

3. Validity of the action of the respondents in seeking to recover duty payable during 25th December, 1989 to 23rd August, 1990 already adjusted against refund payable to the petitioners:

The High Court found that the respondents' action in seeking to recover the duty payable during this period was justified and valid in law. The Supreme Court did not specifically address this issue in detail but set aside the High Court's order, implying that the respondents' action was valid. The Supreme Court concluded that the entertainment duty should be levied as per Section 3(1)(b) of the Act, which is 15%, and not 3.75% or 7.5% as argued by the petitioners.

Conclusion:

The Supreme Court set aside the High Court's order and concluded that the entertainment duty payable by the petitioners should be 15% as per Section 3(1)(b) of the Bombay Entertainments Duty Act, 1923. The petitioners were not entitled to the 50% reduction provided under Section 3(2) of the Act, as they did not fall under the specific categories mentioned in that section. The appeals were allowed, and the High Court's interpretation was found to be incorrect.