2018 (4) TMI 813 - HC - VAT and Sales Tax

Entertainment tax - whether the District Magistrate, Kanpur Nagar has justified in demanding sum of ₹ 13,19,223/- as an entertainment tax over whereas the entertainment tax had already paid by the petitioner to the tune of ₹ 87,94,847/- against the sale of Tickets for sum of ₹ 3,53,44,650/-? - Held that - There is no dispute that the petitioner has paid the service tax and further that out of the demand of ₹ 1,01,14,075/- (Rs. one crore one lakh fourteen thousands and seventy five only) towards entertainment tax petitioner has already deposited a sum of ₹ 87,94,847/- and now the alleged demand is of ₹ 13,19,223/- which is being pressed illegally - the operation of the impugned order passed by the District Magistrate, Kanpur dated 21.02.2018 (annexure-1) shall remain stayed.

Summary

Issues:
1. Jurisdiction of the District Magistrate to demand entertainment tax already paid by the petitioner.
2. Interpretation of U.P. Entertainment and Betting Tax Act, 1979 in relation to service tax liability.
3. Pending cases before the Hon'ble Apex Court and High Court on similar issues.
4. Stay of demand notice by the District Magistrate.

Analysis:
1. The primary issue in this case revolves around the jurisdiction of the District Magistrate, Kanpur Nagar, in demanding an additional sum as entertainment tax from the petitioner, despite the petitioner having already paid a substantial amount of entertainment tax. The petitioner argues that the State of U.P. lacks the authority to levy such tax when service tax has already been paid under relevant provisions of the Union Finance Act, 1994. The petitioner contests the justification for the demand made by the District Magistrate.

2. The petitioner's counsel asserts that the amount collected as service tax from viewers who purchased tickets for T-20 Cricket Matches has been duly deposited by the petitioner. It is argued that since service tax is being paid to the Union of India under specific constitutional provisions, there should be no additional liability to pay entertainment tax under the U.P. Entertainment & Betting Tax Act, 1979. The counsel highlights the ongoing legal proceedings in similar matters before the Hon'ble Apex Court and other High Courts, indicating a broader legal context for the present dispute.

3. Notably, the petitioner has already paid a significant portion of the demanded entertainment tax, leaving a disputed amount of ?13,19,223. Given the circumstances and the contention that the demand is being pressed illegally, the High Court stays the operation of the impugned order passed by the District Magistrate, Kanpur, dated 21.02.2018. This stay ensures that the petitioner is not required to pay the disputed amount until the legal issues surrounding the jurisdiction and tax liability are resolved conclusively.

4. The reference to the pending case before the Hon'ble Apex Court, along with the stay granted by the High Court, underscores the complexity and significance of the legal questions involved in the present writ petition. The interplay between different tax statutes, constitutional provisions, and judicial interpretations forms the crux of the dispute, highlighting the need for a thorough examination of the legal framework governing entertainment tax and service tax liabilities in the context of the petitioner's activities related to T-20 Cricket Matches.