2022 (12) TMI 127 - HC - VAT and Sales Tax

Principles of natural justice - contention of the petitioner is that very foundation for charging entertainment tax on the 'costume' as alleged against the petitioner is wholly illegal, inasmuch as, in terms of the mandate of Section 2(l)(iii) of the 1979 Act - whether the orders impugned which are without any opportunity of hearing, satisfies the tax under Section 12 of the 1979 Act? - HELD THAT - The payment for admission, includes any payment made for loan or use of any 'instrument' or 'contrivance' which enables a person to get a normal or a better view or hearing or enjoyment of the entertainment which without the aid of such instrument or contrivance such person would not get. Thus to include any amount under Section 2(l)(iii), it is essential that there should be a use of 'instrument' or 'contrivance' which enables the person to use the benefits and without which such entertainment or enjoyment is not possible - there is no material to state that such costume enhances the enjoyment of the persons to enjoy the entertainment of water park and further there is no material on the record to state that without such costume being provided, the person entering into the water park would not in a position to enjoy the entertainment. In the present case, the costume used in the water park would neither fall within the definition of words 'instrument' or 'contrivance', thus I am inclined to accept the submission of the Counsel for the petitioner that the renting on 'costumes' cannot be included in the term 'payment for admission' as defined under Section 2(l), thus on that score alone, the assessment order is beyond the authority of law and is violative of Article 265 of the Constitution of India. It is well settled that the tax can be levied only when specially provided for and not by intendment. If the legislation was of the view that the renting of the costume should be included for the purpose of determination of the taxes, it could have specifically provided for under the Act which has not been done, thus, I have no hesitation in holding that demand of levy of tax as well as the penalty is without authority of law. Petition allowed.

Summary

Issues:
Challenge to imposition of entertainment tax and penalty under The Uttar Pradesh Entertainment and Betting Tax Act, 1979 based on a survey conducted at a water park premises.

Analysis:
1. The petitioner challenged the imposition of entertainment tax and penalty based on orders dated 31.08.2010, 21.01.2016, and 30.03.2017. The petitioner contended that the tax levied on renting costumes at the water park was exempted previously. The issue arose from a survey conducted at the premises, alleging charging for costumes without proper authority.

2. The petitioner argued that the foundation for charging entertainment tax on costumes was illegal as it did not fall under the definition of 'payment for admission' as per Section 2(l)(iii) of the 1979 Act. The petitioner claimed the costumes were provided by a separate contractor, and the charging was voluntary, not part of admission fees. The assessment period was also questioned for its arbitrary nature.

3. The Counsel for the petitioner contended that the assessment lacked proper authority of law and violated the principles of natural justice by not providing an opportunity for a hearing. The assessment was solely based on one survey, which was inadequate for determining the tax due. The petitioner's arguments were supported by the absence of a denial in the counter affidavit.

4. The Court analyzed Section 2(l)(iii) of the 1979 Act, defining 'payment for admission' as including the use of instruments or contrivances enhancing entertainment. The Court found that costumes did not qualify as instruments or contrivances under this definition, as they did not enhance entertainment or enjoyment at the water park.

5. The Court referred to dictionary definitions of 'contrivance' and 'instrument' to support its interpretation. Since costumes did not meet the criteria of these definitions, the Court concluded that the tax levy on costumes was beyond the authority of law and violated the Constitution of India.

6. The Court emphasized that taxes must be levied explicitly and not by implication. Since the Act did not specifically include renting costumes for tax purposes, the demand for tax and penalty was deemed unauthorized. Consequently, the Court allowed the writ petition, setting aside the impugned orders and directing the refund of the deposited amount to the petitioner within three months.