2023 (10) TMI 160 - HC - VAT and Sales Tax

Imposition/levy of entertainment tax by the petitioners - admission fee in the form of ticket to allow people to visit trade fairs / Pragati Maidan - grievance of the petitioners is that respondent No. 1 was initially exempted from payment of entertainment tax for several years but a policy decision was taken on 18 November 1996 by the Competent Authority and exemption from payment of entertainment tax was withdrawn - HELD THAT - A careful perusal of the various provisions would show that Section (6) is the charging Section whereby the government may prescribe a levy of entertainment tax on all payments for admission to any entertainment , while Section 15 of the Act lays down the procedure for the assessment of tax. A bare perusal of unamended Section 2(a) of the Act, which would be applicable in this case, as it stood prior to the amendment w.e.f. 01 February 2010 would show that it is an inclusive definition defining admission to any place in which entertainment subject to the context in which it comes for consideration that may provide otherwise. Further, a bare perusal of the Section 2(i) of the Act would show that the definition of the word entertainment is a restricted one to mean any exhibition, performance, amusement, game, sport, or race, further extending the meaning of entertainment to cinematographic exhibitions. In the case of GEETA ENTERPRISES AND OTHERS VERSUS. STATE OF U.P. AND OTHERS 1983 (9) TMI 319 - SUPREME COURT , the Supreme Court had an occasion to interpret the word Entertainment as used in Section 2(3) of the United Provinces Entertainment and Betting Tax Act, 1937, which defined the word entertainment to include any exhibitional, performance, amusement, game or sport to which persons are admitted for payment. The issues arose in the background of the factual matrix where the assessee/petitioner permitted persons to enter the premises without any charge to view a show on the video which consisted mainly of sports, games etc. played on the screen of the video. It was canvassed that the petitioner was not charging any admission fee but the electronic machines imported from Japan having educational value for persons playing the games were meant to provide educational entertainment by showing sea warfare, battle field, space warfare, sports and many other things which were likely to provide both education and entertainment to the viewers, particularly to young children. In the case of HOTEL RAJDOOT PVT. LTD. VERSUS UNION OF INDIA (UOI) AND ORS. 2008 (8) TMI 1022 - DELHI HIGH COURT , the question for determination was whether the petitioner was liable to pay entertainment tax on the payment received for admission to Pussycat Discotheque in its Hotel under the provision of U.P. Entertainment and Betting Tax Act, 1937, as extended to Union Territory of Delhi in which Section 3(1) was the charging Section. Section 2(3) of the above mentioned Act defined the word entertainment to include any exhibition, performance, amusement, game or sport to which persons are admitted for payment - It was held that entertainment tax was leviable on the coverage/fixed entry charges to access to the discotheque, this Court out rightly rejected the plea by the petitioner that the primary object of running the Pussycat discotheque was to provide a different menu and atmosphere to the customers. The Court found no merit in the plea that only couples were permitted entry so that there could be an element of privacy. It was held that the petitioner was charging entry fee and the serving of meals and alcohol undoubtedly had an element of amusement as the customers were not only enjoying music but also dancing on the floor. There are regulated hours for the purposes of trade and commerce, where the main purpose apparently is promotion of trade and business, however there is no challenge to the fact that entry of general public is not restricted, and people of all ages and genders visit the site for a variety of gratification, entertainment or amusement on payment of additional or higher charges/fee. It is pertinent to mention here that the assessee may also be imposed with a levy of entertainment tax wherever people are allowed free of charge inside the complex by virtue of Section 14 of the Act. The impugned order dated 30 November 2007 passed by the FC cannot be sustained in law - Petition allowed.

Summary

Issues Involved:
1. Jurisdiction and Authority of the Deputy Commissioner.
2. Definition and Applicability of "Entertainment" under the Delhi Entertainment and Betting Tax Act, 1996.
3. Imposition of Entertainment Tax on Entry Tickets to Trade Fairs.

Issue 1: Jurisdiction and Authority of the Deputy Commissioner
The petitioners challenged the impugned order on the grounds that it was passed by the Deputy Commissioner who allegedly had no authority to exercise powers under Section 15(3) of the Act. The court concluded that the Deputy Commissioner was properly authorized under Rule 2(iii) of the Rules and Section 3(2) of the Act, which allows for the appointment of Deputy Commissioners to exercise the powers and perform the functions of the Commissioner.

Issue 2: Definition and Applicability of "Entertainment"
The core issue was whether the activities conducted at Pragati Maidan, including trade fairs and other events, fall under the definition of "entertainment" as per Section 2(i) of the Act. The court referred to various legal precedents and definitions, concluding that "entertainment" includes any exhibition, performance, amusement, game, sport, or race, and extends to cinematographic exhibitions. The court determined that the term "entertainment" should be understood in its popular sense, encompassing activities that provide amusement or diversion to the public.

Issue 3: Imposition of Entertainment Tax on Entry Tickets to Trade Fairs
The petitioners argued that the entry fee charged for admission to the trade fair grounds should attract entertainment tax. The court analyzed whether the entry tickets to the trade fair grounds constituted "payment for admission to entertainment." The court concluded that the entry fee was primarily for regulating visitor access and did not automatically grant admission to entertainment events within the fairgrounds, which required separate tickets. Consequently, the court found that the impugned order failed to distinguish adequately between the entry fee for the trade fair grounds and the admission charges for individual entertainment events.

Decision:
The court found that the impugned order dated 30 November 2007 could not be sustained in law. The respondent was held liable to pay entertainment tax for the assessment years in question. The court allowed the writ petition, setting aside the impugned order and the assessment orders to the extent of the tax imposed on entry tickets to the trade fair grounds. The petitioners were granted liberty to proceed as per the law.