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TMI Blog2012 (2) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... e race course to place bets on the races or merely derive pleasure from watching the races. On the entry fee collected by the petitioner, it collects entertainment tax under the Act at 25 per cent and pays the same to the betting tax authorities. It is submitted that with the advent of mobile phones, the petitioner felt that indiscriminate use of these phones inside the race course was becoming a nuisance. Therefore, in order to restrict the entry and use of the mobile phones, the petitioner decided to levy a separate charge or entry fee for carrying the mobile phones inside the premises as a regulatory measure. It was also felt that placing a total ban on the mobile phones may not be feasible since the patrons or punters would like to remain in touch with their families or place of work and the phones may also be useful in cases of emergency. Apparently the betting tax authorities under the Act came to know that the petitioner was collecting mobile entry fee from its patrons. They, therefore, issued notice dated February 18, 2002 asking the petitioner to pay entertainment tax at 25 per cent on the charges collected for carrying the mobile phones. The notice was issued by the En ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... temporaneously with the settlement arrived at, a letter dated November 30, 2005 was written by the Deputy Commissioner (Tax) to the President of the petitioner-club, which is annexure P5 to the writ petition. The petitioner was informed that with effect from December 1, 2005 entry of mobile phones into the petitioner-club was being allowed subject to the following conditions: (a) DRC will pay weekly entertainment tax at25 per cent on collection of charges of mobile phones by DRC. (b) DRC will maintain a detailed record in form of bound register mentioning the names of persons who are carrying the mobile phones, mobile phone numbers, addresses of persons who are carrying the mobile phones, amount of charge collected for entry of mobile phone by DRC, amount of entertainment tax collected. (c) The register to be maintained by Delhi Race Club shall be serially of Entertainment Tax Department, Government of NCT of Delhi. (d) That DRC shall be liable to pay the entertainment tax on amount received from mobile phone charges from financial year 2002-03 onwards till June 21, 2005 as per the decision of the Competent Authority which will be conveyed separately. (DRC stands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of the settlement and that in these circumstances there was no justification for issuing show-cause notice proposing to levy entertainment tax on the entry of mobile phones from April 1, 2002 to November 30, 2005. Apparently nothing was heard from respondent No. 3 for a while. However, the petitioner received an assessment order dated November 24, 2006 for the period April 2002 to June 2005, in which entertainment tax at 25 per cent was levied on the charges for entry of mobile phones in accordance with section 2(m)(iv) read with section 6(1) of the Act. The total collections made by the petitioner as mobile charges for the aforesaid period and the entertainment tax demanded from it came to ₹ 3,40,26,718 and ₹ 85,06,679, respectively, as set out below: Year Total collection by DRC from mobile charges (in Rs.) Entt. tax payable by DRC (in Rs.) 2002-03 63,31,568 15,82,892 2003-04 1,13,19,150 28,29,787 2004-05 1,39,52,750 34,88,187 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertainments and Betting Tax Act, 1996. Hence the impugned order is upheld and the revision petition is rejected. This order is attached to the writ petition as annexure P10. On January 29, 2010, the Additional Entertainment Tax Officer sent a letter to the Deputy Commissioner/Collector (Revenue), District New Delhi, 12A, Jam Nagar House, S.R. New Delhi, requesting him to recover a sum of ₹ 1,28,03,462 from the petitioner as arrears of land revenue and also recover interest at two per cent for the delay in payment of the above sum from the 15th day after the issuing of the assessment order dated November 24, 2006. A copy of the aforesaid order was marked to the Secretary of the petitioner. The present writ petition has been filed against the assessment orders passed by the third respondent raising the demand and against the order passed by the second respondent in revision, rejecting the revision application filed by the petitioner. It is prayed that the assessment order and the revision order be quashed. Prayers have also been made for quashing the recovery notice dated January 29, 2010 and for passing such further order or orders as may be deemed fit and proper. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et shall be deemed to be payment for admission; The question for decision is whether entertainment tax can be levied on amounts collected by the petitioner as entry fee for mobile phones under sub-clause (iv) of clause (m) of section 2 read with section 6(1) of the Act. There was some debate as to the applicability of sub-clause (iii) and the objection taken on behalf of the petitioner was that this sub-clause is not applicable at all since the mobile phone cannot be considered as something which enables a person to get a normal or better view of the races or as an instrument or contrivance without which the person viewing the races would not get any enjoyment. A further objection raised is that sub-clause (iv) was referred to and relied upon only in the counter-affidavit filed by the respondents and not in the assessment order. It was however, clarified on behalf of the respondents that sub-clause (iii) is not applicable to the present case and that the basis of the assessment order was sub-clause (iv). We find that the assessment order refers to only sub-clause (iv). We would, therefore, proceed to consider the question posed before us only with reference to this sub-clause. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, in our opinion, the entertainment tax authorities were right in law in invoking sub-clause (iv) of clause (m) of section 2 read with section 6(1) of the Act for levying entertainment tax on payments made as mobile phone entry charges. Moreover, had it been the intention to provide that the purpose (use of mobile) should be connected with the entertainment (horse race), then the use of restrictive words connected with the entertainment would make no sense, because the purpose could be whatsoever . This is one more reason to hold that it is the payment which should be connected with the entertainment and not the purpose of the payment. It is, therefore, not necessary that the purpose for which the payment was made should be connected with the entertainment. Herein, the purpose for which the payment was made was the carrying of the mobile phone inside the premises of the petitioner. As rightly pointed out on behalf of the petitioner, there is no connection between the mobile phone and the horse races. However, as we have pointed out in the preceding paragraphs, it is the payment that should be connected with the horse race. That connection is afforded by the fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any inanimate object. The Supreme Court, however, rejected the contention of the respondent and allowed the appeal of the State holding that the real nature and character of the levy was not on the admission of cars or motor vehicles, but the levy was on the person entertained who takes the car inside the theatre and watches the film while sitting in his car. The contention of the petitioner on the basis of this judgment was that unless the mobile telephones were in any manner connected with the entertainment (the horse races in the present case), the levy cannot be brought under sub-clause (iv) of clause (m) of section 2. This judgment, contrary to what the petitioner contends, is actually against it. If the decision is to be applied to the present case, it has to be held that the levy of entertainment tax was really not on the admission of mobile phones into the premises of the petitioner, but it was on the person entertained who takes the mobile phone inside the race club and watches the horse races. Moreover, we are not in the present writ petition concerned with the constitutional validity or the competence of the State Legislature to enact sub-clause (iv). We are only concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC 110, the Supreme Court was concerned that the U.P. Entertainment and Betting Tax Act, 1937 which was extended to Delhi. A restaurant in Delhi conducted cabaret performances every evening. The minimum charges for eatables at the time of the performance were ₹ 5 for evening tea and ₹ 10 for the dinner. These amounts were adjusted towards eatables that were consumed over and above what was provided by the restaurant for these charges. The price of the eatables were not raised for the purpose of covering the entertainment, but the condition was that whether a person consumed anything or not, he had to pay ₹ 5 for the evening and ₹ 10 for the night. A minimum fee was levied for taking a seat for witnessing the show and for taking tea or dinner. On these facts the Supreme Court held, affirming the judgment of a Division Bench of this court in State v. V.N. Sood ILR 1976 Delhi 842 that the payment for the tea or the dinner would come under section 2(6) of the U.P. Act as a payment for admission. It is noteworthy that section 2(6)(iv) of the U.P. Act is identically worded as section 2(m)(iv) of the Act. It was held by the Supreme Court that though the payment ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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