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TMI Blog2021 (10) TMI 762X X X X Extracts X X X X X X X X Extracts X X X X ..... lved in the matter i.e., notice issued in the first instance to the appellant/ present petitioner wherein it has proposed to levy tax collections from MARENA treating the same as recreation parlour and a demand was made under section 4F of the KET Act. The Tribunal has gone beyond the notice issued to the petitioner in the matter by confirming the payment on a new ground for levy solely based on the definition of 'entertainment' as per Section 2(e)(iii) of the KET Act and meaning of the word 'amusement' meaning thereby the Tribunal has travelled beyond the entertainment tax notice. In the present case, the petitioner is an Educational Institution and not a 'recreation parlour'. The provision of amenities and facilities, such as MARENA are being provided with an intention to improve the personality of the students. Another important aspect of the case is that the Entertainment Tax can be levied in respect of charges collected for admissions or participation to a recreation parlour as defined under Section 2(1) of the KET Act. Recreation Parlour means any place where a game such as bowling, billiards, snooker or the like by whatever name called is provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The petitions are allowed. - STRP NO.294/2018 C/W STRP NO.7/2020 - - - Dated:- 23-7-2021 - HON'BLE MR. JUSTICE SATISH CHANDRA SHARMA AND HON'BLE MR. JUSTICE NATARAJ RANGASWAMY PETITIONER (BY SRI G SHIVDASS, SENIOR COUNSEL A/W SRI MOHAN MAIYA G L, ADVOCATE) RESPONDENTS (BY SRI JEEVAN J NEERALGI, ADVOCATE) ORDER SATISH CHANDRA SHARMA J. Regard being had to the similitude controversy involved in both the cases, they were heard analogously together and a common order is being passed. 2. The petitions were admitted to consider the following substantial questions of law: In STRP No.294/2021 i. Whether, in the facts and circumstances of the case, the Karnataka Appellate Tribunal is right in dismissing the STA Nos.53 to 55/2017 filed by the petitioner, by upholding the orders of the First Appellate Authority and the Assessing Authority, insofar as they levy entertainment tax on the charges collected from students by the petitioner for utilizing facilites of MARENA? ii. Whether the Karnataka Appellate Tribunal is permitted to traverse beyond the allegations made in the Entertainment Tax Notice, which proposed to levy tax on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 27.08.2018 in STA Nos.53 to 55/2017 and Judgment dated 16.09.2019 in STA No.248 to 252/2018 respectively passed by the Karnataka Appellate Tribunal, Bengaluru, Mangaluru Camp (M/s. Manipal Academy of Higher Education v. The Joint Commissioner of Commercial Taxes (Appeals), Mangaluru and another). 4. The facts of the case reveal that the petitioner is a deemed University registered under Section 3 of the UGC Act, 1956. It is a registered Trust, operating as a non-profit organisation primarily engaged in imparting education. The petitioner-University with an object to provide overall development of its students as well as the faculty has set up an indoor sports arena called MARENA . The University is providing facilities relating to sports, health and fitness. It has been further stated that MARENA includes gymnasium, cafeteria, sports shop, walking/jogging Track, Sauna, Steam Bath, Change Rooms, Lockers, Sports Courts such as Badminton Courts, Squash Courts, Tennis Courts and Basketball Courts, Crickets, Football, simulated games and other ancillary services. It has been further stated that in respect of most of the facilities like walking/jogging track, badminton courts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Section 2(e)(iii) of KET Act. It has been stated that the petitioner-University is having a sports complex. It is meant for students and it is certainly true that the students, their parents in case visit the University and certain other members are also permitted to use the facilities. However, it is not open to public at large. It has been argued vehemently before this Court that the recreation facility which are meant for students cannot be subjected to entertainment tax as has been done in the present case. The order passed by the Tribunal in paragraph-76 to 85 reads as under: 76. On account of facts and grounds of appeal and question of law being common, these appeals are clubbed together and disposed of by this common judgment. The following points which arise for our consideration are: Point No.1: Whether the facilities provided by the Appellant is entertainment vis- -vis recreation under Section 2(e)(iii) of the KET Act, 1958, read with Section 2(l) thereof? Point No.2: Whether the place where the facilities are provided is a place of entertainment U/s 2(ib) of the KET Act, 1958? Point No.3: Whether the Appellant is a proprietor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing issues arise for our consideration, A. The appellant contends that some of the facilities like walking/jogging track, badminton courts, squash courts, basket ball court etc., provided at MARENA are offered to students free of cost. The entertainment tax is leviable only when there is an admission to or participation in a place where a game, such as bowling, billiards, snooker or the like are provided. The Manipal University is not a commercial institution and the MARENA is not a recreation parlour. B. The provisions of KET Act, 1958 provide the definitions of various terms used and those relevant for the purpose of this case are extracted below: 2(a) admission includes admission as a spectator or as one of an audience, and admission for the purpose of amusement by taking part in an entertainment; (b) admission to an entertainment includes admission to any place in which an entertainment is held; (ba) Amusement means any amusement for which persons are required to make payment for admission to any amusement arcade or amusement park or theme park or by whatever name called (e) Entertainment with all its grammatical variations and cognate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s entry of any person in to the entertainment. (v) any payment for admission of a motor vehicle into the auditorium of a cinema known as drive-in-theatre. Explanation .- Payment for admission shall not include any sponsorship fee or advertisement charges paid to the proprietor or any person connected with or conducting or organizing any event of sport. (ib) place of entertainment means the place where an entertainment is held and includes the booking office and any place from where the entertainment is provided by means of cable connection from any type of antennae with a cable net work attached to it or cable television and such other place where the accounts and other documents connected with the entertainment are kept. [(k) proprietor in relation to any entertainment other than an entertainment referred to in sub-clause (iii) of clause (e) includes any person responsible for the management thereof and in relation to any entertainment referred to in sub-clause (iii) of clause (e) includes any person conducting, organizing, sponsoring or patronizing any such entertainment.] [(l) Recreation Parlour means any place where a game such as bowling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or performance or pageant or a game or sport whether held indoor or outdoor to which persons are admitted on payment. Admittedly in the case of the appellant facilities of indoor games are provided to the members, students and others by charging a sum on annual subscription basis or on temporary basis to others in MARENA. In the light of the understanding of the word entertainment as music, performance or gathering of persons either by way of recreation, distraction, diversion, pleasure, enjoyment, hospitality, satisfaction etc., the activities provided by the appellant in the MARENA cannot but be termed as entertainment in terms of Section 2(e)(iii) of the KET Act, 1958. To provide recreation and entertainment to its members, to promote camaraderie and fellowship among its members, to do all other acts and things as are conducive to the attainment of the objectives set forth by the appellant to its members and students who are utilizing the facilities provided in MARENA. The definition of entertainment is wide enough to include game or sport whether held indoor or outdoor to which persons are admitted on payment, the various facilities provided by the appellant in MARENA cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the affirmative. Point No.3: The appellant contends that it is not a proprietor as per the Act. As per the definition in 2(k) of the Act, it does not make any distinction for any purpose behind conducting of entertainment, suffice it that any person in charge or responsible for conducting the entertainment is termed as proprietor . The expression PERSON employed includes a legal person also like a company, corporation, association, club, institution etc. Hence, the appellant is a proprietor under the Act for the purposes of application of the provisions of KET Act, 1958. The pith and substance of the levy of tax under the KET Act, 1958 is on the person who gets entertained and it is immaterial whether the person is a company, corporate sector, group of people, etc., The provisions of KET Act, 1958 do not recognize or link the liability with any stated purpose or motive whether social, commercial etc. Therefore, the stand taken by the appellant in this regard does not call for any interference. Hence, we answer this point in affirmative. Point No.4:- The definition of payment for admission will have to be read with the definition of admission to an enterta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction, which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. The Hon ble Supreme Court in the case of C.T.O. v/s. Rajasthan Taxchem Ltd., in their decision reported in (2007) 5 VST 529 (at page 536)(SC) has ruled that the word includes in a definition gives wider meaning to the words or phrases in a statute. The word includes is usually used in the interpretation clause in order to enlarge the meaning of the words in the statute. When the words includes is used it must be construed as comprehending not only such things as they signify according to their nature and impact but also those things which the interpretation clause declares they shall include. Further, the West Bengal Taxation Tribunal in the case of M/s.Peerless General Finance Investment Co. Ltd., V/s. State of West Bengal in their decision reported in (2010) 31 VST 155, 176 (WBTT) by relying on the judgment of the Hon ble Supreme Court in the case of P.Kasilingam V/s.P.S.G. College of Technology reported in AIR 1995 SC 1395 has ruled that it is well-settled t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purposes of computing the entertainment tax. The very use of the word each payment for admission to or participation in recreation parlour in Section 4-F of the KET Act, 1958 would not alter the effect of liability on the composite fee charged and collected by the appellant from its members and students as it is immaterial whether the participants utilize all the facilities provided in MARENA at a stretch or utilize as and when they require. The each payment for admission referred to in Section 4-F of the KET Act, 1958 is in relation to participation or admission of individuals who intend to utilize the facilities provided by the appellant. The Hon ble High Court of Karnataka in the case of M/s.Nataraj Talkies v/s. State of Karnataka and another in their decision reported in (1988) 69 STC 278 has observed at para 9 that we must have due regard to the object of the Act and the intent of the Legislature. We must adopt such an interpretation so as to achieve the purpose of the Act and not to defeat the purpose . The Hon ble Supreme Court in the case of Commissioner of Sales Tax, Delhi and others v/s. Shri Krishna Engineering Company and others in their decision reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled a class or kind of objects. According to Sutherland Statutory Construction (3rd Edn.) Vol.II p. 395, for the application of the doctrine of ejusdem generis, the following conditions must exist. (i) The statute contains an enumeration by specific words; (ii) The members of the enumeration constitute a class; (iii) The class is not exhausted by the enumeration; (iv) A general term follows the enumeration and (v) There is not clearly manifested an intent that the general term be given a broader meaning than the doctrine requires. Therefore, if the enumerated items are similar in nature or identical in description, then such items can be included in the class of enumerated ones otherwise not. The enumerated items are snooker, billiards and bowling, etc., and the appellant has provided the facility for foot ball, volley ball, cricket, Tennis as well in the MARENA arcade for which subscription fee is charged and collected from its members and also from students and individuals who intend to avail the facilities provided in MARENA arcade. 84. When the liability of entertainment tax is upheld for the reasons recorded in the foregoing paragra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be levied and collected a tax calculated at the rate of twenty per cent on each payment for admission to or participation in recreation parlour. The tax so levied shall be paid by the proprietor. Provided that no tax shall be levied where the payment for admission excluding the amount of tax, is less than, fifty rupees in respect of any amusement in the limits of Bangalore Urban Agglomeration or a City Municipal Corporation and two hundred and fifty rupees in respect of any amusement in other areas. Section 2 of Karnataka Entertainment Tax Act, 1958 (a) admission includes admission as a spectator or as one of an audience, and admission for the purpose of amusement by taking part in an entertainment; (b) admission to an entertainment includes admission to any place in which an entertainment is held; (ba) Amusement means any amusement for which persons are required to make payment for admission to any amusement arcade or amusement park or theme park or by whatever name called. (e) (e) Entertainment with all its grammatical variations and cognate expressions means,- (i) a horse race or live telecast of a horse race to which persons ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation.- For the purposes of clause (ii), the interest payable for a part of a month shall be proportionately determined. (3) Any amount of tax or any other amount including Interest due under this Act may, without prejudice to any other mode of collection be recovered,- (a) as if it were an arrear of land revenue; or (aa) by attachment and sale or by sale without attachment of any property of such proprietor or any other person by the prescribed authority in accordance with such rules as may be prescribed; or (b) notwithstanding anything contained in the Code of Criminal Procedure, 1973 (Central Act 2 of 1974), on application to any Magistrate, by such Magistrate as if it were a fine imposed by him. (4) The High Court may, either suo-motu or on any application by the prescribed authority or any person aggrieved by the order, revise any order made by a Magistrate under clause (b) of sub-section (3). Section 12 12. Penalties.- (1) The proprietor of any entertainment or any person employed by him in any place of entertainment who admits any person to any place of entertainment in contravention of the provisions of section 5, shall on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner wherein it has proposed to levy tax collections from MARENA treating the same as recreation parlour and a demand was made under section 4F of the KET Act. The Tribunal has gone beyond the notice issued to the petitioner in the matter by confirming the payment on a new ground for levy solely based on the definition of 'entertainment' as per Section 2(e)(iii) of the KET Act and meaning of the word 'amusement' meaning thereby the Tribunal has travelled beyond the entertainment tax notice. 9. In the present case, the petitioner is an Educational Institution and not a 'recreation parlour'. The provision of amenities and facilities, such as MARENA are being provided with an intention to improve the personality of the students. Another important aspect of the case is that the Entertainment Tax can be levied in respect of charges collected for admissions or participation to a recreation parlour as defined under Section 2(1) of the KET Act. Recreation Parlour means any place where a game such as bowling, billiards, snooker or the like by whatever name called is provided for which persons are required to make payment for admission or participation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was dealing with the definition of 'Entertainment' as used in Section 2(3) of the United Provinces Entertainment and Betting Tax Act, 1937. In the light of the definition of Entertainment as held by the Hon'ble Supreme Court that there is no public colour in respect of the activities carried out in MARENA and by taking shelter of the definition under the Entertainment Tax, the Tribunal has certainly erred in law and in facts in dismissing the appeal preferred by the assessee. 12. The Division Bench of Bombay High Court in the case of Gondwana Club, Nagpur v. State of Maharashtra and others reported in 2017 SCC Online, Bombay 94 while dealing with the case under the Maharashtra Entertainments Duty Act (1 of 1923) has quashed the notice issued against the Club in the matter of payment of Entertainment duty. 13. In the aforesaid case, keeping in view the Rules of the petitioner-Club therein (Gondwana Club) and specifically keeping in view the fact that only regular members of the club, their guests and the service members were permitted to use the facilities provided by the Club, any payment of entertainment duty was held to be bad in law. 14. In the present ..... X X X X Extracts X X X X X X X X Extracts X X X X
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