1995 (11) TMI 442 - HC - VAT and Sales Tax

Court affirms entertainment tax on cable services, rejecting profit motive exemption

Hindalco Industries Ltd. And Versus State Of Uttar Pradesh And Others

Hindalco Industries Ltd. And Versus State Of Uttar Pradesh And Others - AIR 1996 All 199 Issues Involved:1. Applicability of entertainment tax to Cable Television Network provided by Hindalco.2. Definition and scope of 'admission' and 'entertainment' under the U.P. Entertainment & Betting Tax Act, 1979.3. Whether Hindalco's welfare measure without profit motive exempts it from entertainment tax.4. Procedural fairness in issuing notice and determining the number of cable connections.Issue-wise Detailed Analysis:1. Applicability of Entertainment Tax to Cable Television Network Provided by Hindalco:The petitioners argued that entertainment tax under the U.P. Entertainment & Betting Tax Act, 1979, is only applicable for 'admission' to a place of entertainment, which does not apply to the Cable Television Network provided at employees' residences. The Court, however, referred to the inclusive definition of 'payment for admission' under Section 2(1) of the Act, which covers any payment connected with an entertainment, regardless of the place. The Court cited a Division Bench authority in Civil Misc. Writ Petition No. 1353 of 1993, which had repelled similar contentions, thereby affirming that the entertainment tax is applicable to the Cable Television Network provided by Hindalco.2. Definition and Scope of 'Admission' and 'Entertainment' under the Act:The petitioners contended that the Act's provisions require physical admission to a place of entertainment, which is not the case with the Cable Television Network. The Court analyzed the definitions under Section 2, highlighting that 'admission' includes any place where entertainment is held and 'entertainment' encompasses various forms of amusement provided for payment. The Court concluded that the Act's scope is broad enough to include payments for cable television services provided at residences, thus making Hindalco liable for the entertainment tax.3. Whether Hindalco's Welfare Measure Without Profit Motive Exempts it from Entertainment Tax:The petitioners argued that the Cable Television Network was a welfare measure without profit motive, charging only a nominal fee of Rs. 5 for maintenance, and thus should be exempt from tax. The Court acknowledged the welfare intent but emphasized that the liability to pay entertainment tax is created once any sum is realized from viewers for entertainment, regardless of the amount or the name given to the charge. The Court suggested that Hindalco could seek exemption under Section 11(1) of the Act from the State Government but upheld the tax liability unless such an exemption is granted.4. Procedural Fairness in Issuing Notice and Determining the Number of Cable Connections:The petitioners claimed that the impugned order was passed without proper notice. The Court reviewed the timeline and found that Hindalco had been granted multiple opportunities to show cause, thus procedural fairness was maintained. However, the Court noted a discrepancy in the number of cable connections (4000 vs. 8000) based on conflicting statements and lack of proper adjudication by the District Magistrate. The Court directed the District Magistrate to determine the exact number of residential units with cable connections after a proper inspection in the presence of Hindalco's representatives and then reassess the tax liability accordingly.Conclusion:The writ petition was partly allowed. The Court upheld the right of the State Government to realize entertainment tax from Hindalco but quashed the specific demand in Annexure 15. The matter was remanded to the District Magistrate to determine the correct number of residential units provided with cable TV connections and reassess the tax liability within three months, ensuring procedural fairness and proper inspection.