2017 (4) TMI 627 - HC - Indian Laws

Court upholds entertainment tax on concert, citing legislative intent for cultural promotion.

Gypsy Pegasus A Partnership Firm Versus State of Gujarat

The court dismissed the petition, ruling that levying entertainment tax on the musical concert was legal. The court held that the exemption under Section ... Entertainment tax on the musical concert performed / organized by the petitioner - Held that:- As for purpose of Amendment Act, 1998 and Section 3, 3A and schedule are read together with Section 29 r/w budget speech of the Hon'ble Finance Minister there can be only one conclusion that entertainment / activities mentioned in Schedule III, if they are performed in commercial manner and for profit making and which has no element of educational, medical, charitable, philanthropic or such other purposes, are not entitled to exemption from payment of entertainment tax like musical concert performed in the present case which has commercial element and the sole purpose is for profit making and all those activities mentioned in Schedule III shall be entitled to exemption from entertainment tax if there is an element of educational, medical, charitable, philanthropic or such other purposes and element is non commercial and non profit making. Therefore, the submission on behalf of the petitioner that for all the activities / entertainment mentioned in Schedule III irrespective of whether they are performed for any educational, medical, charitable, philanthropic or such other purposes or irrespective of fact whether they are performed for commercial purpose or not and / or there is a commercial element on such activities / entertainment, they shall be exempted from payment of entertainment tax cannot be accepted. As in the present case it is an admitted position that the live musical concerts organized by the petitioner on 24.12.2016 was admittedly not for any educational, medical, charitable, philanthropic or such other purposes. It is an admitted position that same is having commercial element and even they charge also very high entry fee ranging from ₹ 500/above and may be upto to ₹ 5000/per entry. Under the circumstances it cannot be said that the action of the respondent can be said to be in any way illegal and / or contrary to the legislative intent of Section 3A and Schedule III of the Entertainment Tax Act. Issues Involved:1. Legality of levying entertainment tax on a musical concert under the Gujarat Entertainment Tax Act, 1977.2. Interpretation of Section 3A read with Schedule III of the Gujarat Entertainment Tax Act, 1977.3. Legislative intent behind the insertion of Section 3A and Schedule III in the Gujarat Entertainment Tax Act, 1977.4. Applicability of exemption from entertainment tax for commercial events.Issue-wise Detailed Analysis:1. Legality of levying entertainment tax on a musical concert under the Gujarat Entertainment Tax Act, 1977:The petitioner organized a musical concert on 23.12.2016 and argued that the event should be exempt from entertainment tax under Section 3A read with Schedule III of the Gujarat Entertainment Tax Act, 1977. The petitioner contended that the respondent authority levied the tax beyond their jurisdiction, violating the provisions of the Act. The respondent argued that the petitioner had an alternative statutory remedy and that the tax levy was consistent with the Act’s provisions.2. Interpretation of Section 3A read with Schedule III of the Gujarat Entertainment Tax Act, 1977:The petitioner relied heavily on Section 3A and Schedule III, asserting that all kinds of musical programs, including musical nights and opera, are exempt from entertainment tax. The petitioner emphasized a literal interpretation of Section 3A, arguing that the language is clear and unambiguous, thus requiring a straightforward application without adding any conditions.3. Legislative intent behind the insertion of Section 3A and Schedule III in the Gujarat Entertainment Tax Act, 1977:The respondent argued that the legislative intent behind Section 3A and Schedule III was to encourage cultural and sports activities, not commercial events. They cited the Finance Minister’s Budget Speech and the statement of objects and reasons of the Amendment Act, 1998, which emphasized promoting non-commercial cultural activities. The respondent contended that the exemption was meant for activities without a commercial element, aligning with educational, medical, charitable, or philanthropic purposes.4. Applicability of exemption from entertainment tax for commercial events:The court analyzed the legislative intent, considering the Budget Speech and the statement of objects and reasons. It concluded that the exemption under Section 3A and Schedule III was intended for non-commercial cultural activities. The court held that activities performed for profit, such as the petitioner’s musical concert with high entry fees, do not qualify for the exemption. The court noted that the legislative intent was to exempt activities that promote cultural and sports activities without a commercial motive.Conclusion:The court dismissed the petition, holding that the respondent’s action to levy entertainment tax on the petitioner’s musical concert was legal and consistent with the legislative intent of Section 3A and Schedule III of the Gujarat Entertainment Tax Act, 1977. The court emphasized that the exemption applies to non-commercial activities and not to profit-making events.