2018 (9) TMI 301 - HC - VAT and Sales Tax

'Bangalore Fashion Week' payments deemed 'payment for admission' under Karnataka Entertainment Tax Act.

The court held that the event 'Bangalore Fashion Week' constituted 'entertainment' under the Karnataka Entertainment Tax Act, 1958, and the payments ... Levy of Entertainment Tax - Fashion show organized by appellant - penalty - whether the event in question, a fashion show organised by the appellant, falls within the expression ‘entertainment’ and there had been ‘payment for admission’ so as to attract the relevant charging provisions of the Act, 1958? Held that:- A bare look at the definition of 'entertainment' in the Act of 1958 is sufficient to find that the expression has been defined in too wide and broad terms which undoubtedly take within their sweep an event like the one organised by the appellant, namely, a fashion show, which was sponsored by the interested manufacturers or business houses and which comprised of lifestyle parties, after-hour parties, press conferences, and exhibition of designer products/apparels by live models walking on the ramp and on mannequins. The said event definitely falls within the expressions 'exhibition' as also 'performance', apart that it would also answer to the description of an amusement for recreation and entertainment and even of a pageant. In a cumulative effect of the activities of the event in question, we are in no doubt that they were of such exhibitions and performances, which indeed provide amusement and entertainment - The event organised by the appellant, therefore, clearly answers to the wide definition of 'entertainment' per sub-clause (iii) of clause (e) of Section of 2 of the Act of 1958. Element of 'payment for admission' - Held that:- The receipts of the appellant directly answer to the description of 'payment for admission' under the Act of 1958; and when such payment for admission was received by the appellant for the event in question, which had been an 'entertainment' for the purpose of the Act of 1958, there is no escape for the appellant from the liability thereunder. Appeal dismissed - decided against appellant. Issues Involved:1. Whether the event 'Bangalore Fashion Week' falls within the definition of 'entertainment' under Section 2(e) of the Karnataka Entertainment Tax Act, 1958.2. Whether the payments received by the appellant constitute 'payment for admission' under Section 2(i)(iv-a) of the Karnataka Entertainment Tax Act, 1958.3. Liability of the appellant for entertainment tax and penalty.Issue-wise Detailed Analysis:1. Definition of 'Entertainment':The primary issue was whether 'Bangalore Fashion Week,' organized by the appellant, qualifies as 'entertainment' under Section 2(e) of the Karnataka Entertainment Tax Act, 1958. The court noted that the Act's definition of 'entertainment' includes 'any amusement or recreation or any entertainment provided by a multi-system operator or exhibition or performance or pageant or a game or sport whether held indoor or outdoor to which persons are admitted on payment.' The event in question, comprising lifestyle parties, fashion shows, and exhibitions, was determined to fit within this broad definition. The court emphasized that the terms used in the definition are of wide import and cover various forms of amusement and recreation. The court rejected the appellant's argument that the event did not constitute a 'pageant' as envisaged by the Act, stating that the definition is not restricted to such a narrow interpretation.2. 'Payment for Admission':The second issue was whether the payments received by the appellant, including sponsorship fees and advertisement charges, qualify as 'payment for admission' under Section 2(i)(iv-a) of the Act. The Act defines 'payment for admission' to include any payment connected with an entertainment, including sponsorship fees and advertisement charges, which enables entry into the entertainment. The court found that the sponsorship fees and advertisement charges received by the appellant for the event fall within this definition. The court noted that these payments were intended to promote goodwill, brand name, or business interest, thereby facilitating entry into the event. The court dismissed the appellant's argument that the payments were not directly for admission, highlighting that the broad definition in the Act encompasses such payments.3. Liability for Entertainment Tax and Penalty:The final issue was the appellant's liability for entertainment tax and penalty. The court upheld the assessment order dated 24.07.2017, which imposed entertainment tax amounting to Rs. 4,75,000/- with an equal amount of penalty. The court observed that the appellant had received significant amounts through ticket sales and sponsorship fees, making the event liable for entertainment tax under the Act. The court rejected the appellant's contention that the sponsor, not the event organizer, should be liable for the tax. The court emphasized that the appellant, as the event organizer, collected payments for admission and thus was liable for the tax. The court also noted that the event provided amusement and entertainment, fulfilling the criteria for taxation under the Act.Conclusion:The court concluded that the appellant's event, 'Bangalore Fashion Week,' falls within the definition of 'entertainment' under the Karnataka Entertainment Tax Act, 1958, and the payments received qualify as 'payment for admission.' Consequently, the appellant is liable for the assessed entertainment tax and penalty. The court dismissed the appeal, affirming the learned Single Judge's decision and the imposition of tax and penalty on the appellant.