TaxTMI 
TaxTMI 
2015 (5) TMI 1021
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....eason of the survey was the activities carried out by the petitioner-company in providing opportunity of gaming and playing sports to visiting customers, which attracts liability under the Rajasthan Entertainments and Advertisements Tax Act, 1957. Consequent upon survey, a consolidated notice was issued by the assessing authority to the petitioner-company on March 23, 2011, proposing to assess the liability of entertainment tax for the period from October, 2007 to March, 2009. The assessment orders were passed by the competent authority on March 31, 2011 wherein a total receipt of Rs. 8,25,529 for the month of March, 2009, tax of Rs. 2,47,659, interest of Rs. 58,623 and penalty of Rs. 4,95,318, totalling to Rs. 8,01,600, came to be assessed. The assessment order accompanied with notice of demand was served upon the petitioner-company. Petitioner- company preferred appeal thereagainst before the Deputy Commissioner (Appeals-II), Commercial Taxes, Jaipur, who by order dated December 7, 2011 partly allowed the appeal and directed the assessing authority to bifurcate the revenues of petitioner-company into screen based and non-screen based video games and thereafter assess the tax liab....
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....ving an opportunity of hearing to the petitioner-company and without following due process of law prescribed in the Act. The learned appellate authority and the Tax Board failed to appreciate that separate assessment orders required separate show-cause notices and such assessment order in respect of different months could not be passed on single show-cause notice for the entire financial year. The notice of assessment was served in form O by merely indicating the description "notice for reassessment" in place of heading "notice for assessment". The proceedings of reassessment thus should be vitiated for reason of non-compliance of the statutory provisions inasmuch as no adherence to the principles of natural justice. The learned counsel for the petitioner has argued that the issue of "taxing of non-screen based video games" was decided against the Depart ment at the stage of first appeal as also by the Tax Board. The Department having not preferred the appeal/revision thereagainst, the issue of not taxing of "non-screen based video games" has attained finality in view of concurrent findings. As such, the essential ingredients for levy of entertainment tax namely "payment of admi....
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.... performance, amusement, games, or sport and cable services to which persons are admitted for payment. There is no dispute that the present assessee is engaged in the activity of providing video game and other indoor game facility to its customers. For the purpose of availing of these videos game facilities, a "fun city" card is issued to the customers on payment and this card is further recharged on the wishes and requirement of the customer. The learned counsel for the Revenue placed reliance on judgment of the Supreme Court in Geeta Enterprises v. State of U. P. [1983] 4 SCC 202 and argued that video games are the latest addition to the concept of entertainment and video game parlors providing the said services fall within the domain of entertainment. Therefore, the present matters are squarely covered by this judgment of the Supreme Court. Reference in particular is made to the observations made by the Supreme Court in para 14 of the report. It is argued that though the State Government by notification dated March 26, 1999 remits in full as many as fourteen activities of entertaining from the entertainment tax including the additional entertainment tax, but in continuation t....
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....s some confusion regarding whether entry No. 6 of the above notification also includes video games and video game parlours making them eligible for benefit of exemption. In this regard it is clarified that, 'video games and video game parlours' are not covered under the above mentioned entry No. 6 appended to Notification No. F.10 (4) FD/Tax-Div./99-168 dated March 26, 1999 and hence are taxable at appropriate rates. Needful may be done accordingly. Sd/- (AJITABH SHARMA) Deputy Secretary to Government" Indisputably, the aforesaid clarification dated October 23, 2004 has been issued by the Deputy Secretary to Government, Department of Finance, Government of Rajasthan and therefore it will have to be read into entry No. 6 of the original notification as to what would be meant by "all kinds of games and sports" as in the opinion of the State Government this has become necessary because there was some confusion whether the said entry would also include video games and video games parlors making them eligible for benefit of exemption. The Tax Board has rightly held that a scrutiny of general meaning of the words, games and sports, reveals that in collective ....
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....t naught admissibility of an alien or hetero dox entry of video games and video game parlour in the organic cons truct of all kinds of sports and games." Admittedly, the petitioner-assessee is engaged in providing service of video game and other indoor game facility to its customers and for that purpose it issues a "fun city card" to its customers on payment, which is then further recharged on the wishes and requirement of the customers. The Supreme Court in Geeta Enterprises [1983] 4 SCC 202 has held that videos games are the latest addition to the concept of entertainment and video game parlors providing the said services fall within the domain of entertainment. Consequently, entertainment tax shall be charged on the same. It was also held by their Lordships in the said judgment that even though no immediate fees is charged on the admittance to video game parlors, a certain amount is charged from their users if he wants to enjoy the entertainment. The relevant observations made by their Lordships in para 13 of the report is worth quoting: "14. The Allahabad High Court in the case of Gopal Krishna Agarwal v. State of Uttar Pradesh [1982] All LJ 607 (All), which was ....
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....e is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably (see AIR 1981 SC 463; [1981] 1 SCR 823 (State of Karnataka v. Hansa Corporation)). It is equally well-settled that the micro classification will not vitiate the tax. Only because the tax is levied at a conveniently flat rate having regard to the various circumstances or as an easy means of collection and a variety of other pragmatic variables, to call it invalid, is an absurdity, especially because in fiscal matters large liberality must be extended to the Government having regard to the plurality of criteria which have to go into the fiscal success of the measure. (See [1979] 1 SCR 845; AIR 1979 SC 321 (Avinder Singh v. State of Punjab))". The judgment of the Supreme Court in Inter Continental [2002] 82 ECC 497 relied by learned counsel for the petitioner examined the question whether the end-use verification of the products is necessary for availing of the benefit of concessional rate of duty. That judgment has no bearing on the controversy involved in the present case and is of no help to the petitioner, which would be evident from the following observatio....
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....State of U. P., AIR 1981 SC 1274, 1282, para 24. 2Shyam Sunder v. Ram Kumar [2001] 8 SCC 24 (para 44); Brij Mohan Das Laxman Das v. Commissioner of Income-tax [1997] 223 ITR 825 (SC) and Commissioner of Income-tax v. Podar Cement Pvt. Ltd. [1997] 226 ITR 625 (SC). law it is not presumed to be retrospective irrespective of the fact that the phrases used are 'it is declared' or 'for the removal of doubts'." It is trite that benefit of exemption in a notification or circular or a statutory provision or a rule and incentive thereunder has to be granted on strict construction thereof and if such benefit is admissible on fulfilment of certain condition, it would not be granted unless that condition is satisfied. A provision or notification granting concession/incentive has to be in the first stage interpreted strictly. If on such construction, the subject falls within its scope, then full play has to be given to the same so as to extend the intended benefit. In case of any ambiguity or doubt regarding interpretation of ordinary tax statute, the relevant provision has to be construed in favour of assessee. If however, there be any doubt about interpretation of any provi....