TaxTMI 
TaxTMI 
2020 (10) TMI 778
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....as 'PVR Cinemas', and hold that the entire price of the ticket when booked online through the Web Portal of the cinema owner by the customer would be exigible to the Entertainment Tax under the provisions of the Tamil Nadu Entertainment Tax Act. 2. The Tamil Nadu Entertainment Tax Act, 1939, is a pre- Independence Legislation, enacted at the point of time in the history when nobody had even conceived the idea of Internet, Web Portal or concepts like online bookings of cinemas. The Preamble to the said Act published in the Fort St.George Gazette on 20 June 1939 states, ' it is expedient to provide for the levy by the Government of taxes on entertainment and to repeal the Madras Local Authorities Entertainments Tax Act, 1926, and to provide for the payment of compensation to the local authorities now levying a tax under the Act aforesaid'. After Independence, the relevant words were substituted in the said Act of 1939 which continued to operate even after Independence, to introduce words "State of Tamil Nadu" at the appropriate places. Certain definitions to give perspective to this enactments after the advent of Internet etc. were added by the Amendment Act of ....
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.... each payment for admission to any cinematograph exhibition in the theatres located, - (i) within the limits of the areas of the Municipal Corporations, Municipalities, Special Grade and in the theatres, whether permanent or semi-permanent, within five kilometres from the outer peripheral limits of such areas of the Municipal Corporations and Municipalities, Special Grade, - (A) at the rate of [thirty per cent] of the gross payment for admission inclusive of the amount of the tax for new film; and (B) at the rate of [twenty per cent] of the gross payment for admission inclusive of the amount of the tax for old film; (ii) in the areas other than those specified in subclause (i), at the rate of [twenty per cent] of the gross payment for admission inclusive of the amount of the tax for new or old film.] 5. Mr.R.V.Easwar, learned Senior Counsel appearing on behalf of the Appellant/Assessee submitted that clause "(c)" of the definition "Payment for admission" as defined in Section 3(7) of the Act has to be read as a whole composite definition and each part of it has to be satisfied to levy the charge of Entertainment Tax and therefore, any payment ....
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....the entire amount of Rs. 220.78 can be made liable to bear the Entertainment Tax at the rate given but only Rs. 190.78 uniformly charged from both types of customers can be subject of the Entertainment Tax. He submitted that therefore the Department has wrongly called upon the Assessee to pay Entertainment Tax on the said internet or online booking charges paid by the person for availing the facility of internet booking or online booking of the tickets from the comfort of his home without waiting in the queue at the cinema hall counter, is a charge for such independent facility provided to the customers through the Web portal, which is not integrally connected with the entry into the cinema hall for watching the movie or entertainment and therefore that part of the cost to the customer cannot be subject of levy of Entertainment Tax. He therefore submitted that the learned Single Judge has erred in dismissing the Writ Petitions of the Assessee and the said order is required to be interfered with in the present intra court appeals. 7. Mr.Easwar, the learned Senior Counsel heavily relied upon the Division Bench decision of the Gujarat High Court in the case of Ramanlal B. Jariwala ....
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....lopment Ltd. V. State of Gujarat and others [(2013) 59 VST 306], dealing with the case of amusement park, where the entry to park was separately charged and each ride had a separate ticket for enjoying that entertainment of having the ride in amusement park. On the question of Entertainment Tax on the entry ticket for entry into the amusement park itself, following the earlier decision in the case of Ramanlal B. Jariwala the Division Bench of the Gujarat High Court held that the amusement park per se was not a place of entertainment like cinema hall or a theatre and for getting the entertainment, the visitor was required to purchase separate ticket for every ride and therefore, Entertainment Tax could not levied on the number of persons who have entered the amusement park. Purchase of ticket for mere entry into the amusement park, not being a payment for admission to an entertainment, would not be exigible to Entertainment Tax. 9. Mr.Easwar, learned Senior Counsel also cited a decision of the Hon'ble Supreme Court in the case of Markand Swaroop Agarwal vs. M.M.Bajaj/Volga Restaurant, [1979 (1) SCC 116], and he submitted that in the said restaurant, the entertainment by way o....
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.... must not only be "connected" with an entertainment but it should also be "required" to be made as a "condition" for attending or continuing to attend the entertainment. Therefore, unless the said payment satisfies all these ingredients, the payment cannot be made exigible to entertainment tax. Online booking charges is not exigible to entertainment tax 8. As stated earlier, cine-goers have the option of booking the tickets at the counter or through the online portal. The base ticket price for a movie remains the same, regardless of whether it is booked online or through the portal. The only difference lies in the fact that tickets booked online would carry an additional fee towards online booking charges. Reference is drawn to the Additional Affidavit submitted by the Appellant on 06.10.2020, wherein the ticket pricing was demonstrated to be the same by providing a copy of the tickets booked at the counter and through the online portal for same movie and for the same show time. 9. Based on the wordings of Section 3(7)(c), the online booking charges could be taxed only if the same constitutes a "condition for attending or continuing to attend the entertai....
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....fore, the language of the clause itself contains the limits of the sweep of the words "payment for any purpose whatsoever". It is respectfully submitted that in light of such limiting words clearly set out in the clause, it will not be permissible to construe the words "payment for any purpose whatsoever" in an unbridled or unprincipled manner, ignoring the limitation. Though the purpose for which the payment is made by the cine-goer may be anything, the tests are: (a) it should be connected with the entertainment and (b) it should be paid in accordance with a requirement that such payment is a condition for attending the entertainment. Even assuming for the sake of argument and without conceding the point, that the online ticket booking charges are in some way or the other connected with the entertainment, it cannot at all be said that such charges have been required to be made as a condition for attending the entertainment. It is only a condition for using the online facility. Therefore, it is respectfully submitted that however wide the words "payment for any purpose whatsoever" may be construed, it will still have to be limited to such payments which are (a) required t....
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....entertainment. Also, such govt. printed tickets are issued regardless of whether tickets were booked online or at the counter. ... 19. The Learned Single Judge's reliance on State of Karnataka v. Drive-in-Enterprises ("Drive-in-Enterprises) (2013) 59 VST 306 (Guj), is wholly misplaced. The crucial distinction between the instant case and decision in Drive-in-enterprises are as follows: (i) The case firstly was concerning the challenge of the constitutional validity of levy of entertainment tax on vehicles. Moreover, there was a specific charging provision under the Karnataka Entertainment Tax Act, 1958 with respect to admission of motor vehicles into the place of entertainment. (ii) The tax on the entry of cars was with respect to entry into a drive-in-theatre. The concept of drive-in-theatre is that a person could drive-in his car and watch a movie by sitting in his car. A person watching a movie in his car would certainly gain a better movie watching experience compared to a squatter in a drive-in-theatre. Consequently, the ruling was confined to the experience of a cine-goer with respect to a drive-in-theatre and the levy of tax on th....
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....d distinct payments: one payment for the seat inside the auditorium to attend the entertainment, for which government fixed rate, depending on the class, is paid and the other payment is separately and distinctly paid for a different quid pro quo, viz., payment of online booking charges for which the quid pro quo is the provision of the online booking facility. The Petitioner/Appellant respectfully submits that on the facts of the present case in which two separate and distinct payments of different nature and character are involved, the ratio of the judgment of the Supreme Court in Sunrise (supra) cannot, in the very nature of things, apply. .... 22. The Petitioner/Appellant respectfully begs to submit that the learned Single Judge has failed to appreciate that the doctrine of pith and substance, which has been pressed into service to hold that section 3(7)(c) should be broadly construed to include the online booking charges also as part of the "payment for admission", is a doctrine which properly belongs to the field of Constitutional Law and has no scope or place to be applied to the interpretation of the provisions of a legislative enactment. "Pith and substan....
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....that while interpreting a statutory provision which provides for the measure of taxation it is permissible to expand its contours beyond the express language of the said provision. While the Petitioner/Appellant maintains that Section 3(7)(c) is part of the charging Section 4, and therefore cannot be construed liberally as a measure of taxation, it is submitted in the alternative and without prejudice that even if it is construed as a measure of taxation it should still conform, and cannot exceed, the strict language. Accordingly, it is respectfully submitted that in any case - whichever way Section 3(7)(c) is construed, whether as part of the charging section or only as a measure of taxation, it should still be construed in light of the over-riding language, viz., "....required to be made as a condition for attending or continuing to attend the entertainment....". So construed, it will be clear that the online booking charges are paid only for use of the facility of booking tickets online and does not, without payment for the ticket, entitle the cine-goer to attend or continue to attend the movie. Therefore it cannot be construed as a "payment for admission". Payment of S....
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....n the ticket, and thus, Entertainment Tax would be payable on both the ticket cost equally. Likewise, whether the ticket is booked online or purchased at the counter, both types of customers may incur different costs, nonetheless, the State would be entitled to collect Entertainment Tax on both the costs, including the cost for providing facility like online booking charge from one customer, while no such charge being taken from the one who buys ticket at the counter. He urged that it is not necessary, as contended by the learned counsel for the Assessee that the charges for online booking is charged from all customers uniformly or not, and it cannot be said that it will become a condition to be uniformly applied to all for the purpose of attracting levy of Entertainment Tax under Section 3(7)(c) of the Act, read with the charging provisions of Section 4 of the Act. 13. Mr.Shaffiq also relied upon the decision of the Hon'ble Supreme Court in the case of Express Hotels Pvt. Ltd. vs. State of Gujarat and Another, [1989 (3) SCC 677], Federation of Hotel and Restaurant Association of India etc. vs. Union of India and ors. [(1989) 3 SCC 634]; and Sri Srinivasa Theatre and others ....
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....itting in the car in the auditorium was further required to pay a sum of Rs. 2/- to the proprietor of the Drive-in Theatre. On the question whether Entertainment Tax would be payable on the said cost of Rs. 2/- also paid for driving the car in, on the contention that the car did not have any kind of "entertainment" and the charge of Rs. 2/- was only for entry allowed to the car, the Hon'ble Supreme Court repelled the said contention on the basis of 'pith and substance' theory and held that in 'pith and substance', levy is on the person who is entertained. Therefore, whatever be the nomenclature of levy, in substance, the levy under the heading, "admission of vehicle" is a levy on entertainment and not on admission of vehicle inside the Drive-in Theatre. As long as in 'pith and substance', the levy satisfies the character of levy, i.e. Entertainment, it is immaterial in what name and form, it is imposed. The word "entertainment" is wide enough to comprehend in it, the luxury or comfort with which a person entertains himself. Once it is found that there is nexus between the Legislative competence and the subject of taxation, the levy is justified and va....
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....harge is attracted in terms of Section 4 of the Entertainment Tax Act. The issue is only with reference to the measure of tax in terms of Section 3 (7)(c) viz., whether the online booking charges is to be added to the "payment for admission". The value of "payment for admission" in terms of Section 3 (7)(c) of the Act would include all payments received for any purpose in connection with the admission to entertainment. D. It is well settled that, unlike the subject matter, the legislature would have greater latitude while fixing the measure or the value on which tax is leviable and need not contour along the lines of the subject matter of levy. - Union of India V. Bombay Tyre International Ltd., - (1984) 1 SCC 467: E. Single Right - The submission of the assessee that "online booking charges" is distinct from the ticket is unsustainable in as much as the expression "for any purpose", "connection with" is expansive - para 50 of Doypack Systems Pvt.Ltd. Vs. Union of India and Others (1988 2 SCC 299) . It is impermissible to dissect the online booking charge from the ticket, they are inextricably and intimately connected with the admission. The learned singl....
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....emains a chance and may suffer disappointments which could be avoided through online booking. 19. We have heard the both the learned counsels at length and given our earnest consideration to the rival submissions, provisions of the Statute and case laws cited at the Bar. 20. The basic elements or components which enter into the concept of levy of tax, were discussed by the Hon'ble Supreme Court in the case of Govind Saran Ganga Saran vs. Commissioner of Sales Tax, [1985 SCC Supp. 205], where the provisions of Bengal Finance (Sales Tax) Act, 1941 were tested on the anvil of restrictions imposed under Section 15 of the Central Sales Tax Act, 1956 and the Hon'ble Supreme Court held as under : "The components which enter into the concept of a tax are : (1) the character of the imposition known by its nature which prescribes the taxable event attracting the levy; (2) a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax; (3) the rate at which the tax is imposed; (4) the measure or value to which the rate will be applied for computing the tax liability. Any uncertainty or vagueness in the legislative scheme defining any of t....
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....is that the payment should be necessary condition to be complied with for gaining entry into the place for entertainment. The payment made for any other purpose connected with such entertainment will be taxable under the said Act, only if the person concerned is required to make such payment as a condition for entry. Obviously, the online booking charges or internet handling charges, as the name given by some other cinema theater owners is not a mandatory payment for gaining entry into the cinema hall. It is an additional payment for extra or other facility provided by the Cinema hall owner. With the advent of internet, much after the said enactment of 1939, even though amended from time to time, the said Act could not have provided for levy of tax on the service of internet provided by the cinema owner. The same could be a subject matter of levy of Service Tax by the Parliament in the erstwhile law regime, prior to GST, with effect from 1 July 2017. But the Entertainment Tax being a tax collected by State for the Local Administration or Municipal Administration, is leviable only on cost of ticket which entitles a person to gain entry into the cinema hall or theatre. 22. T....
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....r seats in the auditorium, were two different classes of consumers. But they were not in the same premises or place for entertainment in that sense for enjoying the entertainment. While one class could enjoy the movie on the big screen while sitting in the comfort of their cars, the others had a restricted area of auditorium to view the movie from their seats, like any other usual cinema theatre. Therefore, Entertainment Tax on the full rate of tickets whether it was Rs. 5/- for the car owners or Rs. 3/-, for the auditorium customers, was held to be justified. But that rationale cannot be imported and applied here. While the service of internet booking itself is not only outside the realm of Entertainment Tax Act as such, but is independent and optional service provided by the cinema owner. It is neither mandatory nor uniformly applicable to all. If one opts for the online booking, one will have to pay something extra. But that has nothing to do with the gaining of the entry into the cinema hall for which one separately pays Rs. 190.78 like paid by all others who buy their tickets at the counter of the cinema hall. Therefore, the measure of taxation, viz., the ticket cost of Rs.....