TaxTMI 
TaxTMI 
2021 (10) TMI 762
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....sessing Authority, insofar as they levy entertainment tax on the charges collected from students by the petitioner for utilizing facilites of MARENA? ii. Whether the Karnataka Appellate Tribunal is permitted to traverse beyond the allegations made in the Entertainment Tax Notice, which proposed to levy tax on collections from MARENA treating the same as a 'recreation parlour' and demand was made under Section 4F of the KET Act, while the Tribunal confirms the demand solely on the definition of 'entertainment' and 'amusement'? iii. Whether the Karnataka Appellate Tribunal is correct in holding that MARENA qualifies as a place of entertainment and the petitioner is a 'proprietor', for the purposes of levying entertainment tax? iv. Whether, in the facts and circumstances of the case, the Karnataka Appellate Tribunal is right in upholding the orders of the First Appellate Authority and the Assessing Authority, insofar as the confirmation of levy of interest and penalty under Sections 9 and 12 of KET Act, respectively? STRP No.7/2020 "i. Whether the Karnataka Appellate Tribunal erred in deviating from th....
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....a, sports shop, walking/jogging Track, Sauna, Steam Bath, Change Rooms, Lockers, Sports Courts such as Badminton Courts, Squash Courts, Tennis Courts and Basketball Courts, Crickets, Football, simulated games and other ancillary services. It has been further stated that in respect of most of the facilities like walking/jogging track, badminton courts, squash courts, basketball court, tennis court etc., the students are not required to pay anything. However, in respect of certain other facilities, a nominal usage charge is collected from the students to meet the necessary expenses for operating "MARENA". 4a. The facts further reveal that an inspection was conducted on the premises of the petitioner by the Assistant Commissioner, Udupi on 18.08.2012 and entertainment tax notices dated 21.10.2013 were served to the petitioner for the periods 2010-11, 2011-12 and 2012-13 i.e., up to August 2012. It was alleged that the petitioner-University has failed to seek registration under the KET Act and has failed to discharge the payment of applicable entertainment tax on the proceeds received from MARENA under Section 4F of the KET Act. The petitioner- University did submit reply to the sho....
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....t No.1: Whether the facilities provided by the Appellant is "entertainment" vis-à-vis "recreation" under Section 2(e)(iii) of the KET Act, 1958, read with Section 2(l) thereof? Point No.2: Whether the place where the facilities are provided is a "place of entertainment" U/s 2(ib) of the KET Act, 1958? Point No.3: Whether the Appellant is a "proprietor" within the meaning of the expression "proprietor" in Section 2(k) of the KET Act, 1958? Point No.4: Whether the charges collected from the participants fall within the meaning of the expression "Payment for admission" U/s 2(i) of the KET Act, 1958? Point No.5: Whether the admission fee collected from the participants/members, as the case may be, is separate for each of the sports or games and other facilities or is it the composite charges? Point No.6: The charging Section 4-F refers to "each payment for admission". Consequently, where payment is made for a specific period i.e. a year or month or a week, can it be vivisected in relation to each participation? Point No.7: What happens if the person pays for a week and avails the facility only for one day or does not use the ....
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....f amusement by taking part in an entertainment; (b) "admission to an entertainment" includes admission to any place in which an entertainment is held; (ba) "Amusement" means any amusement for which persons are required to make payment for admission to any amusement arcade or amusement park or theme park or by whatever name called (e) 'Entertainment' with all its grammatical variations and cognate expressions means,- (i) a horse race or live telecast of a horse race to which persons are admitted on payment; (ii) Cinematograph show including video shows to which persons are admitted on payment or exhibition of films or moving pictures which are viewed and heard on the television receiving set, with the aid of any type of antennae with the cable network attached to it or cable television for which persons are required to make payment by way of contribution or subscription or installation and connection charges or any other charges collected in any manner whatsoever; (iii) 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 indoo....
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....s connected with the entertainment are kept. [(k) 'proprietor' in relation to any entertainment other than an entertainment referred to in sub-clause (iii) of clause (e) includes any person responsible for the management thereof and in relation to any entertainment referred to in sub-clause (iii) of clause (e) includes any person conducting, organizing, sponsoring or patronizing any such entertainment.] [(l) " Recreation Parlour " means any place where a game such as bowling, billiards, snooker or the like by whatever name called is provided, for which persons are required to make payment. C. The ACCT (Enforcement) Udupi, has visited the place of the appellant on 11-07-2012 and on 08-08-2012 and collected certain information as to the activities of MARENA. The MARENA IS SITUATED IN 1.46 LAKH SQ. FEET AREA which can accommodate 2000 persons. It has 7 floors, entry level consists of gymnasium, the first floor has a walking track of 200 meters, Level-1 has sauna, steam bath, change rooms and lockers. Level-2 has badminton courts and squash courts, level-3 has two basket ball courts of 600 seats capacity, level-4 has services, level-5 has simulated gam....
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.... falls within the meaning of entertainment. (b) Further, the word 'amusement' is also used in the definition of 'entertainment' and the word 'amusement' is defined under Section 2(ba) of the KET Act, 1958 which includes playing a game or skill on a machine or riding on a machine or any other carriage or contraption or boat or other vessel or playing in an enclosure or water body or any other specially designed or developed or demarcated surface or area or participating in any contest or game of chance or skill or talent, held or organized or provided in any amusement arcade or amusement park or any other place for which persons are required to make payment for admission or participation. From combined reading of the definition of 'amusement' and 'entertainment' as reproduced above it is evident that the facilities provided by the appellant in MARENA arcade covers activities like singing, dancing, playing light indoor games like billiards, watching music, dance and dramatic performances, circus shows, horse races, mimicry and the like. The essential feature of a amusement is that the person being amused is brought to a State of extraordinary happiness and pleasure. In both ....
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....b) of the KET Act, 1958. Section 2(b) contemplates 'admission to any place in which an entertainment is held' and the definition 'recreation parlour' means any place where a game such as bowling, billiards, snooker or the like by whatever name called is provided for which persons are required to make payment for admission or participation. The payment for availing the facilities provided in MARENA arcade is for a place of entertainment contemplated in Section 2(1) could only be respecting persons admitted for payment to the arena in the place of entertainment. This view finds fortification from the substantive provisions of the KET Act, 1958 itself. Therefore, it is clear that the charges received by the appellant constitutes 'payment for admission' as defined under Section 2(i) of the KET Act, 1958. Thus, this point is also answered in the affirmative. Point Nos.5, 6 & 7:- As these points are inter-connected with one another, they are answered by recording following common findings: (a) As per the report of the ACCT (Enforcement), Udupi in which the appellant has participated and furnished the required details and information, the appellant has charged fixed char....
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....inition clause extends the coverage of the main part of the definition to bring within its ambit such things as are not ordinarily covered by the opening part. The inclusive part need not always be read in conjunction with the main part. It is to be read separately to find out the extent of extended coverage introduced or intended by it. When the definition of 'payment for admission' as appearing in Section 2(i) of the KET Act, 1958 is viewed in the light of the above legal dictums a conclusion is obvious that the use of words "any payment for any purpose whatsoever connected with an entertainment which a person is required to make" would include any fee paid either annually or partially for participation in the indoor games provided in the MARENA arcade would fall within the definition of 'payment for admission'. (b) The composite fee charged by the appellant from its members and students for utilizing the facilities provided in the MARENA arcade is the amount liable to entertainment tax as provided under Section 4-F of the KET Act, 1958 and there is no condition that upon making payment of certain fee either by the members or students they could pay the appellant towards....
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....erved that "in matters which deal with provisions to prevent evasion of tax which is due to the State the construction of the provision must be strict and in favour of the enforcement of the provision". By applying the ratio of these judgments to the facts of the case of the appellant before us we hold that the three points framed are answered against the appellant and in affirmative. 83. In addition to the above, the appellant submits that the games permitted other than the specified ones into the definition by principles of ejusdem Generis. In Jage Ram And Ors vs State Of Haryana And Ors on 2 March, 1971, AIR 1033 SCR(3) 871 the court observed that: The ejusdem generis rule is not a rule of law but is merely a rule of construction to aid the courts to find out the true intention of the legislature. If a given I provision is plain and unambiguous and the legislative intent is clear, there is no occasion to call into aid that rule ejusdem generis rule is explained in Halsbury's Laws of England (3rd Edn.). Vol. 36 p. 397 paragraph 599 thus "As a rule, Where in a statute there are general words following particular and specific words, the general words must be c....
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....ons recorded in the foregoing paragraphs of this order, the consequential interest and penalty levied by AA and upheld by FAA found to be justifiable as these statutory levies are very much attracted in the facts and circumstances of the case of the appellant as the appellant has failed to declare the payment received towards admission to MARENA arcade and did not discharge the admissible entertainment tax liability even though the same is very much attracted in the facts and circumstances of the case of the appellant. The fact of non-payment of entertainment tax by the appellant on the charges received from its members and students and others has come to light only due to the inspection undertaken by the ACCT (Enforcement), Udupi and it is not a voluntary disclosure by the appellant. Under the circumstances, the penalty and interest levied by AA and upheld by FAA does not warrant any interference at this stage. 85. POINT No.8: In the light of the discussions made supra we pass the following; ORDER 1. The appeals in STA Nos. 53 to 55/2017 are dismissed by upholding the orders of AA and FAA. 2. The Registrar of the Tribunal is directed to comply with Re....
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....ns means,- (i) a horse race or live telecast of a horse race to which persons are admitted on payment; (ii) Cinematograph show including video shows to which persons are admitted on payment or exhibition of films or moving pictures which are viewed and heard on the television receiving set, with the aid of any type of antennae with the cable network attached to it [or without a cable network attached under the Direct To Home scheme] or cable television for which persons are required to make payment by way of contribution or subscription or installation and connection charges or any other charges collected in any manner whatsoever; (iii) any amusement [or recreation or any entertainment provided by a multi system operator] or exhibition or performance or pageant or a [x x x] game or sport whether held indoor or outdoor to which persons are admitted on payment; Explanation.- Recognised game or sport shall mean Cricket, Hockey, Foot Ball, Basket Ball, Tennis, Golf, Volley-Ball, Badminton, Kabbadi, Swimming, Athletics, Base-Ball, Weight Lifting, and any other sport or game the Government may notify. (ib) "place of entertainment" means the pl....
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....on employed by him in any place of entertainment who admits any person to any place of entertainment in contravention of the provisions of section 5, shall on conviction be punishable with simple imprisonment for a term which may extend to six months or with fine which shall not be less than rupees ten thousand for the first offence and not less than rupees fifteen thousand for the second or subsequent offence during the financial year or both. (1A) Any distributor who contravenes the provisions of section 10-A shall, on conviction be punishable with simple imprisonment for a term which may extend to six months or with fine which shall not be less than rupees ten thousand for the first offence and not less than rupees fifteen thousand for the second or subsequent offence during the financial year or with both. (1B) The proprietor of any entertainment who fraudulently evades the payment of any tax due under this Act, shall, on conviction, be punishable with simple imprisonment for a term which may extend to six months or with fine which shall not be less than rupees ten thousand for the first offence and not less than rupees fifteen thousand for the second o....
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.... place where a game such as bowling, billiards, snooker or the like by whatever name called is provided for which persons are required to make payment for admission or participation. The petitioner is neither a "recreation parlour" nor the petitioner has set up the MARENA with an intention to provide recreation or amusement. Therefore, in the considered opinion of this Court, by no stretch of imagination the Entertainment Tax could have been imposed upon the educational institution. 10. The petitioner is a registered Trust. As stated earlier, it is a non-profit organisation and MARENA is not a sports complex. MARENA provides facilities to the students and faculty in relation to sports, health and fitness. It is not certainly open to the public at large i.e., for the entire township. It cannot be treated as a parlour or a place of entertainment as held by the Tribunal. The Apex Court in the case of Geetha Enterprises and Others v. State of Uttar Pradesh and others reported in 1983 (4) SCC 202 in paragraph-12 of the order has held as under: "12. Thus, on a consideration of the legal connotation of the word 'entertainment' as defined in various books and other circu....
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.... members of the club, their guests and the service members were permitted to use the facilities provided by the Club, any payment of entertainment duty was held to be bad in law. 14. In the present case also we are dealing with an educational institution, which has been set up by a Trust, wherein the students and the faculty members are provided facilities in relation to sports, health and fitness. It is certainly true that the parents who visit the students and other persons who visit the University are permitted to use the sports facilities. 15. It is nobody's case that the petitioner-University is running an indoor sports arena called MARENA as a commercial venture and any person can become a member of using the facilities. Resultantly, this Court is of the opinion that the order passed by the Assessing Authority, the order passed by the First Appellate Court and the order passed by the Karnataka Appellate Tribunal are bad in law and therefore, in respect of Question No.1, it is held that the Tribunal was not at all justified in dismissing the appeal preferred by the assessee. 16. In respect of Question No.2, again the question is answered in favour of the assessee ....