TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 630
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....learned counsel for the parties, Writ Petition No.497 of 2014, is taken as the lead petition. The learned counsel also agree that a common judgment could dispose of these petitions, since the legal issue involved in all three writ petitions is the same. 2. Rule and Interim relief was granted on 9 July 2014, staying the operation and implementation of paragraph 3(d) of the Government Order (G.O.) dated 4 April 2013 and clause (a) of the Government Order (G.O.) dated 18 March 2014 issued by the Revenue and Forest Department, Government of Maharashtra, which prohibited the collection of service charges/convenience fees on booking of computerized cinema tickets online. Brief Facts:- 3. The Petitioner is engaged in the business of operating and managing multiplex cinemas in India, including in the State of Maharashtra. 4. On 4 April 2013, the impugned G.O. was issued, ordering that no exhibitor, owner, or agent should charge or recover any additional amount from viewers for online computerised ticket sales. The said clause (d) of the G.O. reads as under:- (d) At the time of selling the tickets in the Cinema theatres through online computerized system, the Operator, Owner and also ....
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....mitted that without a law, no restrictions can be imposed on legitimate business. He further submits that there is no power conferred upon the Respondents under the Maharashtra Entertainment Duty Act, 1923 (ED) to issue such G.O.s. He submits that even the impugned G.O.s do not specify the source of power for issuing such orders, nor can any such source of power be traced in the reply filed by the Respondents. He further submits that such an order could not have been issued even under Article 162 of the Constitution of India. 10. The learned counsel, in his written submissions, invoked Article 14 of the Constitution of India on the ground that it would lead to disparity between the State of Maharashtra and other States, and consequently impugned the G.O.s as violative of Article 19(1)(g). He also states in these submissions that convenience fees cannot be treated as 'payment for admission'. We may observe that on both these issues, no submissions were made in the course of the arguments, but the same has been taken in the written submissions, and therefore, the same are not considered by us. Upon this being pointed out to the learned counsel for the Petitioner, he readily accepted....
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....e, etc. In paragraph 2 of the G.O. dated 4 April 2013, it is specified that the entertainment duty would be chargeable on the charges of the spectacles, which shall be included in these tickets for the levy of the entertainment duty. In clause 3(d) of this G.O., it was mentioned that at the time of selling the tickets in the cinema theatres through online computerised system, the Operator, Owner and also the Agent shall not charge any additional service charge and for this purpose, the Operator/Owner of the theatres shall not recover the amount due and payable to the appointed agency. In this petition, the Petitioner challenges paragraph 3(d) of the G.O as mentioned above. 18. On 18 March 2014, the Respondents, after referring to the above G.O. dated 4 April 2013, issued necessary guidelines to the Operators of all cinema theatres to make an online sale system/mechanism available for the sale of tickets. Clause (a) of the G.O. dated 18 March 2014 stated that all cinema theatre operators shall set up their own service or system for online ticket sales, and while making tickets available through this system, no additional service charges shall be recovered from viewers. The G.O. dat....
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....wer by the State Government by general or special order. Section 10-A deals with appeals and revision. Section 13 deals with prohibition of levy of entertainment duty by local authorities. 25. The short issue which is posed for consideration of the Court is whether the impugned G.O.s insofar as it prohibits the theatre owners and others to collect convenience fees on online ticket booking is constitutionally valid. 26. We now propose to examine whether, under the ED Act, there is a power given to the authority issuing the impugned G.O.s to prohibit the collection of convenience fees on online booking. We have already examined various sections of the ED Act above. The only relevant Section which would require consideration insofar as to ascertain the source of power to issue such G.O.'s would be Section 7 and Section 10. 27. Section 7 empowers the State Government to make Rules for securing the payment of the entertainment duty and for carrying into effect the provisions of the ED Act. Section 7 to the extent relevant reads as under:- "7. Power to make rules.- (1) The State Government may make rules for securing the payment of the entertainments duty and generally for carrying ....
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....ravention of, or fails to comply with, any such rules he shall, on conviction, 1be punished with imprisonment for a term which may extend to six months or with fine which may extend to one thousand rupees or with both. 28. On an examination of Section 7(1) and the sub-clauses specified therein, we do not find any power conferred upon the Respondents to pass the impugned G.O.s prohibiting collections of convenience fees. The Rules are made for securing the payment of the entertainment duty and for carrying into effect the provision of the said Act. The ED Act is enacted for levy and collection of the entertainment duty by the State. Therefore, prohibiting collection of convenience fee by the theatre owners and/or others from its customers on online booking does not fall within the purview and scope of the ED Act. By the impugned G.O.s, what is sought is to prohibit the collection of convenience fees without anything more. We have not been pointed out any provision of Section 7 which empowers imposing such a prohibition, nor it is stated so in the impugned G.O.s and affidavit-in-reply. 29. Section 10 which deals with delegation of powers by the State Government provides that powers....
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....rts activity, pool game or tourist bus with video facility, within the limits of,- TABLE Serial No. Area [Rate of entertainment duty on payment for admission fixed by the proprietor (1) (2) (3) 1 Brihan Mumbai Municipal Corporation. 25 per cent. 2 All Mumbai Corporations (other than Brihan Mumbai Municipal Corporations and Cantonments areas. 20 per cent. 3 "A" Class, "B" Class and "C" Class Municipal Councils. 15 per cent 4 Any other areas not covered by entries 1 to 3 above. [10 per cent] [Provided that, in the case of the cabaret or discotheque entertainment, fifty per cent. of the total payment charged by the proprietor per person per show, whether with or without eatables or beverages and whether regular tickets are issued or not, for a admission to such entertainment, shall be deemed to be the payment for admission and duty shall be levied thereon accordingly under this clause : Provided further that, the entertainment duty in respect of an amusement park shall be 15 per cent. of the payment made for admission to the amusement park, including payment made for admission for games and rides, whether charges separately or not:] [Provided also that, th....
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.... persons simultaneously. 1,000 [(1AA) In computing the duty and the surcharge under this Act, a fraction of a rupee less than 5 paise, or which is not a multiple of 5 paise, shall be rounded off to 5 paise, or to next higher multiple of 5 paise, as the case may be.] (2) Where the payment for admission to an entertainment is made by means of a lump sum paid as a subscription or contribution to any society, or for a season ticket or for the right of admission to a series of entertainments or to any entertainments during a certain period of time, or for any privilege, right, facility or thing combined with the right to admission to any entertainment or involving such right of admission without further payment or at a reduced charge, [the entertainment duty shall be levied and paid on 50 per cent. of such lump sum at the rates specified in clause (b) of sub-section (1).] (3)(a) In lieu of the tax payable under clause (c) of sub-section (1) in the case of *** video exhibition [but excluding exhibition by means of any type of antenna or cable television] held in the places of entertainment specified in column (2) of the Table below and situated in the areas specified in column (1)....
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..... 30 per cent. of the houseful tax capacity of a show multiplied by the number of shows actually held. 2 Within the limits of 'B' Class Municipal Councils. 24 per cent. of the houseful tax capacity of a show multiplied by the number of shows actually held. 3 Within the limits of 'C' Class Municipal Councils. 18 per cent. of the houseful tax capacity of a show multiplied by the number of shows actually held. 4 All other areas not covered by entries 1 to 3 above but, excluding the areas of Municipal Corporations and Cantonments. 12 per cent. of the houseful tax capacity of a show multiplied by the number of shows actually held. Explanation.-For the purposes of this sub-section, "housefull tax capacity", in relation to a cinematograph exhibition, means the notional aggregate of duty for a show leviable under clause (c) of sub-section (1) if all the seats and other accommodation available and provided to the audience in the cinema theatre as specified in the licence issued by the Licensing Authority under the Maharashtra Cinemas (Regulation) Rules, 1966, were occupied by spectators.] [(b) The duty leviable under this sub-section shall be recoverable weekly in accordan....
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....e option permitted under this sub-section shall be exercised once in a calendar year and the proprietor shall not be permitted to withdraw the same during that calendar year. (i) No proprietor of [Video exhibition or Cinematograph exhibition, as the case may be,] who fails to pay duty under this sub-section shall conduct such [Video exhibition or Cinematograph exhibition, as the case may be,] unless he gives security of such amount and in such manner as the State Government may, by general or special order, specify for the payment of duty under this sub-section. (j) Notwithstanding anything contained in this sub-section, in case where no show has been held in the place of exhibition [specified in the Tables under clause (a) or (a-a), as the case may be,] continuously for the entire week, the Commissioner shall after such enquiry as he may deem necessary and subject to such conditions as may be prescribed, remit the duty payable under this sub-section as relates to the exhibition concerned for the week during which no show has been held.] 32. Section 3 of the ED Act is a charging section for levy and payment of entertainment duty on payments for admission to entertainment. 33.....
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....on 3(3) and its various clauses mentioned above provides for, is an alternate mechanism for calculation of entertainment duty based on notional gross collection or houseful tax capacity defined therein rather than a certain percentage of the admission fee. Merely, because the notional gross collection is considered as a basis for calculating the amount of duty, does not mean that the Respondents have the power to prohibit collection of convenience fee by issuing G.O.s. 38. Section 3(3)(e) provides that no proprietor of a video cinema or a cinema theatre to which the sub section is applicable shall collect any amount either by way of duty or otherwise in excess of the payment for admission taken into consideration for calculating the "gross collection capacity" or "houseful tax capacity" as the case may be of such exhibition. In our view, if according to the Respondents Section 3(3)(e) empowers them to prohibit collections of convenience fees then there was no need for issuing G.O.'s since the provision of Section 3(3)(e) was in existence much before the date on which the impugned G.O.s were issued. 39. In any case, in our view, section 3(3)(e) only prohibits collection of an amou....
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..... prohibiting collection of convenience fees as already observed by us above. The issue before us is not the collection of entertainment duty on the convenience fee but the issue before us is prohibition issued by the G.O.s from collecting the convenience fees. Therefore, we do not accept this submission of the Respondent that by virtue of Section 4(2)(b) the Respondents are empowered to issue the impugned G.O. to the extent challenged herein. 41. In Shri Durga Chand Kaushik and Anr. Vs. Union of India ILR (1979) 2 Del. 730, an issue arose before the Delhi High Court under the Delhi Cinematograph Rules, 1953, that for obtaining the licence, the condition of fixing the rates of admission to the auditorium was ultra-vires. The Delhi High Court on perusal of various Sections of the Cinematograph Act, 1952 held that there is no provision which provides for price control of cinema tickets and the regulation of the rates of admission to cinema auditoriums is not a policy stated in the said Act. The Court further observed that it is neither a purpose sought to be achieved by the said Act nor means to achieve any other purpose stated in the Act. The Court observed that even if the power t....
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....de by a person by way of contribution or subscription or installation connection charges or any other charges collected in any manner whatsoever for television exhibition with the aid of any type of antenna with a cable network attached to it or cable television [* *] (vii) any payment made by person to the proprietor of a Direct-to-Home (DTH) Broadcasting Service by way of contribution, subscription, installation or connection charges, or any other charges collected in any manner whatsoever for Direct-to-Home (DTH) Broadcasting Service with the aid of any type of set top box or any other instrument of like nature which connects TV set at a residential or non-residential place of connection-holder directly to the Satellite ; and [(viii) any payment made by way of sponsorship amount for a programme which is organised only for invitees, without selling tickets; [Explanation.- For the purposes of this sub-clause any expenditure incurred by any co-operative society including a co-operative housing society or by the management of, any factory, hotel, lodge, bar, permit room, pub, or by a person or group of persons, for the purchase of any type of antenna or any other apparatus for....
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.... then the said amount of service charges or part thereof, not so spent shall be included in the payment for admission and thereupon, the provisions of sub-sections (2) to (5) of section 4-B shall, mutatis mutandis, apply for the purpose of assessment of the entertainments duty at the rate specified in clause (c) of sub-section (1) or clause (a) of sub-section (3) of section 3 of this Act: [Provided also that, the proprietor shall be allowed to set off the amount spent in a financial year in excess of the amount collected as service charges in that financial year towards maintenance and for providing facilities and safety measures as provided in the second proviso, against the amount of the service charges which will be collected during the next four financial years immediately following the financial year in which the excess amount is spent: [Provided also that, any payment not exceeding 7[one rupee] per ticket if charged by the proprietor of a touring cinema towards service charges, separately and the proprietor of such touring cinema shows to the satisfaction of the prescribed officer (as defined in the rules made under this Act), that such payment made is spent by him during....
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.... facility for online ticket booking, shall be included in the payment for admission. Explanation.-For the purposes of this proviso, the expression "service provider" means and includes any person or any company or agent who is authorized or permitted by the proprietor of any entertainment to book online tickets through their website or portal or by any other means. 44. Section 2(b) which defines "payment of admission" is an inclusive definition and specifies various items which can be considered as payment of admission. For example, any payment made by way of sponsorship amount for a program which is organized only for invitees without selling tickets, in such a case sponsorship amount will be treated as payment of admission. Similarly, any payment for seats or other accommodation in a place of entertainment will be treated as payment of admission. All the instances specified in Section 2(b) only provides as to what should be "payment of admission" on which the rate of duty specified in Section 3 can be imposed. Section 2(b) does not empower the State to provide as to what should be collected and what should not be collected from the customer. What it provides is that the collec....
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....ofessional or technical qualifications necessary for practicing any profession or for carrying on any occupation, trade or business or the carrying on by the State, or by a corporation owned or controlled by the State of any trade, business, industry or service, whether to the exclusion, complete or partial or otherwise. 49. The restriction/prohibition imposed by the G.O.s impugned in the present petition interferes with the right of the Petitioner to carry on business, occupation or trade inasmuch as by the impugned G.O.s consideration to be agreed upon between two private parties is sought to be regulated or interfered with and the Petitioners are barred from charging them any amount for the business they are engaged in. There was no argument about such business not being legitimate business or res extra commercium. Such a course of action on the part of the State cannot be permitted except in cases where there is a Statute or Law which governs the regulation of the price or consideration. For example, the Essential Commodities Act, 1955, the Defence of India Act, 1931, etc. 50. Admittedly, we have not been shown any Statute or Law which empowers the State to interfere with the....
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....dance could be found on a fair reading of the Act, and the other relevant circumstances. In the instant case, we have already observed above that in the ED Act there is no power shown to us by which the impugned G.O.'s prohibiting collection of convenience fee could be issued. 53. The legislation touching upon price control in India has always been specific, eloquent and reasonable, even though important, restriction on the right to carry on business has never been sought to be achieved indirectly or by implication and without setting out a statement of the policy of the legislature on this behalf. Infact, numerous price control orders made in India derive their authority from one or the other of the enactments and their validity has always been judged, having regard to the provisions of this principal enactments. 54. The law is now well settled that any law which is made under clauses (2) to (6) of Article 19, to regulate the exercise of the right to the freedom guaranteed by Article 19(1) must be 'a law' having statutory force and not a mere executive or departmental instruction. Applying the said well settled principle to the facts of the present case, we have no doubt that th....
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....e rights in order to enable the Government to carry on their business, a specific legislation sanctioning such course would have to be passed." 60. Therefore, the G.O.s issued by the Respondent without fulfilling the mandatory provisions of Article 162 of the Constitution cannot be categorised as a decision by a State and, therefore, it cannot be said that the State is empowered to issue the G.O.s prohibiting collection of convenience fee. 61. We draw support for our above analysis from the decision of the Supreme Court in the case of Indian School, Jodhpur & Anr. vs. State of Rajasthan & Ors. (2021) SCC OnLine 359 and more particularly paragraphs 113 to 117 which read as under:- "113. A fortiori, even the argument of the Respondents relying upon the existence of executive power under Article 162 of the Constitution, ought to fail. It is well-established position that the executive power of a State under Article 162 of the Constitution extends to the matters upon which the legislature of the State has competency to legislate and is not confined to matters over which legislation has already been passed. It is also well settled that the State Government cannot go against the prov....
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....Shivaji Bhagwat More 38 will not come to the aid of the respondents for the same reasons. Notably, not only the subject of finalisation of fee structure and the matters incidental thereto have been codified in the form of the 2016 Act, but also a law has been enacted to deal with the matters during the pandemic situation in the form of Central Act, namely, the 2005 Act including the State legislation i.e. the 2020 Act. In fact, the State legislation deals with the subject of epidemic diseases and its management. Even those enactments do not vest any power in the State Government to issue direction with regard to commercial or economic aspects of matters between private parties with which the State has no direct causal connection, which we shall examine later at the appropriate place. In other words, the power of the State Government to deal with matters during the pandemic situation have already been delineated by Parliament as well as the State Legislature. 117. As such, it is not open to the State Government to issue directions in respect of commercial or economic aspects of legitimate subsisting contracts/transactions between two private parties with which the State has no dir....
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....ecision of Delhi High Court supports the submissions made by the Petitioners. 63. We are, therefore, of the view that the impugned G.O. transgressed the fundamental rights under Article (19)(1)(g) granted to the Petitioners by prohibiting theatre owners and others from collecting the convenience fees from their customers. Absent a Statutory regulation which regulates the right to conduct the business of the Petitioner, the imposition of such a restraint would infringe the legitimate rights of theatre owners. The impugned prohibition is directly contrary to Article 19(1)(g) of the Constitution of India. If business owners are not permitted to determine the various facets of their business (in accordance with law), economic activity would come to a grinding halt. The choice of whether to book the ticket online or purchase it at the theatre is left to the customers. 64. Suppose the customer feels it convenient to book the tickets online by not going to the theatre and paying the convenience fees. In that case, the Respondents cannot restrain the Petitioners from collecting the convenience fees since for providing this facility of online booking, the theatre Owners/Petitioners have t....