AI Drafter 
TaxTMI 
TaxTMI 
2025 (7) TMI 630
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....PER JITENDRA JAIN, J.) 1. By consent of the 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 thr....
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....on the right to carry on a legitimate business, which is unconstitutional. He submitted 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 th....
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....000, and prescribed a revised procedure for the printing of cinema tickets, the levy of an additional service charge, 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 maki....
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..... 24. Section 9 deals with recovery of entertainment duty as an arrear of land revenue. Section 10 provides for delegation of power 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:- "....
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....ion including Direct-to-Home (DTH) Broadcasting service by public auction; (k) for prescribing the terms and conditions for exemption of duty under sub-section (13A) of section 3. (2) If any person acts in contravention 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 p....
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.... of antenna, cable television, [Internet Protocol Television,] exhibition by means of Direct-to-Home (DTH) Broadcasting service, bowling alley, go-carting, dance bar, [permit room or beer bar with live orchestra, pub,] discotheque, amusement park, water sports 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 ....
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....nicipal Corporation (1) Machine operated by one person. (2) Machine operated by two persons simultaneously. 75 1,500 3 Within the limits of all other areas not covered (1) Machine operated by one person. 500 Serial No. Area Type of Video Game Machine Rate of entertainment, duty per month, per machine (in Rupees) (1) (2) (3) (4) 1 By entries 1 and 2 above (1) Machine operated by two 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 redu....
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....h but excluding video exhibition and 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, the proprietor of such exhibition may, subject to such conditions as may be prescribed, pay the amount of duty to the State Government every week as specified in the corresponding entry in column (3) of the said Table. TABLE Serial No. Area Amount of entertainments duty (1) (2) (3) 1. Within the limits of 'A' Class Municipal Councils. 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 ....
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.... or reduced in respect of such payment. Where a proprietor does not reduce the rates of payment for admission, he shall, in addition to any other penalty under this Act, be liable to pay duty as if no exemption or reduction from the payment of duty was made under section 6. (g) In calculating the reduction in the rates of payment for admission under clause (f), the gross collection capacity [or houseful tax capacity as the case may be,] for the purpose of payment of such reduction of duty shall be the same as specified in the Explanation to clause (a) [or clause (a-a), as the case may be]. (h) The 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. ....
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....ertainment duty with respect to cable television and the calculation is based on a certain percentage of the "houseful tax capacity" of a show multiplied by the number of shows actually held. Explanation to Section 3(3)(a-a) defines "houseful tax capacity" to mean notional aggregate of duty for a show leviable if all the seats were occupied by the spectators. 36. Section 3(3)(b) provides that duty calculated under Section 3(3)(a) and (a-a) shall be recoverable weekly in accordance with the rates specified in the table from the proprietor taking into consideration the actual number of shows held in each week. 37. Therefore, what Section 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 cinem....
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....special order issued on that behalf allows the proprietor to pay the amount of entertainment duty. Clause (b) on which the learned counsel for the Respondent has placed reliance only states that the same shall be in accordance with returns of the payment for admission to the entertainment and on account of the duty. The phrase "on such conditions" in Section 4(2)(b) would mean conditions relating to payment of entertainment duty and not condition prohibiting collection of convenience fees. In our view, Section 4(2)(b) of the ED Act only deals with methods of collecting the entertainment duty but it does not empower the Respondents to issue a G.O. 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 aros....
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....l or better view or hearing, of the entertainment which, without the aid of such instrument or contrivance, such person would not get; [* * *] (iv) any payment, by whatever name called for any purpose whatsoever, connected with an entertainment, which a person is required to make, in any form as a condition of attending, or continuing to attend the entertainment, either in addition to the payment, if any, for admission to the entertainment or without any such payment for admission ; (v) any payment made by a person for admission to a video exhibition irrespective of whether any eatables or beverages or both are or are not provided to him against such payment;] (vi) any payment made 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 a....
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....ear, to the prescribed officer the audited accounts of the service charges collected and spent by him towards maintenance and providing facilities and safety measures as provided in the second proviso. The proprietor shall be allowed to carry forward unspent amount of service charges for 4[four financial years] immediately following the financial year in which the amount has remained so unspent. If the prescribed officer on perusal of the accounts is satisfied at the end of the admissible period for which the proprietor is allowed to carry forward the unspent amount of the service charges or part thereof, that, the said amount has not been spent towards the maintenance and providing facilities and safety measures as provided in the second proviso, 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 ....
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....acility for online ticket booking in all entertainments, in that case, such payment towards such service charges shall not be included in the payment for admission, subject to the condition that the proprietor and the service provider shall submit the data of online tickets sold per month, and online internet handling fee or convenience charges charged thereof and also the certified copies of agreement for online ticket booking services to the Collector before seventh day of every succeeding month; and any amount of such service charges in any form more than ten rupees or more than such amount as may be specified by the State Government, from time to time, by notification in the Official Gazette, levied by the proprietor himself or through any service provider, for providing 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 "pay....
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....er that the intention of the legislature was to treat convenience fees as "payment towards admission" by bringing suitable law, but the G.O. did not state so, and on the contrary it prohibited collection of convenience fees, which has been observed by us above is not in accordance with the provisions of the Act. 48. Article 19(1)(g) of the Constitution of India provides for protection of the right to practice any profession or to carry on any occupation, trade or business. Article 19(6) of the Constitution of India provides that nothing in sub-clause (g) shall prevent the State from making any law imposing, in the interest of general public, reasonable restrictions on the exercise of the right conferred by the State and in particular preventing the State from making any law relating to professional 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 pre....
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.... is sought to be achieved by the impugned G.O. s is to prohibit the Petitioners from collecting convenience fees which would be outside the realm of the ED Act. 52. As observed above, we have not been shown any law on the basis of which the Respondents can invoke Article 19(6) to justify the issuance of impugned G.O.s. In our view and on a conjoint reading of Articles 19(1)(g) and 19(6) where power is conferred on the executive to regulate and to control the exercise of the freedom conferred by Article 19(1)(g), it is necessary that the law which does, should either lay down the circumstances or grounds on which the discretion is to be exercised. In other words, the Act must furnish sufficient guidance to the executive in the matter of the exercise of discretionary power. It is enough if such guidance 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, e....
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.... impugned G.O.s from being quashed and set aside. 58. The Hon'ble Supreme Court in the case of State of Bihar (supra) in paragraph 69 has observed that the requirement of law for the purpose of clause (6) of Article 19 of the Constitution of India can by no stretch of imagination be achieved by issuing a circular or a policy decision in terms of Article 162 of the Constitution or otherwise. Such a law must be one enacted by the legislature. 59. In Rai Sahib Ram Jawaya Kapur & Ors. vs. State of Punjab AIR 1955 SC 549, the Hon'ble Supreme Court observed as under:- "17. Specific legislation may indeed be necessary if the Government require certain powers in addition to what they possess under ordinary law in order to carry on the particular trade or business. Thus when it is necessary to encroach upon private 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 Sta....
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....olicy document in exercise of executive power under Article 162 of the Constitution, which power exclusively vests in the State Government alone. The fact remains that the direction issued in terms of impugned order dated 28-10-2020, on the face of it, collide with the dispensation specified in the 2016 Act in the matter of determination of school fees and its binding effect on all concerned for a period of three academic years, without any exception. The fact that in the proceedings before the High Court the State Government had ratified the impugned order, does not take the matter any further. In that, there can be no ex post facto ratification by the State Government in respect of subject, on which, it itself could not issue such direction in law. 116. Even the exposition in Ram Jawaya Kapur v. State of Punjab and A.P.D. Jain Pathshala v. 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....
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....o deserve similar indulgence. Selective intervention of the State in response to such demands may also suffer from the vice of discrimination and also likely to impinge upon the rights of private individual(s) the supplier of goods or service provider, as the case may be. The State cannot exercise executive power under Article 162 of the Constitution to denude the person offering service(s) or goods of his just claim to get fair Compensation/cost from the recipient of such service(s) or goods, whence the State has no direct causal relationship therewith." 62. We have already clarified above that the issue before us is not whether entertainment duty on convenience fees should be levied or not, but the issue before us is whether the Respondents, by issuing impugned G.O. can prohibit the Petitioners from collecting the convenience fees. In our view, the said decision 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. A....