TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 486
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.... of 2016, have sought the following reliefs: - "a) to issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, order or direction to quash and set aside the impugned Amendment and the impugned Circulars, annexed hereto as Exhibits F, G and H; b) to issue a declaratory writ declaring that the impugned Amendment only has prospective effect from 29/12/2014 and does not operate in a retrospective manner; c) to issue a declaratory writ declaring that in view of the impugned Amendment, respondents No. 1 did not have the power to levy and collect Entertainment duty on the Convenience Fee till 29/12/2024, for providing the facility of online booking of tickets." 2. The petitioners in Writ Petition No. 1689 of 2015, seek precisely the following reliefs: - "(a) For an order to declare that the Impugned Amendment Act is not applicable to the transaction fees/service charge/ convenience fees charged by the online booking service providers including the 1st petitioner; (b) In the alternative to the above prayer, for an appropriate writ, order and declaration to quash/declare as null and void the Impugned Amendment Act." 3. The petitioners are c....
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....e charging exorbitant amount per ticket as internet handling fee or convenience charge for online ticket booking service, which resulted in undue financial exploitation of persons admitted to such entertainments. In order to curb this exploitation, the Government of Maharashtra has decided to levy entertainment duty on the amounts charged towards service charges by the proprietors themselves or through service providers which exceeds rupees ten or any such amount as may be specified by the State Government, from time to time, by notification in the Official Gazette, per ticket as internet handling fee or convenience charge for online ticket booking services for all entertainments, which will result into restricting the amount of service charges for online ticket services. It is, therefore, expedient to amend section 2 of the Maharashtra Entertainments Duty Act (I of 1923) suitably." 5. By order dated 21 July 2015 in Writ Petition No. 1813 of 2016 in paragraph No. 3, the Co-ordinate Bench had directed the cinema owners as well as service providers to provide all information regarding amounts received by them on sale of tickets online. On 19 August 2015, the Co-ordinate Bench had ....
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....ate Government. On 2 September 2015, Rule was granted in Writ Petition No. 1689 of 2015 and interim relief restraining respondents from recovering duty from the service providers was passed. However, it was clarified that this would not preclude the respondents from making recovery of entertainment duty from the cinema owners, subject to the rights contended in Writ Petition 1813/2016. Thereafter, the matter has now been listed before this Bench for final hearing. 10. The petitioner No. 1 in Writ Petition No. 1813 of 2016 is an Association of Multiplex Theatres in which there is more than one screen for exhibiting a movie/film. To watch a movie, a person must buy a ticket, which entitles him to watch the film. Before the advent of internet technology, a person who wished to watch a movie had to go to the theatre and buy a ticket. However, with rapid advancement in technology, the theatre owner invested in technology so that a person who wished to buy a ticket to entertain himself by watching a film/movie, did not need to be physically present at the theatre to buy the ticket, but could buy the ticket at his own convenient time and from his convenient location by logging into the o....
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....rther submitted that the members of the petitioners have started a separate line of business activity, which is selling tickets online, and, therefore, it does not fall within the definition of "entertainment" as defined by Section 2 (a) of the MED Act. He further submitted that by insertion of the impugned proviso in the definition of "payment of admission", the measure of tax is sought to be amended without there being an amendment in the charging Section, i.e. Section 3 of the MED Act and the impugned proviso seeks to tax new activity through the definition of "payment of admission". He further submitted that by a deeming fiction, the scope of the main Section 2 (b) of the MED Act cannot be enlarged, and the function of the proviso is to exclude something which is in the main provision and not to introduce a new levy on such activity. He, therefore, submitted that the impugned amendment seeking to amend the definition of "payment of admission" is bad in law and ultra vires. 13. Mr. Thacker submitted that charging "convenience fees" is not a condition for attending entertainment, but it is a facility given to a customer to book the ticket without coming to the theatre and standi....
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....Govt. of NCT of Delhi and Another (2025) 138 GSTR 34, and submitted that even before the Delhi High Court the activity of fashion show was sought to be taxed under the Delhi Entertainment and Betting Tax Act by introducing an Explanation with retrospective effect which was held to be unconstitutional without changes in the definition of entertainment, charging and machinery provisions. 17. Mr. Thacker, learned counsel for the petitioners submitted that the impugned proviso is violative of Articles 14 and 300A of the Constitution of India and further is beyond legislative competence as mandated by Article 246(3) of the Constitution of India since the activity sought to be taxed does not constitute "entertainment" and no study has been done or any representation sought from the petitioners before introducing the impugned proviso and there is no basis for excluding sum up to Rs. 10/- from payment of admission in case of online ticket booking and to include more than Rs. 10/- with respect to the said activity and therefore is arbitrary and unreasonable. 18. Mr. Thacker submitted that the petitioners were carrying on a separate business of booking tickets online for their customers. H....
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....ct. This was a definition clause and an amendment to the definition clause can never affect the charging section, i.e. Section 3 of the said Act. In any event, Mr. Thacker submitted that the purpose of a proviso is to carve out an exception from the main provision and a proviso cannot be used to enlarge the enacting clause or the main provision. He therefore submitted that by relying upon the impugned proviso, no entertainment duty could be levied on the charges or convenience fee for online ticket booking. He relied on the following judgments:- (1) Haryana Land Development Bank Vs. Employees Union (2004) 1 SCC 574; (2) Shah Bhojraj Kuverji Oil Mills Vs Subhash Chandra Yograj Sinha 1961 SCC OnLine SC 60; (3) Dwarka Prasad Vs. Dwarka Das Saraf (1976) 1 SCC 128. (4) Mangala Waman Karandikar Vs Prakash Damodar Ranade (2023) 6 SCC 139; (5) Ambalal Sarabhai Enterprises Ltd. Vs. Amrit Lal & Co. (2001) 8 SCC 397; and (6) Thomas T. V. Vs. Joint Secretary and others 2020 SCC OnLine Ker. 434; 22. Mr. Thacker submitted that no separate machinery has been provided to assess and collect tax on online ticket bookings. In the absence of any procedural machinery, the impugned amendmen....
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....time, and the power to tax such service is with the Union of India and not with the State. Therefore, the State is incompetent to levy tax on this activity. 26. Mr. Rajadhyaksha further placing reliance on the decision of the Supreme Court in the case of N.D.P, Namboodripad vs. Union of India (2007) 4 SCC 502 submitted that the definition under Section 2 (b) of the MED Act is exhaustive and since "convenience fee" is not a condition for attending the entertainment, same cannot be brought to tax by amending the definition of "payment for admission". He placed strong reliance on the decision of the Madras High Court in the case of PVR Ltd. Vs. C.T.O. in support of his submission. 27. He further relied upon the decision of the Gujarat High Court in the case of Ramanlal B. Jariwala vs. District Magistrate, Surat (supra) where charges for providing lift facility were held not to be exigible to entertainment duty. Similarly, he relied upon the decision of this Court in the case of Royal Western India Turf Club Ltd. (supra) where charges for bringing mobile phones inside the race course were held to be not a condition for entry into the race course and therefore, entertainment duty was ....
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....in any event, it be declared that the petitioners were not liable to pay any entertainment duty under the said Act. Submissions of the Respondent-State:- 32. Mr. More, learned counsel for the respondents, defended the challenge to the impugned proviso by submitting that under Schedule Seventh, List II, Entry 62, the State has the power to levy entertainment tax. He submitted that by applying the principle of "pith and substance", the activity of online ticket booking is exigible to entertainment tax under the said entry. He relied upon the decision in the case of The State Of Karnataka vs M/S. Drive-In Enterprises 2001 (4) SCC 60 and Federation Of Hotel & Restaurant vs Union Of India & Ors AIR 1990 Supreme Court 1637. 33. He submitted that the term 'convenience fees' effectively constitutes part of the cost of enjoying entertainment, and therefore, it is, in essence, a component of admission for entertainment and consequently subject to duty. Mr. More relied upon paragraph Nos. 17.26, 17.30, 17.31, 17.33, 17.34, and 17.36 of the decision of the Supreme Court in the case of The State Of Kerala vs Asianet Satellite Communications Ltd. & Ors. 2025 SCC OnLine SC 1225 to supp....
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....ed is the activity of rendering services of online booking, whereas under Entry 62 of List II of the Seventh Schedule, what is sought to be taxed is entertainment, and the impugned proviso is a measure of tax to compute the duty. Changes are made in the 'measure of tax' to determine the entertainment duty, which is within the legislative competence of the State. 38. Mr. More, distinguished the decision of the Madras High Court in the case of PVR Limited (supra) by submitting that it was a case where the challenge was to an assessment order and the vires of the provision was not challenged before the Hon'ble Madras High Court. He further submitted that the online booking charges constitute a condition for buying the ticket to an entertainment and the provisions of the MED Act are different than the provisions of the Tamil Nadu Entertainment Duty Act. He, therefore, submitted that the decision of PVR Limited (supra) does not apply to the facts of the present case. 39. Mr. More, therefore, summing up, pleaded for dismissal of both petitions. Submissions of the Petitioners in Rejoinder :- 40. Mr. Thacker, learned counsel for the petitioners in Writ Petition No. 1813 of 2016, distin....
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....must be examined when a person is inside the place of entertainment. He submitted that the activity of online ticket booking is outside the place of entertainment and therefore, the State does not have the power to levy entertainment duty on this transaction. 43. Mr. Rajadhyaksha also placed reliance on paragraph 26 of the decision of the Supreme Court in the case of Federation of Hotel and Restaurant Association of India Vs. Union of India (supra) and prayed for a declaration of the proviso being ultra vires Article 246(3) of the Constitution of India. He, however, submitted that uniformity would apply to a class of persons inside the venue of entertainment. Therefore, the test of uniformity must be satisfied, which in the instant case is not, and thus, even on this count, also the impugned proviso is invalid. Analysis & Conclusions 44. At the outset, we wish to state that insofar as petitioners in Writ Petition No. 1689 of 2015 are concerned, there is no demand notice or any proceedings initiated against the petitioners. It is only on the apprehension that proceedings would be initiated that the present petition is filed seeking a declaration and injunction against the respond....
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.... pleadings in their petition. 48. Before we delve into the reasoning, it is apt to reproduce the relevant provisions of the MED Act, which are as under:- "2 Definition - In this Act, unless there is anything repugnant in the subject or context - (a-1) to (a-3) ........ (a) "entertainment" includes any exhibition performance, amusement, game or sport to which persons are admitted for payment, or, in the case of television exhibition with the aid of any type of antenna with a cable network attached to it or cable television or Direct-to-Home (DTH) Broadcasting Service, 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 but does not include magic show and temporary amusement including games and rides. ..................... (b) "payment of admission" in relation to the levy of entertainments duty, includes,- (i) any payments made by a person who, having been admitted to one part of a place of entertainment, is subsequently admitted to another part thereof for admission to which a payment involving duty or more duty is required ; (ii) any payme....
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....or cable television : Provided that, where regular tickets are not issued by the proprietor for admission to a video exhibition and the amount charged to a person admitted to the exhibition is inclusive of the price for any eatables or beverages or both, then seventy-five per cent., of such amount shall be deemed to be payment for such admission : Provided further that, [subject to the provisions of sub-section (13) of section 3] any payment not exceeding [seven rupees in case of ordinary and air-cooled cinemas and nine rupees in case of air-conditioned cinemas] per proprietor towards service charges separately and the proprietor shows to the satisfaction of the prescribed officer as defined in the rules made under this Act that the amount of such service charges is spent by him towards maintenance and providing facilities and safety measures in the permanent cinema [or quasi-permanent cinema] in addition to those required under the provisions of the Bombay Cinemas (Regulation) Act, 1953 and the Maharashtra Cinemas (Regulation) Rules, 1966, or any other law for the time being in force, such service charges shall not be included in the payment for admission; Provided also that....
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....ial years immediately following the financial year in which the excess amount is spent: Provided also that, any payment not exceeding (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 the license period towards maintenance and providing facilities and safety measures in such touring cinema, as specified by the State Government (by notification in the Official Gazette issued in this behalf), in addition to those required under the provisions Ben of the "Bombay Cinemas (Regulation) Act, 1953 and the Maharashtra Cinemas (Regulation) Rules, 1966, or any other law for the time being in force, in that case, such payment towards service charges shall not be included in the payment for admission, subject to the condition that the proprietor of such touring cinema shall submit, to the prescribed officer within a period of one month from the date of expiry of license period, the audited accounts of the service charges collected and spent by him towa....
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....t or pass for admission to an entertainment free of any payment or at reduced rate of payment for such admission; (e-e) "dance bar" means and includes any bar or permit-room where along with serving liquor, for entertainment, any type of dance is also performed to the tune of any type of music; (e-el) "Direct-to-Home (DTH) Broadcasting service" means a system of distribution of multi channel television programmes in Ku Band by using a Satellite system, by providing television signals direct to the subscriber's premises without passing through an intermediary such as cable operator; .................. (f) "entertainment duty", or "duty" in respect of any entertainment means the entertainment duty levied under section 3; ..................... (h) "ticket", or "season ticket" means a ticket issued by a proprietor of an entertainment for admission of a person or persons to an entertainment; ................. 3. Duty on payments for admission to entertainment.- (1) There shall be levied and paid to the State Government [on payment for admission fixed by the proprietor] to any entertainment [expect in the case of video games, exhibition by means of any type of antenna o....
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.... temporary amusement. 53. Section 2(b) defines "payment of admission" in relation to the levy of entertainment duty to include items specified therein and clause (iv) provides for 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. 54. Explanation to Section 2(b) provides that payments made for purchase of any type of antenna or any other apparatus for securing transmission, etc. shall be deemed to be payment for admission. First proviso to Section 2(b) provides for abatement of 25% if amount charged for admission to a video exhibition is inclusive of the price for any eatables or beverages. Second proviso provides that any payment not exceeding Rs. 7/- in case of ordinary and air-cooled cinemas and Rs. 9/- in case of air-conditioned cinemas per ticket, if charged, separately and used towards maintenance and providing facilities and safety measures then such service charges shall not be included in....
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....tion 4(2) provides for consolidated payment of a percentage to be fixed by the State Government of the gross sum received by the proprietor on account of payments for admission to the entertainment and on account of the duty or in accordance with the returns of the payments for admission to the entertainment and on account of the duty. 59. Section 4B deals with the assessment of entertainment duty based on the returns required to be filed by the proprietor. Section 6 deals with the exemption provided by the State Government if the entertainment is for charitable or educational purposes. Section 7 empowers the State Government to make rules for securing the payment of the entertainment duty and generally for carrying into effect the provisions of the Act. 60. Section 8 empowers the authorities under the Act to enter place of entertainment for administration of this Act. Section 9 deals with recovery of entertainment duty as an arrear of land revenue. Section 9A deals with compounding of offences. Section 9B deals with interest on failure to pay the duty and Section 9C deals with refund of excess duty paid. Section 10-A deals with appeals and revision. The other Sections are not ma....
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....usiness activity of the theatre owners outside the activity of screening movies. There are no pleadings or, in any event, serious or proper pleadings to sustain this superstructure sought to be projected during oral arguments. 66. On a query being raised, the learned counsel was unable to show any averment in the petition to this effect but made a feeble attempt by bringing to our notice paragraph 7(f) of the petition wherein it is stated that the convenience fee is an independent and distinct fee for facilitating online booking of tickets and the same is optional. In our view, this averment cannot be construed as a foundation to argue across the bar that selling tickets online is a separate business activity dehors the activity of featuring movies. The whole substratum of the petitioners' submissions is based on this oral argument, which does not feature in the petition. This submission deals with factual aspects, and such an argument cannot be based without pleadings and, more so, without verifying the facts of each of the members of petitioner No. 1. 67. However, even otherwise, in our view, the substratum of the submissions based on separate business activity cannot be sustai....
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....s should be made in Section 3 also. In our view, this would not be a correct proposition since the definition section itself is meant for interpreting the words used in the whole of the Act unless the context otherwise requires, and in the present case before us, no such case is made out for giving a different meaning than contained in the definition section. 71. The Hon'ble Supreme Court, in the case of Bhagwati Developers (P) Ltd. vs. Peerless General Finance & Investment Co. Ltd. (2013) 9 SCC 584, observed in paragraph 30 that "when the word 'securities' has been defined under the SCRA, its meaning would not vary when the same word is used at more than one place in the same statute; otherwise, it will defeat the very object of the definition section." The purpose of a definition is to prevent the need for repeated descriptions of the subject matter to which the words or expressions are applied. In our view, once the definition section is amended, there is no need to amend the phrase used in the charging section, which is already defined, unless there are grounds to not adopt the definition section, which, in this case, the petitioners have failed to establish. Once the definiti....
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.... of admission, contemplates that in addition to the primary price paid for the ticket, the "convenience fees" paid at the time of buying the ticket online, entitles the individual to attend the entertainment and would be treated as payment for admission. 76. In our view, the payment of "convenience fees" cannot be detached from the buying of a ticket online for attending the entertainment. Making payment of convenience fees is an inextricable part of buying the ticket online for entertainment. The composite price paid does go a long way in enhancing the experience of the entertainment, i.e., watching the film or gaining seamless admission to the place of entertainment. Splitting the transaction or styling it as a separate activity having no nexus or connection with payment for admission, or calling it by some other name, cannot be grounds to either strike down the levy or declare that it would not be attracted. Therefore, in our view, the "convenience fees" charged would squarely fall within section 2(b)(iv) which defines "payment of admission" and which forms the measure of tax on which rate of duty is to be paid under Section 3 of the MED Act. 77. The phrase used in Section 2(b....
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....o the facts of the case before us, and more forcefully because in the instant case before us, the convenience fee is paid for booking the ticket online, which would permit the individual to attend the entertainment. Even the cinema owners issued one consolidated invoice for the ticket cost and convenience fees. The said invoice was produced before us by the learned counsel for the petitioners. However, we must add that this composite invoice is not the basis for our reasoning. Even a separate invoice would perhaps not have altered the real nature of the charge given the broad definition in the MED Act. 81. The impugned proviso introduced by the 2014 Amendment Act does not seek to levy a duty on a new form of entertainment. It only provides that if a separate amount is charged and it does not exceed Rs. 10/-, then the same will not be treated as payment for admission, but if the amount charged exceeds Rs. 10/-, then it shall be included in the payment for admission. In our view, this proviso is, in its true sense, a proviso which carves out an amount less than Rs. 10/- paid for online booking from the definition of "payment of admission" as given in Section 2(b)(iv). 82. In our vi....
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....e State, and the impugned proviso seeks to amend the measure of tax used for calculating the duty. Therefore, the petitioners' argument on this point cannot be accepted. 85. Section 2(b) contains various provisos. The second proviso provides that if payment does not exceed the amount specified therein as the service charges specified for the nature of services offered therein, then such service charges shall not be included in the payment for admission. This itself indicates that if any activity is directly connected with entertainment, then even if it is treated separately, but the amount exceeds what is specified in the proviso, then the same shall be treated as payment for admission. To the same effect are the fifth and sixth provisos to Section 2(b). 86. The import of these provisos is that even if the proprietor treats the activity by charging separately, but if the amount exceeds what is prescribed therein, then it will be treated as payment for admission, and if the payment is less than the specified amount, then it will not be treated as payment for admission. That does not mean that the service of providing air-conditioned or touring cinema or computerized ticket termina....
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....n read in this manner, the convenience fee is a payment for admission under Section 2(b)(iv), read together with Section 2(a) and Section 3(1) of the MED Act. Any other interpretation would render the said three Sections redundant, and the Rules cannot be interpreted in a manner that makes these provisions meaningless. Section 2(b)(iv) explicitly states that the payment can be either in addition to, or separate from, the payment for admission. Moreover, this interpretation cannot be accepted because, as per Section 2(b) (viii), payment for admission includes sponsorship amounts for a programme organised for invitees without ticket sales. If the interpretation proposed by the learned counsel were accepted, no entertainment duty would be levied where tickets are not sold but invitees are allowed to attend the event. Therefore, this contention must be rejected. 90. Before the advent of online ticket booking, tickets were sold at the theatre counter, which was manned by a person. The theatre owner would certainly consider the cost of the counter clerk, printing tickets, and other expenses when setting the ticket price. Now, due to technological innovation, tickets are sold not only at....
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....ipate all possible abuses. 94. As held in R.K. Garg Vs. Union of India (1982) 133 ITR 239 (SC), every legislation particularly in economic matters is essentially empiric and it is based on experimentation. There may be crudities, inequities and even possibilities of abuse but on that account alone it cannot be struck down as invalid. These can always be set right by the Legislature by passing amendments. The court must therefore adjudge the constitutionality of such legislation by the generality of its provisions. Laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc. Moreover, there is always a presumption in favour of the constitutionality of a statute and the burden is upon he who attacks it to show that there has been a clear transgression of the constitutional principles. The Legislature understands and correctly appreciates the needs of its own people, its laws are directed to problems made manifest by experience and its discrimination is based on adequate grounds. 95. In adjudging constitutionality, the court may take into consideration matters of common knowledge, matters of com....
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....espect to any of the matters enumerated in List I - Union List in the Seventh Schedule to the Constitution under Article 246(1). Subject to power of the Parliament, the Legislature of any State can make laws under Article 246(2) with respect to any of the matters enumerated in List III - the Concurrent List. Subject to the above, the legislature of any State has exclusive power under Article 246(3) of the Constitution of India to make laws with respect to any of the matters enumerated in List II - State list. 99. The various entries in the three Lists are "fields" of legislation. The entries in the lists must be interpreted liberally and not in a narrow or pedantic sense. Power to legislate as to the principal matter mentioned explicitly in the entry shall also include legislation touching incidental and ancillary matters. 100. It is a well-settled principle of law that the Legislature can impose tax on entertainment on person providing entertainment as indeed on the person receiving entertainment. In other words, there is no reason to preclude legislation from imposing tax on the person who provides entertainment. Those who receive entertainment are exigible to tax. Those who pr....
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.... to the essential character of the levy can be regarded as a valid foundation for tax assessment. In the present case, payment of convenience fees has a clear and direct link to entertainment activities and, therefore, it serves as a valid basis for levying entertainment duty. 104. Mr. More is justified in placing reliance on the decision of this Court in the case of Vasant Madhav Patwardhan (supra) for justifying the State competency to enact the impugned proviso. The Co-ordinate Bench has examined all the aspects dealing with the challenge to the competency of the State in levying the entertainment duty on DTH, and similar submissions are canvassed even before us in the present matter, and the vires of the State's power to legislate were upheld. The appeal against the said decision was dismissed by the Hon'ble Supreme Court in Vasant Madhav Patwardhan vs. State of Maharashtra 2006 SCC Online 471. 105. In Drive-In Enterprises (supra), the appeal before the Supreme Court stemmed from the Karnataka High Court's decision to declare the provisions of the Karnataka Entertainments Tax Act, 1958, unconstitutional for exceeding legislative powers. The State of Karnataka had imposed ....
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...., the person entertained while sitting in his car inside the auditorium views the film exhibited therein. This shows that the person entertained is admitted inside the drive-in theatre along with the car/motor vehicle. This further shows that the person entertained carries his car inside the drive-in theatre in order to have better quality of entertainment. The quality of entertainment also depends on with what comfort the person entertained has viewed the cinema films. Thus, the quality of entertainment obtained by a person sitting in his car would be different from a squatter viewing the film show. The levy on entertainment varies with the quality of comfort with which a person enjoys the entertainment inside the drive in theatre. In the present case, a person sitting in his car or motor vehicle has luxury of viewing cinema films in the auditorium. It is the variation in the comfort offered to the person entertained for which the State Government has levied entertainment tax on the person entertained. The real nature and character of the impugned levy is not on the admission of cars or motor vehicles, but the levy is on the person entertained who takes the car inside the theatre ....
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.... analysis on the competency of the State to make the impugned amendment by relying upon the decision of the Supreme Court in the case of State of Kerala vs. Asianet Satellite (supra). In this case also, an argument was raised that since the activity of broadcasting is subject matter of service tax, it cannot be subjected to entertainment duty under the Entertainment Duty Act. The Hon'ble Supreme Court by applying the principle of pith and substance upheld the power conferred on the State Legislature to impose entertainment duty on broadcasting and other services under Entry 62, List II. 109. The Hon'ble Supreme Court observed that the core and essence of the provisions of the State Act pertain to the taxation of providers and recipients of entertainment and amusement within that entry, through television broadcasting services. The Court also rejected the argument of colourable legislation. It examined how the broadcaster operates, noting that the activity comprises two aspects: firstly, relaying signals from satellites of various broadcasters of TV channels, and secondly, the purpose of such relaying-namely, the content delivered to the subscriber. This content results in the ente....
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....ole and to its scope and objects. It is said that the question of invasion into another legislative territory has to be determined by substance and not by degree. According to the pith and substance doctrine, if a law is in its pith and substance within the competence of the Legislature which has made it, it will not be invalid because it incidentally touches upon the subject lying within the competence of another Legislature. 8.2.4 The Privy Council quoted with approval, the observations of Gwyer, CJ in A.L.S.P.P.L. Subrahmanyan Chettiar vs. Muttuswami Goundan, AIR 1941 FC 47 wherein it was observed that overlapping of subject-matter is not avoided by substituting three lists for two, or even by arranging for a hierarchy of jurisdictions. It was observed that "Subjects must still overlap, and where they do the question must be asked what in pith and substance is the effect of the enactment of which complaint is made, and in what list is its true nature and character to be found. If these questions could not be asked, much beneficent legislation would be stifled at birth, and many of the subjects entrusted to provincial legislation could never effectively be dealt with". In the s....
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.... has authority to legislate. Entries 82 to 92 enumerate the taxes which could be imposed by a law of Parliament. An examination of these two groups of entries shows that while the main subject of legislation figures in the first group, a tax in relation thereto is separately mentioned in the second. Thus, Entry 22 in List I is "Railways", and Entry 89 is "Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway fares and freights". If Entry 22 is to be construed as involving taxes to be imposed, then Entry 89 would be superfluous. Entry 41 mentions "Trade and commerce with foreign countries; import and export across customs frontiers". If these expressions are to be interpreted as including duties to be levied in respect of that trade and commerce, then Entry 83 which is "Duties of customs including export duties" would be wholly redundant. Entries 43 and 44 relate to incorporation, regulation and winding up of corporations. Entry 85 provides separately for corporation tax. Turning to List II, Entries 1 to 44 form one group mentioning the subjects on which the States could legislate. Entries 45 to 63 in that List form another group, and they deal with....
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....minative of its essential character. The same transaction may involve two or more taxable events in its different aspects. Merely because the aspects overlap, such overlapping does not detract from the distinctiveness of the aspects. In our opinion, there is no question of conflict solely on account of two aspects of the same transaction being utilised by two legislatures for two levies both of which may be taxes or fees or one of which may be a tax and the other a fee falling within two fields of legislation respectively available to the two. 11.14 In Union of India vs. Mohit Minerals Pvt. Ltd., (2018) 13 SCR 139 ("Mohit Minerals Pvt. Ltd."), this Court explicitly held that, "the principle is well settled that two taxes/imposts which are separate and distinct imposts and on two different aspects of a transaction are permissible as "in law there is no overlapping. 11.15 .8 it was observed that there is a distinction between the object of tax, the incidence of tax and the machinery for the collection of the tax. The distinction is important but is apt to be confused. Legislative competence is to be determined with reference to the object of the levy and not with reference to its....
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....ents in its different aspects. Merely because the aspects overlap, such overlapping does not detract from the distinctiveness of the aspects. 11.28 To determine whether there are different aspects to the activity conducted by the assessees herein which is sought to be taxed by the Union under the Finance Act, 1994 (as amended in different years) as a service tax and by the States under different State legislations as entertainment tax, it is first necessary to examine the taxable events which form the basis of levy of the legislative enactments impugned herein. Thereafter, the modus operandi of the activity undertaken by the assessees herein needs to be understood. Thereafter, a factual determination as to, whether, the taxable event which forms the basis of the levy under the Central and the State enactments corresponds to different aspects of the activity under consideration must be undertaken." 112. By applying the principles enunciated by the Supreme Court to the facts before us, it appears that the rendering of online ticket booking is regarded as a service and is taxed under the Finance Act, 1994 by the Union. Conversely, the act of entertainment involving films or movies ....
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....ogy for online ticket booking. However, it is difficult to determine the exact amount spent on technology per ticket. Therefore, by the impugned proviso, the legislature, in its wisdom, has estimated Rs. 10/- per ticket for this and excluded the said amount from the definition of "payment of admission." Thus, in our view, there is no unreasonableness in excluding this sum, and any amount above Rs. 10/- should be included in the definition of "payment of admission." 115. The test required for judging the legislative competency of a State to enact a law has recently been enunciated by a nine-judge bench of the Supreme Court in the case of Mineral Area Development Authority and Anr. vs. Steel Authority of India and Anr.. (2014) 10 SCC 1. The issue before the Supreme Court was validity of law made by the State on mineral-bearing lands pursuant to Entry 49 of List II and on mineral rights under Entry 50 of List II of Seventh Schedule when royalty is already imposed by virtue of Section 9 of the Mines and Minerals Development Regulation Act, 1957, a legislation passed by the Union by virtue of Entry 54 List I. The Supreme Court held that though the royalty is taken as a measure of tax f....
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....would not preclude the State Legislature to use the measure of mineral value or mineral produce under List II Entry 49. The State Legislature has legislative discretion to determine the appropriate measure for the purposes of quantifying taxes, so long as there is a reasonable nexus between the measure and the nature of the tax. The measure does not determine the nature of the tax. The words "lands" under List II Entry 49 includes mineral-bearing land. The mineral produce is the yield from a mineral-bearing land. Since royalty is determined on the basis of the mineral produce, royalty can also be used as a measure to determine the tax on royalty. The fact that the State Legislature uses mineral produce or royalty as a measure does not overlap with List II Entry 50." 117. The guidelines laid down by the nine-Judge bench of the Supreme Court, if applied to the facts before us, lead us to have no hesitation in holding that the State has the legislative competence to enact the impugned proviso. The impugned proviso merely seeks to exclude or include certain sums within the definition of "payment of admission," and such payments are a form of tax for the levy of entertainment duty. It ....
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....ss a particular law, the motives which impelled it to act are irrelevant. On the other hand, if the legislature lacks competency, the question of motive does not arise at all. 121. His Lordship Krishna Iyer (J), in R.S Joshi vs. Ajit Mills Ltd. & Anr. AIR 1977 Supreme Court 2279, on behalf of the bench concerning colourable exercise observed as under:- "Certainly, this is a malignant expression and when flung with fatal effect at a representative instrumentality like the Legislature, deserves serious reflection. If forgetting comity, the Legislative wing charges the Judicative wing with 'colourable' judgments, it will be intolerably subversive of the rule of law. Therefore, we too must restrain ourselves from making this charge except in absolutely plain cases and pause to understand the import of the doctrine of colourable exercise of public power, especially legislative power. In this branch of law, 'colourable' is not 'tainted with bad faith or evil motive'; it is not or crooked. Conceptually, pejorative 'colourability' is bound up with incompetency. 'Colour', according to Black's Legal Dictionary, is 'an appearance, semblance or simulacrum, as....
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....o. 1813 of 2016. 127. Tata Sky Limited Vs. State of Madhya Pradesh and Ors. (2013) 4 SCC 656. In our view, this decision is distinguishable on facts and not applicable to the case of the petitioners. The issue before the Hon'ble Supreme Court was whether a new form of entertainment, i.e. Direct-to-home (DTH), can be taxed under the Entertainment Duty Act without there being a corresponding amendment in all the relevant Sections to cover this form of entertainment within its ambit. It was on these facts that the Supreme Court observed that unless a new form of entertainment is included within the definition of entertainment, charging section, etc. there can be no levy. In the case before us, there is no levy of entertainment duty on new forms of entertainment but by virtue of the impugned amendment, the form of entertainment which was already subject matter of duty prior to amendment continued to be exigible under the MED Act and what was sought by the impugned proviso was to make changes in the measure of tax by not including sum up to Rs. 10/- towards online booking charges in calculating the payment for admission and to include the sum charged more than Rs. 10/- in arriving at ....
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.... in the case of State of U.P. vs. Virendra Bahadur Katheria& Ors. 2024 SCC OnLine SC 1712 in paragraphs 42 and 43. 130. Therefore, for all the above reasons, the decision relied upon by the learned counsel for the petitioners in the case of PVR Ltd. (supra) does not apply to the facts of our case. In any case, we, with respect, do not agree with the opinions expressed by the Madras High Court. 131. The petitioners have also relied upon the decision of the Gujarat High Court in the case of Ramanlal B. Jariwala. Vs. Dist. Magistrate, Surat (supra). The issue before the Gujarat High Court was whether lift charges for reaching the theatre, which was on the first floor, can be treated as payment for admission. The facts of the present case before us are whether convenience fees paid to buy a ticket online for watching a movie can be treated as payment for admission under the MED Act. As we observed above, unless the convenience fee is paid, a person who wishes to buy the ticket online cannot buy the same and therefore, consequently, he would not be permitted to enter the place of entertainment to entertain himself. There is a direct connection between the convenience fee paid and the ....
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....se before us, no new form of entertainment is sought to be taxed, but the impugned proviso seeks to change the measure of tax and therefore, even on this count, the decision of the Delhi High Court cannot come to the rescue of the petitioners. There is a complete machinery provided under the Act for charging, administering and recovery of entertainment duty and therefore, even on this count the decision of Delhi High Court cannot be of any assistance. On the contrary, the Delhi High Court disagreed with the view of the Coordinate Bench of this Court in the case of Gems and Jewellery Export Promotion Council Vs. State of Maharashtra & Ors. 2013 SCC OnLine Bom 372. For all the above reasons, even this decision cannot be of any assistance to the petitioners for the issue which is before us and for the view which we have taken. 135. The learned counsel relied upon the decision in the case of CIT Vs. Shakuntala (supra) and Vodafone International Holdings BV Vs. Union of India (supra) and submitted that deeming fiction cannot be used to travel beyond the plain terms of language. On a query being raised, we were not shown as to how or why the proviso is a deeming fiction. In any case, th....
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.... of the present case. 138. Lastly, Mr. Thacker relied upon the decision in the case of CIT Vs. B.C. Srinivasa Setty (1981) 2 SCC 460 and Fashion Design Council of India (supra) and contended that there is no separate machinery provided to assess and collect tax on online booking of tickets and therefore, the impugned proviso is required to be struck down. In our view, this is not correct. The impugned proviso only excludes sum charged up to Rs. 10/- for online booking ticket charges from the definition of payment for admission. By the impugned proviso, the Legislature is not trying to rope in a new form of entertainment by treating online booking of tickets as an entertainment which would require amendment in the charging section. The form of entertainment is already in existence and on which the petitioners are paying entertainment duty. It is only the measure of tax which is sought to be changed by excluding Rs. 10/- and including sum charged more than Rs. 10/- in the definition of payment for admission. Therefore, the machinery provided to assess and collect tax prior to the impugned proviso is sufficient to recover the duty since it is only the measure of tax which is sought t....
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....ng the plain meaning of language employed by the Legislature in drafting a statute. 143. In our view, the Statement of Objects and Reasons, when it states that excessive charges are sought to be curbed, it has to be read in the context of how much amount should be permitted to be excluded from the definition of "payment of admission" and it is in that context that the Statement of Objects and Reasons, if at all is to be considered, has to be read. 144. We have already observed that section 2(b)(iv) is a measure of tax and by this proviso what is sought is exclusion of Rs. 10/- and inclusion of more than Rs. 10/-,as payment of admission, in the absence of which everything would have been treated as a measure of tax on which rate of duty specified in Section 3 would be applied. In our view, the petitioners are not justified in submitting that what is sought to be taxed is a separate activity of online ticket booking. This is not borne out from the plain language of the section but on the contrary the Statement of Objects and Reasons states that what is sought to be achieved is to limit the amount which is to be treated as payment for admission for the purposes of the charging secti....