TMI Blog2020 (10) TMI 778X X X X Extracts X X X X X X X X Extracts X X X X ..... that the payment should be necessary condition to be complied with for gaining entry into the place for entertainment - The payment made for any other purpose connected with such entertainment will be taxable under the said Act, only if the person concerned is required to make such payment as a condition for entry. Obviously, the online booking charges or internet handling charges, as the name given by some other cinema theater owners is not a mandatory payment for gaining entry into the cinema hall. It is an additional payment for extra or other facility provided by the Cinema hall owner. With the advent of internet, much after the said enactment of 1939, even though amended from time to time, the said Act could not have provided for levy of tax on the service of internet provided by the cinema owner. The same could be a subject matter of levy of Service Tax by the Parliament in the erstwhile law regime, prior to GST, with effect from 1 July 2017. But the Entertainment Tax being a tax collected by State for the Local Administration or Municipal Administration, is leviable only on cost of ticket which entitles a person to gain entry into the cinema hall or theatre. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or admission to the entertainment . The said reassessment order was passed exercising the powers under Section 7(2) of the Act 1939, and the Assessing Authority not only imposed tax at the rate of 30% on the online booking charges to the extent of ₹ 41,96,277/- but imposed penalty @ 150% under Section 7(3) of the Act to the extent of ₹ 62,94,416/- vide Assessment order dated 21 September 2015, for AY 2010-11. The said reassessment orders for all the years in question for AY 2007-08 to 2014-15 (upto December 2014) cannot be sustained and are hereby quashed - Appeal allowed. - Writ Appeal Nos. 685, 694, 695, 696 and 697 of 2020 - - - Dated:- 15-10-2020 - Dr. Justice Vineet Kothari And Mr. Justice M.S. Ramesh For the Appellant : Mr.R.V.Easwar, Senior Advocate for Mr.N.Murali For the Respondent : Mr.Mohammed Shaffiq, Special Government Pleader (Taxes) COMMON JUDGMENT DR. VINEET KOTHARI, J. Whether the online booking charges charged by a Cinema Hall Owner besides the cost of ticket for entry into the cinema hall and enjoy the entertainment in the form of a movie, is a part of taxable receipt by the Cinema Owner for the purposes of the Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cludes - (a) any payment 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 a tax or a higher tax is required; (b) any payment for seats or other accommodation in a place of entertainment [***]; (c) any payment for any purpose whatsoever connected with an entertainment which a person is required to make as a condition of attending or continuing to attend the entertainment in addition to the payment, if any, for admission to the entertainment ; [and] [(d) any payment deemed to have been made under sub-section (1-A) of section 4 in respect of any taxable complimentary ticket, But shall not include such maintenance charge which the licencee of cinematograph exhibition is permitted to collect, by order of the Government, from time to time, under the Tamil Nadu Cinemas Regulation Act, 1955 (Tamil Nadu Act IX of 1955) and collected by the said licencee; 4. Section 4, the charging provision in the said Act refers to the term defined above in Section 3(7) of the Act in the heading itself and the Section provides for tax on payment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be remotely connected to the ticket for entry in the cinema hall for entertainment, but it cannot be said to be a condition of attending or continuing to attend the entertainment because such a condition is not uniformly applicable to all the persons entering the cinema hall and unless a payment as a condition for entry into a place of entertainment is uniformly applicable to all and has to be mandatorily paid by all, the same cannot be said to be Payment for admission as defined in the Act and therefore, to the extent of ₹ 30/- per ticket paid additionally by the persons who book such cinema tickets for availing the facility of online booking on the Web portal of the Assessee, cannot be made subject to the payment of Entertainment Tax at the rates prescribed under Section 4 of the Act. 6. Drawing our attention to the two types of sample tickets produced before us of the said Assessee cinema, he submitted that for an online booked ticket, there are two parts of the ticket and while 'ticket booking charges' or 'online booking charges' of ₹ 30/- per ticket is separately shown, the ticket amount for entry into the cinema hall is separately shown at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed not pay 10 paise. But if he wants to avail the extra facility of lift, he will have to pay 10 paise more. The Court concluded that charging of 10 paise per passenger who is given the facility of using the lift was not any payment received for admission to any entertainment and it was only for convenience of cine goers to go to the upper floor, where cinema auditorium was situated, where there were other facilities like book stalls, restaurants, ice cream parlours etc. and without entering the auditorium, a person may like to use any of the other services or facilities by paying 10 paise for the lift charges and therefore, such lift charges of 10 paise would not form part of 'cost of admission to entertainment', and unless such payment was made compulsory for every cine goer before he can enter the auditorium, the same cannot be exigible for Entertainment Tax. Likewise, the learned counsel argued that payment of Internet charges of ₹ 30 additionally paid was absolutely optional for the customer and if he wanted to avail the facility of Internet booking of the ticket, only then he was required to pay such online booking charges and not otherwise. Therefore, it wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooked ticket was produced before us, did not have any amount charged on these items, therefore, it was not a case in hand but he submitted that while the use of 3D glasses was integrally connected and was mandatorily payable, if that was the requirement of viewing the entertainment itself, therefore it could be chargeable to tax but no Entertainment Tax could be charged on the cost of food, which could also be booked and ordered online. Thus, he submitted that what is essentially and integrally connected as cost for admission into the place of entertainment for viewing of movie or any entertainment, only that cost could be made subject matter of entertainment and not other charges providing for different facilities like online booking charges etc. 10. Besides the aforesaid arguments, the learned Senior Counsel for the Assessee has also submitted the following written arguments, which are reproduced below in extenso:- 6. While Section 4 of TNET Act is the charging section, Section 3(7)(c) defines payment for admission . A perusal of Section 3(7)(c) would indicate that there are three ingredients that needs to be satisfied in order to be applicable. The ingredients are as fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices. Similar to car parking charges, which can be collected only from those who park their cars in the parking space, the online booking charges can be collected only from those cine-goers who opt or choose to book tickets using the online facility. 10. The argument of the Respondent before this Hon ble Court that the online booking charges are uniformly collected from all those who use the online booking facility overlooks the crucial requirement of the clause that it should have been collected as a condition for attending or continuing to attend the entertainment. The object of such a requirement is clear: if the quid pro quo for the payment is the entertainment, it should be levied and collected from every person who attends the entertainment. The entertainment referred to in the clause is the movie (in the case of the Appellant) and not the online ticket booking facility. 11. In respectful deference to the direction from this Hon ble Court that the Written Submissions should specifically also cover the purport of the words payment for any purpose whatsoever appearing in Section 3(7)(c), it is respectfully submitted that though these words at first blu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not be satisfied since the quid pro quo for the online charges is for the services rendered in providing an online portal for ticket booking. 14. Even assuming arguendo that online ticket charges satisfies the second ingredient, i.e. connected with entertainment, even then it cannot be exigible since it does not operate as a condition for attending the entertainment. 15. The customer who books a ticket online would enjoy the same level of entertainment as compared to the customer booking tickets at the counter and they could be seated next to each other in a cinema hall. There is no added entertainment value that is annexed to a ticket booked online. 16. As per the directions of TN govt., a customer will be issued a govt. printed ticket at the entrance of the theatre hall, which could be subject to verification by govt. officials. This process of issuing govt. approved tickets was mandatory during the entertainment tax regime, which is the period under consideration in the present case. Such govt. printed tickets had to be mandatorily held by the movie goers till the end of the show. If, during any inspection by the govt. authorities, a person is found to no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on has the freedom to choose between booking tickets from ticketing counters or online sufficiently demonstrates that payment of online booking charges is not a condition for attending the entertainment. It is respectfully pointed out that in paragraph 35 of the Impugned Order, it has been accepted by the Learned Single Judge that the cinegoers have a choice to either buy tickets from the ticket counter or to use the online facility by paying online booking charges. The payments made by the customer for attending the entertainment is only the ticket charges which remains the same for tickets booked online or at the counter. 20. It is most respectfully submitted that the Learned Single Judge s reliance on Sunrise Associates v. Govt. of NCT of Delhi and Ors. ( Sunrise ) [(2006) 5 SCC 603] is also wholly misplaced. The ratio in Sunrise does not apply to the present case since the Constitution Bench, while overruling H. Anraj case, had held that there is no bundle of rights involved in the purchase of a lottery tickets. Such issue does not arise here since is only regarding payment made for the entertainment and no question of dual services were involved. In the Petitioner s/App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entertainment tax, and in construing them on the basis of the doctrine of pith and substance which is a doctrine which properly belongs to the field of Constitutional law. 23. While on this, it is further respectfully submitted that the contention of the learned Government Pleader for the Respondent that the provisions of Section 3(7)(c) only provide for the measure of taxation and therefore the rule of strict construction which is applicable to a charging section of a taxing enactment does not apply is, with respect, erroneous. In order to appreciate the charge of entertainment tax, it is necessary to read Section 4 together with Section 3(7)(c) for the simple reason that the words payment for admission , which is the basis of the charge of entertainment tax and are referred to in Section 4, are defined in Section 3(7)(c) and thus they become part of the charging Section 4. It is therefore wholly incorrect to rely on the judgment of the Supreme Court in Union of India Ors. v. Bombay Tyre International Ltd., [1984 SCR (1) 347] , and the observations made therein in the context of Excise Duty and to bring those observations to the interpretation of Section 4 of the TNE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel for the Revenue Mr.Mohammed Shaffiq, learned Special Government Pleader (Taxes) submitted that the definition of Section 3(7)(c) is wide enough to cover the cost of online booking charges, as the said definition clearly stipulates that ' any payment for any purpose whatsoever, connected with an entertainment ' is chargeable to tax. He submitted that the emphasis should be on the connection with the entertainment , rather than as a condition of attending or entry into the entertainment place . He submitted that though it is optional for the customer to book the ticket through online on internet or come to the counter of the cinema hall and buy a ticket physically, but once he exercises this option and pays an inclusive sum for providing any service of online booking with the cost of ticket, the entire sum would be the cost of ticket, entitling him to the entry into the place of entertainment or cinema hall and thus, the entire amount would be liable for Entertainment Tax. 12. Mr.Shaffiq further submitted that measure of taxation for levy of Entertainment Tax can be different in different circumstances like, if somebody purchases a ticket of lower class in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. The measure of the tax is not the same thing and must be kept distinguished from the subject of the tax. 15. Relying upon the decision of the Hon'ble Supreme Court in the case of M/s.Doypack Systems Pvt. Ltd. vs. Union of India and others, [1988 (2) SCC 299], Mr.Shaffiq submitted that vide paragraph 50 of the said judgment, the Hon'ble Supreme Court has held that the expression in relation to (so also pertaining to ), is a very broad expression which presupposes another subject matter. These are words of comprehensiveness which might have direct significance as well as indirect significance, depending on the context. 16. Mr.Mohammed Shaffiq referred to the decision of the Hon'ble Supreme Court in the decision of the State of Karnataka and ors. vs. Drive-in Enterprises, [2001 (4) SCC 60] , on which the learned Single Judge also relied to hold that the Drive-in Theatre of the respondent/ Assessee provided an open air theatre into which admissions are given to persons desiring to see cinema while sitting in their motorcars taken inside the theatre. Drive-in Theatre also had a separate auditorium wherein other persons who are without cars could view the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e completion of manufacturing process and the point of sale by the manufacturer. He therefore submitted that the online booking charges would fall within the extended meaning of the definition provided under section 3(7)(c) of the Tamil Nadu Entertainment Tax Act and would be exigible to Entertainment Tax. 18. Besides the aforesaid arguments, Mr.Shaffiq, has also submitted the following written arguments, which are reproduced below in extenso :- A. On a combined reading of Section 4 read with Section 3(7) (c) of Tamil Nadu Entertainment Tax Act, it is submitted that entertainment tax is levied and collected on each payment for admission to any cinematograph exhibition theatre. Importantly payment of admission is defined under section 3(7)(c) , three expressions which may be relevant are any payment for any purpose , connected with an entertainment and condition of attending . A. Expression for any purpose include collateral purpose. Para 7, Sanjeeva Reddy Vs. Johanputra Reddy A.I.R. 1972 A.P 373 . B. Expression in connection with will embrace within its scope such activities have nexus with the main activity. Expression connected with presuppos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the same entertainment event. Appellant s contentions A. Condition must mean uniformity It is submitted by the appellants that the expression condition in section 3(7)(c) would indicate that it must be uniformly applicable and if an option is made available as in the case of online booking, it would not constitute a condition . The above submission overlooks the fact that there is an option available even in terms of the fares viz., ₹ 100 + ₹ 120 which corresponds and varies according to facilities available. Thus, uniformity as an essential ingredient to constitute condition is unsustainable. B1. Reliance on Gujarat High Court in is misplaced - The judgment of Gujarat High Court is not relevant in as much as the charge for the admission is not connected to admission to auditorium but they are charged for using the facility lift to enter to a particular floor which houses not only theatre but also a restaurant or a play area etc. Therefore, someone may utilize lift and not even enter the theatre above but may go to the restaurant or book stall and therefore, they are disintegrated and independent of each other. To the contrary, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and admits of no ambiguity, recourse to the Statement of Objects and Reasons for the purpose of construing a statutory provision is not permissible. In the absence of any such notification relating to the assessment year in question, a vital prerequisite of Section 15 of the Central Sales Tax Act, namely, that the tax shall not be levied at more than one stage, has not been satisfied in respect of the turnover of cotton yarn, and accordingly the assessment complained of is liable to be quashed. Therefore, it is well, nay, settled legal position that unless all the following four components are satisfied and clearly defined, the levy of tax would fail viz., (i) taxable event; (ii) object of taxation; (iii) rate of taxation; (iv) measure or value on which rate will be applied for computing the tax liability . Unless all the four parameters are clear and unambiguous and uniformly applied to the taxable event chargeable under a taxation enactment, the levy is bound to fail. 21. In the case before us, the test for levy of Entertainment Tax is the entry into the entertainment and payment for that purpose. Entertainment Tax was a State subject and before the said levy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondition for all cinema goers, and this is not only optional but altogether a separate facility provided to all on the Web portal of the cinema hall owners. Therefore, the words in the clause 3(7)(c) of the Act, any payment for any purpose whatsoever connected with an entertainment , in addition to the payment for any for admission to entertainment in clause (c) , will have to be read in conjunction and not without the context of the words, which a person is required (mandatorily) to make as a condition of attending or continuing to attend the entertainment . These words are not superfluous or without meaning and in fact, they provide the bedrock condition for applying Section 3(7)(c) of the Act. Unless such a conditional payment for any purpose is integrally connected with the entertainment is uniformly and mandatorily chargeable from all, who want to have entry in the place of cinema hall, in our opinion, Section 3(7)(c) cannot cover such payment made by the customer, for availing the facility of online booking of tickets. 23. The judgment in the case of Drive-in Theatre (supra) relied upon by the learned counsel for the Revenue as well as the learned Single Judge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Gujarat High Court in the case of lift charges of 10 paise per person in the case of Ramanlal B. Jariwala is also found to be very near to the controversy raised before us and therefore, separate payment for separate facility is not exigible to Entertainment Tax is the premise which we find quite forceful in the case of the Assessee before us. 25. In the assessment order passed by the Assessing Authority in the present case on 21 September 2015, the learned Assessing Officer himself has taken note of the letter dated 19 June 2015 of the Assessee that levy of Service Tax and Entertainment Tax on online ticket booking charges are mutually exclusive but as the Assessee has not paid Service Tax for online ticket booking charges, therefore he is liable to pay Entertainment Tax on charges collected for online booking. From the para 24 of Written Submissions of Assessee, it is clear that Assessee has paid Service Tax under Finance Act 1994 on such 'online booking charge' for the period from 01.07.2012. The Assessing Authority has also dealt with the definition of Section 3(7)(c) of the Act and has emphasized the words any payment for any purpose in addition to the payme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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