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2020 (10) TMI 778 - HC - VAT and Sales TaxLevy of Entertainment Tax - “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 - HELD THAT:- It is well, say, 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. Entertainment Tax was a State subject and before the said levy of Entertainment Tax being subsumed under the GST Laws enforced in the country with effect from 1 July 2017, was the payment for admission, which as per the definition given in the Tamil Nadu Entertainment Tax Act, 1939, as amended from time to time in Section 3(7)(c) of the Act is 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 considerable force in the submission made by Mr.Easwar, learned Senior counsel appearing on behalf of the Assessee. Unless such internet charges or online booking charges are uniformly charged from all the customers for having entry into the cinema hall, such extra service charges taken by the cinema owner to the extent of ₹ 30/- per ticket could not be made subject matter of Entertainment Tax. Even though such payment along with the cost of ticket at the rate of ₹ 190.78 in particular illustration, was part of the overall cost to the customer. The test is attending the entertainment or continuing to attend the entertainment. The mandatory requirement to fall within Section 3(7)(c) of the Act is that a person is required to make, as a condition to attend or continue to attend the entertainment - 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. The measure of taxation, viz., the ticket cost of ₹ 190.78 for both the types of customers could only be held exigible to the Entertainment Tax. ₹ 30/- separately paid for online booking facility, is not sine qua non for having entry in the cinema hall and therefore, falls outside the scope of the term, 'payment for admission', defined in Section 3(7)(c) of the Act - 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 payment for 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.
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