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2021 (10) TMI 762 - HC - VAT and Sales TaxLevy of entertainment tax - charges collected from students by the petitioner for utilizing facilites of MARENA - transversal beyond the allegations made in the Entertainment Tax Notice, which proposed to levy tax on collections from MARENA treating the same as a 'recreation parlour' - MARENA qualifies as a place of entertainment and the petitioner is a 'proprietor', for the purposes of levying entertainment tax or not - levy of interest and penalty under Sections 9 and 12 of KET Act - HELD THAT:- It is evident that the Tribunal has dismissed the petitioner-University appeals upholding the orders of the First Appellate Authority and the Assessing Authority by holding that the facilities provided at MARENA qualify as 'entertainment' under Section 2(e)(iii) of the KET Act and fall under the definition of 'amusement' as well. In the considered opinion of this Court, the Tribunal has failed to appreciate the fact involved in the matter i.e., notice issued in the first instance to the appellant/ present petitioner wherein it has proposed to levy tax collections from MARENA treating the same as recreation parlour and a demand was made under section 4F of the KET Act. The Tribunal has gone beyond the notice issued to the petitioner in the matter by confirming the payment on a new ground for levy solely based on the definition of 'entertainment' as per Section 2(e)(iii) of the KET Act and meaning of the word 'amusement' meaning thereby the Tribunal has travelled beyond the entertainment tax notice. In the present case, the petitioner is an Educational Institution and not a 'recreation parlour'. The provision of amenities and facilities, such as MARENA are being provided with an intention to improve the personality of the students. Another important aspect of the case is that the Entertainment Tax can be levied in respect of charges collected for admissions or participation to a "recreation parlour" as defined under Section 2(1) of the KET Act. "Recreation Parlour" means any place where a game such as bowling, billiards, snooker or the like by whatever name called is provided for which persons are required to make payment for admission or participation. The petitioner is neither a "recreation parlour" nor the petitioner has set up the MARENA with an intention to provide recreation or amusement - in the considered opinion of this Court, by no stretch of imagination the Entertainment Tax could have been imposed upon the educational institution. In the present case also we are dealing with an educational institution, which has been set up by a Trust, wherein the students and the faculty members are provided facilities in relation to sports, health and fitness. It is certainly true that the parents who visit the students and other persons who visit the University are permitted to use the sports facilities - this Court is of the opinion that the order passed by the Assessing Authority, the order passed by the First Appellate Court and the order passed by the Karnataka Appellate Tribunal are bad in law. Scope of SCN - HELD THAT:- The question is answered in favour of the assessee as the Tribunal has travelled beyond the allegations made in the entertainment tax notices which proposed levy of tax by treating MARENA as a recreational parlour and a demand was made under Section 4F of the KET Act. Whether the Karnataka Appellate Tribunal is correct in holding that MARENA qualifies as a place of entertainment and the petitioner is a 'proprietor', for the purposes of levying entertainment tax? - HELD THAT:- The Tribunal has erred in law and in facts in holding that the MARENA is a sports complex which provides recreational facilities to the students which amounts to entertainment and the petitioner is a proprietor for the purposes of levying the entertainment tax, the question is again answered in favour of the assessee and against the revenue. Whether, in the facts and circumstances of the case, the Karnataka Appellate Tribunal is right in upholding the orders of the First Appellate Authority and the Assessing Authority, insofar as the confirmation of levy of interest and penalty under Sections 9 and 12 of KET Act, respectively? - HELD THAT:- The Tribunal has erred in law and in facts upholding the order of the First Appellate Court and the Assessing Authority in so far as the confirmation of tax under Sections 9 and 12 of the KET Act. The issue is again answered in favour of the assessee and against the revenue. The petitions are allowed.
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