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TMI Blog2021 (10) TMI 762X X X X Extracts X X X X X X X X Extracts X X X X ..... n the charges collected from students by the petitioner for utilizing facilites of MARENA? ii. Whether the Karnataka Appellate Tribunal is permitted to traverse 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' and demand was made under Section 4F of the KET Act, while the Tribunal confirms the demand solely on the definition of 'entertainment' and 'amusement'? iii. 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? iv. 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? STRP No.7/2020 "i. Whether the Karnataka Appellate Tribunal erred in deviating from the allegations made in the Entertainment Tax Notice, which proposed to levy tax on collections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Courts, Tennis Courts and Basketball Courts, Crickets, Football, simulated games and other ancillary services. It has been further stated that in respect of most of the facilities like walking/jogging track, badminton courts, squash courts, basketball court, tennis court etc., the students are not required to pay anything. However, in respect of certain other facilities, a nominal usage charge is collected from the students to meet the necessary expenses for operating "MARENA". 4a. The facts further reveal that an inspection was conducted on the premises of the petitioner by the Assistant Commissioner, Udupi on 18.08.2012 and entertainment tax notices dated 21.10.2013 were served to the petitioner for the periods 2010-11, 2011-12 and 2012-13 i.e., up to August 2012. It was alleged that the petitioner-University has failed to seek registration under the KET Act and has failed to discharge the payment of applicable entertainment tax on the proceeds received from MARENA under Section 4F of the KET Act. The petitioner- University did submit reply to the show cause notice dated 28.10.2013 and also attended the personal hearing before the Entertainment Tax Authority on 11.06.2014. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1958, read with Section 2(l) thereof? Point No.2: Whether the place where the facilities are provided is a "place of entertainment" U/s 2(ib) of the KET Act, 1958? Point No.3: Whether the Appellant is a "proprietor" within the meaning of the expression "proprietor" in Section 2(k) of the KET Act, 1958? Point No.4: Whether the charges collected from the participants fall within the meaning of the expression "Payment for admission" U/s 2(i) of the KET Act, 1958? Point No.5: Whether the admission fee collected from the participants/members, as the case may be, is separate for each of the sports or games and other facilities or is it the composite charges? Point No.6: The charging Section 4-F refers to "each payment for admission". Consequently, where payment is made for a specific period i.e. a year or month or a week, can it be vivisected in relation to each participation? Point No.7: What happens if the person pays for a week and avails the facility only for one day or does not use the facility at all? Point No.8: What Orders? 77. Our answers to the above points are as under: Point No.1 to 7: In the affirmative. Point No.8: as per the final order for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment arcade or amusement park or theme park or by whatever name called (e) 'Entertainment' with all its grammatical variations and cognate expressions means,- (i) a horse race or live telecast of a horse race to which persons are admitted on payment; (ii) Cinematograph show including video shows to which persons are admitted on payment or exhibition of films or moving pictures which are viewed and heard on the television receiving set, with the aid of any type of antennae with the cable network attached to it or cable television 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; (iii) any amusement or recreation or any entertainment provided by a multi system operator or exhibition or performance or pageant or a game or sport whether held indoor or outdoor to which persons are admitted on payment. Explanation.- Recognized game or sport shall mean Cricket, Hockey, Foot Ball, Basket Ball, Tennis, Golf, Volley-Ball, Badminton, Kabbadi, Swimming, Athletics, Base-Ball, Weight Lifting, and any other sport or game the Government may notify. (f) "in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any such entertainment.] [(l) " 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. C. The ACCT (Enforcement) Udupi, has visited the place of the appellant on 11-07-2012 and on 08-08-2012 and collected certain information as to the activities of MARENA. The MARENA IS SITUATED IN 1.46 LAKH SQ. FEET AREA which can accommodate 2000 persons. It has 7 floors, entry level consists of gymnasium, the first floor has a walking track of 200 meters, Level-1 has sauna, steam bath, change rooms and lockers. Level-2 has badminton courts and squash courts, level-3 has two basket ball courts of 600 seats capacity, level-4 has services, level-5 has simulated games of cricket, with a bowling machine and a futsal 5-a side football simulated game. It has 7 simulation virtual game counters with LCD computer based system and computer based virtual games like golf, football etc. There are also open Tennis and Volleyball courts. D. The member ship and other charges PRESCRIBED for different participants for availing the facilities provided by the appellant in MARE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of chance or skill or talent, held or organized or provided in any amusement arcade or amusement park or any other place for which persons are required to make payment for admission or participation. From combined reading of the definition of 'amusement' and 'entertainment' as reproduced above it is evident that the facilities provided by the appellant in MARENA arcade covers activities like singing, dancing, playing light indoor games like billiards, watching music, dance and dramatic performances, circus shows, horse races, mimicry and the like. The essential feature of a amusement is that the person being amused is brought to a State of extraordinary happiness and pleasure. In both the definitions of 'amusement' and 'entertainment' the word "means" is used which defines precisely to lay down wheat the expression shall usually mean. On the other hand, the word 'include' is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their nature import, but also other things ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arena in the place of entertainment. This view finds fortification from the substantive provisions of the KET Act, 1958 itself. Therefore, it is clear that the charges received by the appellant constitutes 'payment for admission' as defined under Section 2(i) of the KET Act, 1958. Thus, this point is also answered in the affirmative. Point Nos.5, 6 & 7:- As these points are inter-connected with one another, they are answered by recording following common findings: (a) As per the report of the ACCT (Enforcement), Udupi in which the appellant has participated and furnished the required details and information, the appellant has charged fixed charges from its members and from students as annual fee for the utilization of the amusement / entertainment provided in the MARENA arcade. As per the provisions of Section 2(i)(iv) of the KET Act, 1958 the 'payment for admission' includes 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 constitutes taxable event. There is no condition that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose whatsoever connected with an entertainment which a person is required to make" would include any fee paid either annually or partially for participation in the indoor games provided in the MARENA arcade would fall within the definition of 'payment for admission'. (b) The composite fee charged by the appellant from its members and students for utilizing the facilities provided in the MARENA arcade is the amount liable to entertainment tax as provided under Section 4-F of the KET Act, 1958 and there is no condition that upon making payment of certain fee either by the members or students they could pay the appellant towards MARENA is a mandatory fee charged from all the members and students irrespective of the fact the facilities provided therein are utilized or not. The one-time payment of fee by the members and students covers the participation in MARENA for whole of the year and if any person intends to participate temporarily in any game in MARENA then the participant has to make separate payment for each of the game provided in MARENA. For the purposes of attracting tax under the KET Act, 1958 it is not prescribed by the Legislature that as and when the facility of en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ors vs State Of Haryana And Ors on 2 March, 1971, AIR 1033 SCR(3) 871 the court observed that: The ejusdem generis rule is not a rule of law but is merely a rule of construction to aid the courts to find out the true intention of the legislature. If a given I provision is plain and unambiguous and the legislative intent is clear, there is no occasion to call into aid that rule ejusdem generis rule is explained in Halsbury's Laws of England (3rd Edn.). Vol. 36 p. 397 paragraph 599 thus "As a rule, Where in a statute there are general words following particular and specific words, the general words must be confined to things of the same kind as those specified, although this,' as a rule of construction, must be applied with caution, subject to the primary rule that - statutes are to be construed in accordance with the intention of Parliament. For the ejusdem rule to apply, the specific words must constitute a category, class or genus; if they do constitute such a category, class or genus, then only things which belongs to that category, class or genus fall within the general words ....... It is observed in Craies on Statute Law (6th Edn.) p. 181 that: "The ejusdem ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to light only due to the inspection undertaken by the ACCT (Enforcement), Udupi and it is not a voluntary disclosure by the appellant. Under the circumstances, the penalty and interest levied by AA and upheld by FAA does not warrant any interference at this stage. 85. POINT No.8: In the light of the discussions made supra we pass the following; ORDER 1. The appeals in STA Nos. 53 to 55/2017 are dismissed by upholding the orders of AA and FAA. 2. The Registrar of the Tribunal is directed to comply with Regulation 53(b) of Chapter-IX of Karnataka Appellate Tribunal Regulations 1979 by communicating this order to the persons mentioned therein. 3. The original copy of this judgment shall be placed in STA. No. 53/2017 and copy thereof in STA.Nos.54 and 55/2017. 4. The office is directed to send back the records to lower authorities immediately." 6. This Court has carefully gone through the order passed by the Tribunal and the Tribunal has arrived at a conclusion that MARENA provides entertainment to staff, students, dependants, guests of M/s. Fortune Inn Valley View of Manipal Groups. The Tribunal after placing heavy reliance upon the definition of Entertainment under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or performance or pageant or a [x x x] game or sport whether held indoor or outdoor to which persons are admitted on payment; Explanation.- Recognised game or sport shall mean Cricket, Hockey, Foot Ball, Basket Ball, Tennis, Golf, Volley-Ball, Badminton, Kabbadi, Swimming, Athletics, Base-Ball, Weight Lifting, and any other sport or game the Government may notify. (ib) "place of entertainment" means the place where an entertainment is held and includes the booking office and any place from where the entertainment is provided by means of cable connection from any type of antennae with a cable net work attached to it or cable television and such other place where the accounts and other documents connected with the entertainment are kept. (l) '' 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." Section 9 "9. Payment and recovery of tax.- (1) The tax payable under this Act shall be paid in such manner and in such instalments, if any, and within such time, as may be prescribed. (2) If defau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly evades the payment of any tax due under this Act, shall, on conviction, be punishable with simple imprisonment for a term which may extend to six months or with fine which shall not be less than rupees ten thousand for the first offence and not less than rupees fifteen thousand for the second or subsequent offence during the financial year or both. (1C) The proprietor of any entertainment who contravenes any other provision of this Act, shall on conviction be punishable with simple imprisonment for a term which may extend to six months or with fine which shall not be less than rupees ten thousand for the first offence and not less than rupees fifteen thousand for the second or subsequent offence during the financial year or with both. (2) It shall be presumed until the contrary is proved that any person who is found without a ticket in any place of entertainment has been admitted by the proprietor of the entertainment or by the person employed by such proprietor in such place in contravention of the provisions of section 5." 8. Keeping in view the aforesaid definitions and the order passed by the Tribunal, it is evident that the Tribunal has dismissed the petitioner- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterprises and Others v. State of Uttar Pradesh and others reported in 1983 (4) SCC 202 in paragraph-12 of the order has held as under: "12. Thus, on a consideration of the legal connotation of the word 'entertainment' as defined in various books and other circumstances of the case as also on a true interpretation of the word as defined in Section 2(3) of the Act, it follows that the show must pass the following tests to fall within the ambit of the aforesaid section: (1) that the show, performance, game or sport, etc. must contain a public colour in that the show should be open to public in a hall, theatre or any other place where members of the public are invited or attend the show; (2) that the show may provide any kind of amusement whether sport, game or even a performance which requires some amount of skill; in some of the cases, it has been held that even holding of a tombola in a club hall amounts to entertainment although the playing of tombola does, to some extent, involves a little skill; (3) that even if admission to the hall may be free but if the exhibitor derives some benefit in terms of money it would be deemed to be an entertainment; (4) that the du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, in respect of Question No.1, it is held that the Tribunal was not at all justified in dismissing the appeal preferred by the assessee. 16. In respect of Question No.2, again 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. 17. In respect of Question No.3, 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. 18. In respect of Question No.4, 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. 19. With the aforesaid, the petitions are allowed. The Judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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