Entertainment tax can't be levied on extra fees charged by club to carry mobile phones inside race course: Bombay High Court

In a major relief for the Royal Western Indian Turf Club, the Bombay High Court recently held that the State cannot levy entertainment tax on the fees charged by the club to allow persons to carry mobile phone inside the race course [The Royal Western India Turf Club Ltd. vs State of Maharashtra].A division bench of Justices KR Shriram and Milind Jadhav noted that the petitioner club had decided to charge around ₹1,200 additionally on those who wished to take their mobile phones inside the race course.However, the same cannot be considered a 'payment for admission' since it was neither a condition to enter and view the race nor was it charged on all persons, the Court held. "The charge paid for taking the mobile phone into the races, additionally paid by the race patron is in addition to the entry fee or admission charges to enter the races. It cannot be said to be a condition of attending or continuing to attend the entertainment (horse race) because such a condition is not uniformly applicable to all the persons entering the race course. In our view, unless such a condition is uniformly applicable to all persons entering the race course and is payable mandatorily and paid by all, irrespective of whether he carried a mobile phone or not, the same cannot be said to be 'payment for admission' as defined in the Bombay Entertainments Duty Act. Therefore, to the extent of the amounts paid for carrying the mobile phone into the races, it cannot be made subject to the payment of entertainment tax at the rates prescribed under the said Act," the bench said in its July 1 order..The bench was seized of the petition filed by the club challenging the decision of the Maharashtra government, which by a Government Resolution (GR) issued in December 2001, decided that the charges collected for carrying a mobile phone into the race course during a race are to be treated as payment for admission as defined in Section 2 (b)(iv) of the said Act. Hence, it was decided to levy entertainment duty on same in accordance with the provisions of the Act.The club through senior counsel Shyam Mehta argued that carrying of mobile phones during races does not amount to entertainment nor is it connected with an entertainment, for the purposes of the said Act. The charges levied do not fulfill the definitional parameters of “payment for admission." Hence, the charging section i.e Section 3 of the said Act, which levies a duty on payments for admission should not be attracted in the present case..The judges noted the definition of entertainment from the act and said a payment to be taxable must be a necessary condition to be complied with for gaining entry into the place of entertainment, which is the race course in the present case."The term ‘entertainment’ as per definition includes any exhibition, performance, amusement, game or sport to which persons are admitted on payment. None of these elements exist when a person takes his mobile phone into the race course. There is no exhibition or amusement or game or sport enjoyed by a person taking his mobile phone into the race course. The amount charged by petitioner from every person is not for admission to the race course itself but for carrying the mobile phone during the races. Such a payment cannot be termed as payment for any purposes whatsoever 'connected with an entertainment' which a person is required to make as a condition of attending or continuing to attend the entertainment," the Court said..It further stated that the state authorities would have been justified to levy such a duty if the club charged this extra fees from each and every person entering the race course irrespective of whether he/she took their mobile phones along with them."On the facts of the case, it is obvious that it is not compulsory for anyone wanting to enter in the race course to carry the mobile phone inside. If he does not carry the mobile phone, he does not have to pay. If he wants to carry the mobile phone, he will have to pay. It has nothing to do with entertainment for which he is said to be paying," the Court noted.Therefore, the Court allowed the petition filed by the club and directed the State authorities to refund the amount deposited by the club under the said duty..Senior Advocate Shyam Mehta along with advocates Vivek Shiralkar, Yashoda Desai and law firm Shiralkar & Co. appeared for the club.Additional Government Pleader Himanshu Takke, represented the state authorities..[Read Judgment]