The Bombay High Court upheld the entertainment duty of Rs.71,87,500/- imposed on the Film & Television Producers Guild f India ( FPGI ) for APSARA Awards, 2006, deleting the 100% penalty imposed by the appellate authority.
Justices KR Shriram and Jitendra Jains upheld the entertainment duty of Rs. 71,87,500/- imposed and confirmed by the Appellate Authority in their order dated September 28, 2007. However, they deleted the fine/penalty of Rs. 71,87,500/- also confirmed by the Appellate Authority.
The petitioner, Film & Television Producers Guild of India, a Section 25 company under the Companies Act, 1956, organized the ‘APSARA’ award ceremony on January 21, 2006, at Jamshedji Bhabha Auditorium to honor achievements in cinema and television. The event, in collaboration with Speed Bright, Sony TV, NDTV, Hungama Events, and Reliance Communications, received sponsorship valued at Rs. 4.90 crores, including Free Commercial Time on NDTV channels, Press Advertisement, Internet, Venue Branding, and Collateral Branding. Despite no ticket sales, guild members were invited.
During the event, banners of Reliance and other companies displaying their brands and products were observed by the respondent’s flying squad. Hindi cinema tunes were also performed.
Respondent No. 2, the Additional Collector, issued an order on March 7, 2006, imposing an entertainment duty of Rs. 71,87,500/- and a penalty of Rs. 1,43,75,000/- (double the duty amount). This order was appealed, and on April 17, 2007, the Appellate Authority upheld the entertainment duty but reduced the penalty to Rs. 71,87,500/-.
Subsequently, on September 28, 2007, the Appellate Authority reaffirmed the entertainment duty of Rs. 71,87,500/- and reduced the penalty to the same amount from Rs. 1,43,75,000/-. The petitioner now challenged this decision before the court, with proceedings initiated on December 7, 2007, including a direction for the petitioner to provide a Rs. 15 Lakh bank guarantee, which has been complied with pending final disposition of the case.
The petitioner submitted that the ‘APSARA’ award function does not qualify as “entertainment” under Section 2(a) of the Maharashtra Entertainments Duty Act (previously known as the Bombay Entertainment Duty Act).
They contend that the Act’s definition of “Award Function” was introduced only in 2010, after the event in question, and therefore, it was not intended to be covered as “entertainment.” The petitioner asserts that the Act does not allow for pro rata assessment and charging for intermittent performances between two awards, rendering the machinery provision ineffective in such cases.
Furthermore, the petitioner claimed that the sponsorship amount received from Reliance Communication does not constitute “payment for admission” under Section 2(b) of the Act. They argued that since the activities were temporary, they fall outside the Act’s definition of “entertainment.”
On the other hand, the respondents argued that the award function qualifies as a “performance,” which is explicitly included in the definition of “entertainment.” They contended that the introduction of the definition of “Award Function ” in 2010 merely aimed to adjust the rate of duty and does not imply that such functions were exempt from being categorised as “entertainment” before 2010. The respondents uphold the decisions of the Adjudicating Authority and the Appellate Authority, urging the court to reject the writ petition.
The bench observed that “The definition of entertainment is “inclusive” definition and is widely defined to include any exhibition, performance, etc. Admittedly, therefore, it cannot be gain said that the function organised by petitioner cannot be construed as performance and consequently that it would not fall within the definition of the term “entertainment” The phrase “include” indicates that legislature did not intend to give a restrictive meaning. The definition of “entertainment” does not make a distinction between temporary and permanent performance.”
The High Court stated that the award function fits within the definition of “entertainment” under Section 2(a). They further noted that the contributions from Reliance Communication and others qualify as sponsorship amounts under Section 2(g-3), which consequently fall within the definition of “payment for admission” as per Section 2(b) of the Act.
Therefore, all the necessary conditions specified in Section 3 for imposing entertainment duty—namely the activity, rate, amount subject to the rate, and liable parties—are met. Consequently, the petitioner is liable for paying entertainment duty on the award function, as adjudicated and upheld by the Appellate Authority.
It was further noted that the Petitioner cited the Supreme Court‘s decision in the case of Geeta Entertainment & Ors. and this Court’s decision in Gondwana Club Nagpur Vs. State of Maharashtra, which held that duty cannot be levied unless admission is open to the general public with payment. The court found these decisions inapplicable to the petitioner’s case because they had already determined that sponsorship amounts constitute “payment for admission,” even in cases where tickets are not sold.
Turning to the issue of penalty, the court observed that the original order dated March 7, 2006 does not specify the section of the Act under which the fine of Rs. 1,43,75,000/- was imposed. This omission rendered the imposition legally flawed as the authority did not articulate the statutory basis or justify how the relevant provisions were met.
The appellate authority, in reducing the fine, incorrectly referenced Section 9A, which pertains to compounding of offences, not penalty imposition. Section 5 of the Act, which addresses penalties for non-compliance with Section 4, was neither invoked in the original nor appellate orders, mentioned the bench.
Considering these aspects, the division bench mentioned that the fine/penalty order cannot be upheld. Furthermore, the adjudicating authority initially imposed a penalty of 200% of the duty demanded, reduced by the appellate authority to 100% on grounds that it constitutes a penalty, taking into account the petitioner’s role in promoting Indian cinema as a non-profit organization.
The Bombay High Court observed that the petitioner’s contention revolves around the interpretation of various definitions within the Act, which raised legal questions rather than suggesting any intention to evade duties. Therefore, in the court’s view, it was held that this case does not warrant the imposition of a fine or penalty by the authorities.
The impugned order dated September 28, 2007 is modified accordingly and the petition was disposed of.
Mr. Nirman Sharma, Mr. Ansh Karnawat, Ms. Viveka Truman i/by ANM Global appeared for petitioner. Ms. Jyoti Chavan, Additional G. P. appeared for respondents.
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