A Single Bench of Allahabad High Court has held that the UP State Government cannot impose an entertainment tax on water parks over rented swimming costumes.
Justice Pankaj Bhatia was considering a petition filed by Anandi Water Park Resorts and Club Pvt Ltd wherein the petitioner challenging the order dated 31.08.2010 whereby the entertainment tax of Rs 3,17,378.04/- was imposed in exercise of powers conferred under Section 12 of the Uttar Pradesh Entertainment and Betting Tax Act, 1979 along with penalty of Rs 20,000/-.
Section 12 of the Entertainment Tax Act specifically provides for passing of the orders after giving proper and reasonable opportunity of being heard which has admittedly not been done. The appellate authority has further erred in dismissing the appeal on a day prior to the date fixed for hearing.
Allowing relief to the petitioner, the Court held that the payment for admission, includes any payment made for loan or use of any ‘instrument’ or ‘contrivance’ which enables a person to get a normal or a better view or hearing or enjoyment of the entertainment which without the aid of such instrument or contrivance such person would not get.
“Thus to include any amount under Section 2(l)(iii), it is essential that there should be a use of ‘instrument’ or ‘contrivance’ which enables the person to use the benefits and without which such entertainment or enjoyment is not possible. A costume used in the water park, as stated by the Counsel for the petitioner, is provided to the persons who wants to take it on rent. There is no material on record to suggest that the costumes would be an ‘instrument’ or ‘contrivance’. Further there is no material to state that such costume enhances the enjoyment of the persons to enjoy the entertainment of water park and further there is no material on the record to state that without such costume being provided, the person entering into the water park would not in a position to enjoy the entertainment,” the Court said.
It was therefore, held that “in the present case, the costume used in the water park would neither fall within the definition of words ‘instrument’ or ‘contrivance’, thus I am inclined to accept the submission of the Counsel for the petitioner that the renting on ‘costumes’ cannot be included in the term ‘payment for admission’ as defined under Section 2(l), thus on that score alone, the assessment order is beyond the authority of law and is violative of Article 265 of the Constitution of India.”
Concluding the order, the Court added that “It is well settled that the tax can be levied only when specially provided for and not by intendment. If the legislation was of the view that the renting of the costume should be included for the purpose of determination of the taxes, it could have specifically provided for under the Act which has not been done, thus, I have no hesitation in holding that demand of levy of tax as well as the penalty is without authority of law.”
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