Ashoka Talkies, Badagara vs Badagara Municipality, Badagara and others

1. These appeals are directed against the judgment and order of a Division Bench of the High Court of Kerala reversing the judgment of a learned single Judge allowing the writ petition filed by the appellants.

2. For the purpose of appreciating what is argued, Section 2(7) of the Local Authorities Entertainment Tax Act and Section 3 thereof, as they read at the relevant time, may be quoted, thus:

2(7) 'Payment for admission' includes-

(a) any payment made by a person who, having been admitted to one part of place of entertainment, is subsequently admitted to another part thereof, for admission to which a payment involving a tax or a higher rate of tax is required;

(b) any payment for seats or other accommodation in a place of entertainment; and

(c) 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.

And Section 3 provides:

3. General provisions regarding the levy of the tax and the rate of tax :- Any local authority may levy a tax (hereinafter referred to as the entertainment tax) at a rate not less than 10% and not more than 25% on each payment for admission to any entertainment.

3. Section 3 empowers the local authorities to levy a tax at a rate not less than 10% and not more than 23%, The rate was 20% until, by notification issued pursuant to a resolution of the Municipal Council, Tellicherry dated 31st May, 1969, it was enhanced to 25% with effect from 15th July, 1969.

4. The argument before us is that the lax could be levied only upon the payment for access to the place of entertainment and could not be levied upon the tax element thereon. Section 3 empowers the local authorities to levy a tax on 'payment for admission to any entertainment'. Payment for admission is defined by Section 2(7) to include any payment for any purpose whatever connected with an entertainment which a person is required to make as a condition of admission to the entertainment. The tax which is the subject matter of these proceedings was a payment that a person was required to make as a condition for admission to the entertainment, namely the cinema theatre of the appellant, and it is, therefore, permissible for the local authorities to include the element of that tax in the quantum on which they are empowered to levy a tax under Section 3.

5. The appeals argued before us, therefore, have no merit.

6. We make it clear that the local authorities would not be entitled to charge any tax, under Section 3 on the element of the Refugee Relief Surcharge, which was introduced only in 1972, for any period prior to its introduction.

7. We also make it clear that the grounds which were urged before the learned single Judge and the appeal Court were not urged before us, but we find that the view taken by the appeal Court is justified.

8. The appeals are, accordingly, dismissed. No order as to costs.