In a recent order, the Karnataka High Court clarified that events such as Fashion Week are subject to entertainment tax..Justice Vineet Kothari passed an order to this effect while disposing of a writ petition made by a company, Dream Merchants, which had challenged an assessment order imposing entertainment tax for the conduct of Bangalore Fashion Week in 2012..A writ petition filed against imposition of entertainment tax for this event had initially been disposed of by a single judge of the High Court. An appeal against the single judge verdict before the Division Bench was thereafter was disposed of with a direction to the tax authorities to reconsider the objections of the petitioner and pass fresh orders..However, even after this remand, the assessing authority saw it appropriate to impose and entertainment tax of Rs 4.75 lakh under the Karnataka Entertainment Tax Act, 1958 (‘1958 Act’). The same was challenged by Dream Merchants before the High Court..Advocate Shivaraj N Arali, appearing for Dream Merchants, contended that the Fashion week event did not fall within the definition of ‘Entertainment’ as defined in Section 2(e)(iii) of the 1958 Act. It was pointed out that the event only involved the exhibition of apparel and dresses of various manufacturers on mannequins and live models, to which limited entry was given through passes or tickets upon sponsorship..It was also contended that the sponsorship payments or advertising charges received by the petitioner for the event did not fall within the definition of ‘payment for admission‘ as defined in Section 2 (i) (iv-a) of the said Act..Reference was also made to the case of Calico Mills Ltd., v State of MP and Others, wherein the Madhya Pradesh High Court had held that such exhibition was did not amount to entertainment for the purpose of taxation..Furthermore, it was argued that the definition of Entertainment under the 1958 Act included ‘pageant’, which denoted a procession of people or competition in which some awards was given to the winners. Since nothing of the sort was undertaken by the petitioner for the Fashion Week, the levy of entertainment tax was liable to be quashed..However, the Court did not find merit in these contentions, holding that there was little doubt that an event in the nature of a Fashion Week would be subject to entertainment tax..“There is little doubt that the Event of ‘Bangalore Fashion Week’ which included lifestyle parties, after Hour Parties, Press Conferences, display of designer products through mannequins and live models etc., would fall within the definition clauses and charging provisions of the said Act, 1958.”.This conclusion was supported by the broad definition of Entertainment under the 1958 Act, which included an exhibition or performance or pageant or a game or sport. The Court noted,.“There is no doubt that the wide words employed in the said definition of ‘Entertainment’, which words are joined by the word ‘or’ are by themselves or wide amplitude or import and there is neither any exclusion nor any separate inclusion in the said definition, because the legislature in its own wisdom already provided the wide words include all pervasive entertainments so as to cover all kinds of amusement, entertainment, exhibition or performance or pageant of a game or sport whether held in indoor or outdoor and made them taxable under the provisions of Section 3 of the said Act, 1958.”.Furthermore, the payment for admission has been defined under the Act as including sponsorship fee and advertisement charges, which, the Court noted, the petitioner had collected in the present case..Whereas the petitioner had contended that the Fashion Week in question was not a pageant liable to be taxed, the Court noted that the definition of Entertainment for the purpose of taxation is much wider. Besides, as per the Oxford dictionary, the Court found that the term ‘pageant’ has been defined as a form of entertainment. The Calico case was also distinguished as having clearly different facts and therefore of little assistance..Ultimately, it was observed that the Common Parlance Test has to be applied in determining whether the event in question was subject to the taxing statute..“…one has to go by the common Parlance Test in the taxing statutes while dealing with such controversy and no water tight compartments or hair splitting exercise can be undertaken by the authorities while implementing the statute much less by the Constitutional Courts while dealing with the taxing liability for the Event organised by the petitioner.”.Applying the same, the Court found that,.“The overlapping of the words employed in the definition of ‘Entertainment’ is intended to cover difference kinds of Events and things of entertainment and they cannot be construed in separate and water tight compartments, as is sought to be argued by the petitioner in the present case.”.On these grounds, the Court dismissed the writ petition and upheld the order of the assessing authority on merits..“This Court has no manner of doubt that the event organized by the petitioner clearly attracts the entertainment tax liability and there is no escape from the wide definition of ‘Entertainment’ and charging provisions as contained in the Act itself…”.Read Order:
In a recent order, the Karnataka High Court clarified that events such as Fashion Week are subject to entertainment tax..Justice Vineet Kothari passed an order to this effect while disposing of a writ petition made by a company, Dream Merchants, which had challenged an assessment order imposing entertainment tax for the conduct of Bangalore Fashion Week in 2012..A writ petition filed against imposition of entertainment tax for this event had initially been disposed of by a single judge of the High Court. An appeal against the single judge verdict before the Division Bench was thereafter was disposed of with a direction to the tax authorities to reconsider the objections of the petitioner and pass fresh orders..However, even after this remand, the assessing authority saw it appropriate to impose and entertainment tax of Rs 4.75 lakh under the Karnataka Entertainment Tax Act, 1958 (‘1958 Act’). The same was challenged by Dream Merchants before the High Court..Advocate Shivaraj N Arali, appearing for Dream Merchants, contended that the Fashion week event did not fall within the definition of ‘Entertainment’ as defined in Section 2(e)(iii) of the 1958 Act. It was pointed out that the event only involved the exhibition of apparel and dresses of various manufacturers on mannequins and live models, to which limited entry was given through passes or tickets upon sponsorship..It was also contended that the sponsorship payments or advertising charges received by the petitioner for the event did not fall within the definition of ‘payment for admission‘ as defined in Section 2 (i) (iv-a) of the said Act..Reference was also made to the case of Calico Mills Ltd., v State of MP and Others, wherein the Madhya Pradesh High Court had held that such exhibition was did not amount to entertainment for the purpose of taxation..Furthermore, it was argued that the definition of Entertainment under the 1958 Act included ‘pageant’, which denoted a procession of people or competition in which some awards was given to the winners. Since nothing of the sort was undertaken by the petitioner for the Fashion Week, the levy of entertainment tax was liable to be quashed..However, the Court did not find merit in these contentions, holding that there was little doubt that an event in the nature of a Fashion Week would be subject to entertainment tax..“There is little doubt that the Event of ‘Bangalore Fashion Week’ which included lifestyle parties, after Hour Parties, Press Conferences, display of designer products through mannequins and live models etc., would fall within the definition clauses and charging provisions of the said Act, 1958.”.This conclusion was supported by the broad definition of Entertainment under the 1958 Act, which included an exhibition or performance or pageant or a game or sport. The Court noted,.“There is no doubt that the wide words employed in the said definition of ‘Entertainment’, which words are joined by the word ‘or’ are by themselves or wide amplitude or import and there is neither any exclusion nor any separate inclusion in the said definition, because the legislature in its own wisdom already provided the wide words include all pervasive entertainments so as to cover all kinds of amusement, entertainment, exhibition or performance or pageant of a game or sport whether held in indoor or outdoor and made them taxable under the provisions of Section 3 of the said Act, 1958.”.Furthermore, the payment for admission has been defined under the Act as including sponsorship fee and advertisement charges, which, the Court noted, the petitioner had collected in the present case..Whereas the petitioner had contended that the Fashion Week in question was not a pageant liable to be taxed, the Court noted that the definition of Entertainment for the purpose of taxation is much wider. Besides, as per the Oxford dictionary, the Court found that the term ‘pageant’ has been defined as a form of entertainment. The Calico case was also distinguished as having clearly different facts and therefore of little assistance..Ultimately, it was observed that the Common Parlance Test has to be applied in determining whether the event in question was subject to the taxing statute..“…one has to go by the common Parlance Test in the taxing statutes while dealing with such controversy and no water tight compartments or hair splitting exercise can be undertaken by the authorities while implementing the statute much less by the Constitutional Courts while dealing with the taxing liability for the Event organised by the petitioner.”.Applying the same, the Court found that,.“The overlapping of the words employed in the definition of ‘Entertainment’ is intended to cover difference kinds of Events and things of entertainment and they cannot be construed in separate and water tight compartments, as is sought to be argued by the petitioner in the present case.”.On these grounds, the Court dismissed the writ petition and upheld the order of the assessing authority on merits..“This Court has no manner of doubt that the event organized by the petitioner clearly attracts the entertainment tax liability and there is no escape from the wide definition of ‘Entertainment’ and charging provisions as contained in the Act itself…”.Read Order:
