'No Distinction Between Online Movie Ticket Booking & Offline Ticket Booking For Entertainment Tax Purposes': Bombay High Court

The Bombay High Court has upheld the constitutional validity of the seventh proviso inserted into Section 2(b) of the Maharashtra Entertainments Duty Act, which brings within its ambit the additional amount charged by cinema proprietors for online booking of movie tickets. It observed that the activity of online booking is not different from an offline booking and can be taxed under Entry 62 of List II

A division bench of Justice M.S. Sonak and Justice Jitendra Jain was hearing a batch of petitions filed under Article 226 of the Constitution, challenging the insertion of the seventh proviso in Section 2(b) of the Maharashtra Entertainments Duty Act (MED). The amendment was related to the payment of admission by the proprietors for online ticket booking. Payment of admission is the entertainment duty sought to be levied on the extra amount charged by cinema owners from customers for online booking of movie tickets.

The Court noted that the legislature has acted well within its authority in making the impugned amendment:

“The legislature has the power to make the impugned proviso. Entry 62, List II of the Seventh Schedule, deals with taxation on entertainment and matters incidental thereto. Making of law for determining the measure of tax is a power within the competence of the State under Entry 62 List II of Seventh Schedule to the Constitution.”

The Court rejected the objections raised on the grounds of colourable legislation, observing that merely because the Statement of Objects and Reasons state that the amendment is to curb practice of charging excessive convenience fees, it would not make the impugned proviso a colourable legislation by exercising the power of the State under Article 246 (3) read with Entry 62 List II of Seventh Schedule to the Constitution of India.

The Court also rejected the petitioners' argument that the activity of online booking could not be taxed under Entry 62 of List II since it is not a form of entertainment, and the same cannot be achieved by making an amendment to the measure of tax. It observed that Section 2(b)(iv) is a measure of tax, and by the impugned proviso, the legislature has merely sought exclusion of amounts till Rs.10/- and inclusion of more than Rs.10/- as payment of admission. The Court emphasised that in the absence of such a proviso, everything would have been treated as a measure of tax on which the rate of duty specified in Section 3 would have been applicable.

The Court refused to accept the existence of a distinction between online ticket booking and offline ticket booking.

“… the online ticket booking charges are directly connected with buying a ticket for entertainment, without which a person cannot enter the theatre. The distinction sought to be made within the entertainment area and outside the entertainment area is superfluous,” the Court observed.

Consequently, the writ petitions were dismissed.

Case Title: FICCI & Anr. v. State of Maharashtra & Ors. [WRIT PETITION NO.1813 OF 2016]

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