S.P. Bharucha, J.
1. The interesting question that arises in this writ petition is this: Is the proprietor of a discotheque liable to pay duty under the provisions of the Bombay Entertainment Duty Act, 1923?
2. The petitioners own a hotel in Bombay known as 'Oberoi Towers'. Since 1975 they conduct in the hotel a club called 'The Cellar'. The club is a discotheque where music is piped and a dance floor is provided for those who wish to dance. There is seating accommodation and drinks and snacks can be purchased. The music is suitable for what is described as modern dancing. Entrance to the club is restricted to its members and their guests and to the residents of the hotel.
3. By a letter dated November 3, 1977 the 2nd respondent, the Deputy Collector of Bombay, called upon the petitioners to show cause why action should not be taken against them for contravening the Bombay Entertainment Duty Act,. 1923 now called 'the Act'). The letter stated that the petitioners were conducting a 'programmer of discotheque' in the hotel, that the programmer was entertainment to which persons were admitted on payment and that the provisions of the Act were attracted. In the correspondence that ensued, the petitioners were called upon to pay entertainment duty and furnish returns in respect thereof and the petitioners contended, inter alia, that there was no entertainment provided in the club and that, therefore, they were not liable. Ultimately, by an order dated March 6, 1980, the petitioners' contentions were rejected and they were called upon to pay entertainment duty and surcharge, amounting to Rs. 17,21,884.30 and Rs. 2,97,256.59 respectively, from the year 1975-76 onwards. The petition impugnes that order.
4. It was submitted by Mr. Vahanvati, learned Counsel for the petitioners, that there was no entertainment in a discotheque because there was no exhibition or performance or amusement. As he put it, in order to constitute 'entertainment', there had to be a show or something objective outside the person amused or entertained. There was a distinction between providing entertainment and the facilities for entertainment. The definition of 'entertainment' in the Act and its scheme postulated the holding or organising of the entertainment.
5. The Act imposes 'a duty in respect of admission to entertainment'. Under Section 3 thereof the duty is leviable 'on all payments for admission to any entertainment'. Section 2(a) gives an inclusive definition of 'entertainment'; it includes any exhibition, performance, amusement, game or sport to which persons are admitted for payment'. Under Clause (b) of Section 2, payment for admission includes 'any payment for seats or other accommodation in a place of entertainment'. Under Clause (d), admission to an entertainment includes 'admission to any place in which the entertainment is held'. Clause (c) defines 'proprietor' in relation to any entertainment to 'include any person responsible, or for the time being in charge of the management thereof.
6. The word 'entertainment' is used in the Act as a noun to mean that which entertains or is intended to entertain. Duty under the Act is payable on payments for admission to that which entertains or to any place in which that which entertains is held. That which entertains is that which diverts and includes an exhibition, performance or amusement. The proprietor of that which entertains is the person responsible for or in charge of its management.
7. A discotheque is a dance hall wherein a certain type of music is piped in, usually through an amplifying system. It is equipped with a floor for dancing. It is typified by flashing ligtts. Basically, a discotheque is on a par with a dance hall for ballroom dancing. A dance in the sense of a couple executing a ballroom dance, entertains and diverts both those who are dancing and those who are looking on. It is an. entertainment.
8. Modern or disco dancing also entertains and diverts both those who dance and those who look on and is an entertainment. Admission to a discotheque is admission to a place in which there is modern or disco dancing; therefore, to a place in which an entertainment is held. Payment for admission into a discotheque is hence, payment for admission to an entertainment. The proprietor of a discotheque is the person responsible for the management thereof. He is, therefore, upon an analysis of its provisions liable to pay duty under the Act.
9. Before I consider three decisions, relevant to this aspect, I must note that by Maharashtra Act No. XI/8.4 the Act was amended. Section 3 of the Act now contains a proviso which reads: -
Provided that, in the case of the cabaret or discotheque entertainment fifteen per cent of the total payment charged by the proprietor per person per show shall be deemed to be the payment for admission and duty shall be levied thereon accordingly under this clause.
I do not rely upon this proviso in determining the question before me.
10. The Supreme Court considered the provisions of the M.P. Entertainment and Betting Tax Act, 1937, in the case of Geeta Enterprises v. State of M.P. : 3SCR812 in the context of video games. The definition of 'entertainment' in the M.P. Entertainment and Betting Tax Act, 1937, is identical to that in the Act before me. The Supreme Court noted that 'entertainment' was defined in Words and Phrases (Permanent Edn. Vol. 14 p. 353) thus:-
An entertainment is a source or means of amusement, a diverting performance, especially a public performance, as a concert, drama, or the like;
and in Webster's Third New International Dictionary (p. 757) thus: -
'Entertainment':- the act of diverting, or causing some one's time to pass agreeably. Something that diverts, amuses, or occupies the attention agreeably.
On a consideration of the legal connotation of the word 'entertainment' as defined in various books as also on true interpretation of the word as defined in the M.P. Act, the Supreme Court held that the following tests had to be passed for the show to fall within the ambit of the statute (at p. 1101 para 12): -
(1) that the show, performance, game or sport, etc., must contain a public colour in that the show should be open to public in a hall, theatre or any other place where members of the public are invited to attend the show;
(2) that the show may provide any kind of amusement whether sport, game or even a performance which requires some amount of skill.
In some of the cases, it has been held that even holding of a tombola in a club hall amounts to entertainment although the playing of tombola does, to some extent, involve a little skill;
(3) that even if admission to the hall may be free, but if the exhibition derives some benefit in terns of money it would be deemed to be an entertainment;
(4) that the duration of the show or the identity of the person who operates the machine and derives pleasure or entertainment or that the operator who pays himself feels entertained is wholly irrelevant, in judging the actual meaning of the word 'entertainment' as used in section 2(3) of the Act, So also the fact that the income derived from the show is shared by one or more persons who run the show.
The Supreme Court disapproved the findings of M.P. High Court A.I.R. 19821 M.P. 171 to this effect (at p. 1102): -
Therefore, what entertains a person in the video games parlour is his own performance and not the exhibition, performance, amusement, game or any sport offered by the petitioners. The payment made by a person to another to provide him with tools for deriving pleasure from his performance with the help of the tools cannot be held to be payment to that another for 'admission to entertainment' as contemplated by the Act. In our opinion, therefore, it cannot be held that the petitioners receive 'payment for admission to entertainment', when they collect amounts inserted by the persons in the slot.
11. Mr. Vahanvati laid great stress on the judgment of a Division Bench of this Court in the case of State of Bombay v. R.M.D. Chamarbaugwalla : AIR1956Bom1 Chagla, C.J., dealt with the entertainment contemplated in List II, entries 33 and 62 of the Constitution, and held that this was not the subjective entertainment which a person might receive by solving a cross-word puzzle or by indulging in any other mental or intellectual pleasure. The entertainment contemplated was something objective outside the person entertained. Therefore, although it could be said that a person who solved the cross-word puzzle was entertaining himself, this was not the entertainment which the Constitution contemplated.
12. I doubt whether the provision of a cross-word puzzle in a magazine or newspaper can be equated with the provision of music and the other equipment of a discotheque. In any event, the Supreme Court judgment in the case of Geeta Enterprises, quoted above, has rejected the view of the M.P. High Court similar to that taken in the Bombay case. It cannot now be held that, in order to constitute entertainment, there must be a show or something objective outside the person entertained.
13. Mr. Vahanvati also relied upon the judgment of the Court of Appeal in the case of Attorney General v. Southport Corporation (1934) 1 K.B. 226. The corporation of the borough were the proprietors of an enclosure which adjoined the sea-shore and included a sea-bathing lake. Two areas were reserved for sun-bathing. Dressing accommodation was provided. There was a terrace with seating accommodation which provided non-bathers with a view of the bathing, the lake, the adjacent parks, the recreation ground and the sea-shore There was a cafe. Admission to the enclosure was by tickets. The Court of Appeal held that the provisions in regard to entertainment duty were not attracted. The relevant definitions in the Finance (New Duties) Act, 1916, were virtually identical to those in the Act before me. Lord Hanworth M. R. framed the test; 'Is there then any exhibition or sport in relation to which they (the corporation) are proprietors and managers?' He held that there was not. The amenities provided were of such a nature as could be used by a number of visitors. The visitors were attracted by those amenities and not necessarily by any exhibition or sport. Slesser L. J. and Romer L.J. agreed.
14. The reasoning of the Court of Appeal would seem to be that the exhibition of bathing was ancillary to various other amenities provided and it could not be said that those who were attracted to the grounds were attracted only by reason of the exhibition of bathing. Apart from this, the test which the Master of the Rolls framed may in the present case, be answered by saying that here is a discotheque, of which the petitioners are proprietors in which entertainment and diversion is provided.
15. In conclusion! upon this aspect, I hold, both upon a construction of the Act and the Supreme Court judgment in the case of Geeta Enterprises, that the petitioners are, as proprietors of the discotheque, liable to pay duty under the Act.
16. My attention was drawn by Mr. Vahanvati to a exemption order dated November 22, 1973 read with a circular dated January 4, 1974. The former states that the State Government had exempted from liability to pay entertainment duty under the Act all performances of music (classical, light and instrumental) and classical and folk dancing from Western and Eastern countries. By the latter it is clarified that 'while beat music should be included within the scope of these three orders, Ball Dancing and cabaret Dancing are not clearly covered'. It was submitted that the petitioners were entitled to exemption by reason of the aforesaid. I do not so find. At best, it can be said that the music played at the discotheque is exempt, but not if there is dancing, as there is, to accompany it.
17. It was submitted by Mr. Vahanvati that there was no power to recover duty for the period prior to November 3, 1977 when the first notice was issued. The petitioners were obliged to pay the duty from the time the discotheque commenced in 1975-76. The notice having been issued in November 1977, there is power to recover from the date of the commencement.
18. The last submission on behalf of the petitioners deserves acceptance. Counsel on their behalf submitted that duty could not be recovered by treating the whole amount of the club membership subscription as payment for admission. It was necessary under Section 3(2) to determine what part of the membership subscription represented payment for privileges, rights and purposes other than admission to the entertainment since the petitioners had claimed that members of the club enjoyed diverse other privileges and facilities. The Collector by his impugned order had, however, held: -
Your contention at (f) of the written submissions that a member of the club enjoys diverse facilities, including right to admit guests and that he has unlimited right to re-entry, etc., which aspect should have been considered as other privileges for the purpose of apportionment under Section 3(2) of the Act is irrelevant.
19. There is substance in the contention that members of the club enjoy privileges and facilities other than the right of admission to the entertainment. As an example, they have the right to introduce guests. It was, therefore, not correct for the Collector to say,
The so-called rights or privileges do not involve any financial implications and as such the question of determining or apportioning any payment, therefore, from the lumpsum does not arise at all.
20. Due regard must also be had to the proviso under Section 3, introduced by the Amending Act. There-after in the case of discotheques, only 15% of the total payment per person per show can be deemed to he payment for admission and duty must be levied accordingly. The proviso indicates that the total payment charged by the proprietor of a discotheque include in a substantial measure payment for privileges, rights and purposes other than the admission to the entertainment.
21. In this view of the matter, the order dated March 6, 1980 is quashed and set aside. The authorities shall consider afresh what part of the subscription paid by members of the club called 'The Cellar' represents payment for privileges, rights or purposes other than the admission to the entertainment in the discotheque and shall charge duty only on the balance amount.
22. No order as to costs.
23. Rule accordingly.