R.A. Mehta, J.
1. The petitioner the Sports Club of Gujarat Ltd. has challenged the action of the respondent-State Government in levying entertainment tax in respect of film shows held by the petitioner for its members, their family members and guests.
2. The relevant provisions are contained in the Bombay Entertainments Duty and Advertisements Tax Act, 1983. (During the pendency of the petition this Act, of 1923 has been replaced by the Gujarat Entertainments Tax Act, 1977 and the provisions whereof are pari materia). The relevant provisions are contained in Section 2(a) which defines 'entertainment' to include any exhibition performance, amusement, game or sport to which persons are admitted for payment and sub Section (b) which defines 'payment for admission' as including:
(i) any payment made by a person who, having been admitted to one part of a place of entertainment, is subsequently admitted to another part thereof for admission to which a payment involving duty or more duty is required;
(ii) any payment for seats or other accommodation in a place of entertainment:
(iii) any payment for a programme of synopsis of an entertainment;
(iii-a) any payment made for the loan or use of any instrument or contrivance which enables a person to get a normal or better view or hearing of the entertainment which, without the aid of such instrument or contrivance, such person would not get, and
(iv) 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.
Section 3 deals with duty on payments for admission to entertainments. Section 3(1) provides that there shall be levied and paid to the State Government on all payments for admission to any entertainment a duty (hereinafter referred to as entertainments duty') at the following rate, Sub-section (2) of Section 3 reads as under:
(3) Where the payment for admission to an entertainment is made by means of a lump sum paid as a subscription or contribution to any society, or for a season ticket or for the right of admission to a series of entertainments or to any entertainment during a certain period of time, or for any privilege, right facility or thing combined with the right of admission to any entertainment or involving such right of admission without further payment or at a reduced charge, the entertainment duty shall be paid on the amount of the lump sum; but where the State Government is of opinion, that the payment of a lump sum or any payment for a ticket represents payment for other privileges, rights or purposes besides the admission to an entertainment, or covers admission to an entertainment during any period for which the duty has not been, in operation, the duty shall be charged on such an amount as appears to the State Government represents the right of admission to entertainments in respect of which the entertainments duty is payable.
It is the case of the petitioner that there are nine categories of members and their nature and fees are as under: (In 1975):
a. Donor Members 7500b. Patron Members 6000c. Life Members 5000d. Ordinary Members 1500-3000 plus 100.00 p.m.e. Temporary Membersf. Honorary Membersg. Institutional Members 7500h. Gymkhana Members 100/- p.a. or 10/- p.m.i. Service Members 100/- p.a. or 10- p.m.
The fees have been revised from time to time, but the pattern remains the same. Temporary, Service and Honorary members are not entitled to attend or vote at any general meeting of the club or to be elected as members of the Executive Committee of the club or any sub-committee of the club. The club provides number of facilities to its members and guests such as facilities to play games, billiards, tennis, table tennis, badminton, etc. The guests can avail of the facilities provided by the club only if accompanied by any member of the club. The petitioner club also provides residential rooms for the use of the members of the club, the members of the reciprocating clubs and guests of the members. The facilities provided by the club can be utilised not only by the member, but his wife and unmarried daughters above the age of 17 years. The entrance fees and annual subscription fees, are irrespective of the member availing of any or all of the facilities of the club.
3. The petitioner club started the activity of exhibiting films once a week (except during monsoon) the admission for which is restricted to the members, their wives and unmarried daughters above the age of 17 years and guests of the members. The club asked for permission for the use of 35 mm film projector and the same was granted from time to time.
4. However, it appears that from 1st May 1969 me petitioner club started charging Rs. 21- as guests charges on the day on which motion picture was to be exhibited instead of Rs. 0.50 ps. per guest as usual charges, and therefore the authorities refused to renew the permission. However, the club amended its rules with effect from 1st June 1969 and making it clear that every member will be charged at the rate of Rs. 21 per guest irrespective of the fact that the motion picture was, to be exhibited or not on the day on which the member introduces the guest. Immediately after the amendment of the by-law, the permission was again granted. By letter dt. 30th November 1972 Ann. B to the petition, the order granting permission was issued but therein it was directed that the club shall pay the entertainment duty payable on the film shows or to obtain the exemption certificate from the competent authority. By another letter dt. 30th May 1973 the Government informed the petitioner club that under Section 3(2) of the Act, the petitioner club was liable to pay the entertainment duty on the ground that the payment for admission to entertainment was made by means of a lump sum paid as subscription for contribution to the club and, therefore, the club was liable to pay the entertainment duty and the club was called upon to pay such duty from 1st May 1972 to 31st May 1973 and it was further directed that before seeking revival of permission for exhibition of films the petitioner club should pay the entertainment duty or obtain the exemption. It appears that the State Government proceeded on an assumption that the annual subscription of Rs. 100/- charged by the petitioner club conferred upon its members the rights and privileges of admission to any cinema show held by the petitioner club and therefore the State Government was competent to charge duty on such amount in view of the provisions of Section 3(2) of the Act.
5. The petitioner has challenged the action of the government on several grounds. However, it is not necessary to deal with all the grounds in view of the fact that the petition can be disposed of only on one ground. Section 3(2) has been reproduced earlier where it is provided that where the payment for admission to an entertainment is made by means of a lump sum paid as a subscription or contribution to the club for a right of admission to a series of entertainments or to any entertainment during a certain period of time or for any privilege, right, facility or thing combined with the right of admission to any entertainment or involving such right of admission without further payment or at a reduced charge, the entertainment duty shall be charged on such amount of the lump sum as represents the right of admission to entertainments. Therefore, as is obvious the State Government has to undertake the exercise to see that the duty shall be charged on such amount as represents the right of admission to entertainments in respect of which the entertainments duty is payable. Obviously the entire subscription does not represent the right to entertainment shows nor can it be said that the entire guest charge of Rs. 21- per guest on any day represents the payment for admission. The petitioner club submits that it is not possible to work out such an amount representing the payment for admission to the entertainment show, having regard to the fact that the annual subscription and guest charges are related to all rights, privileges and activities of the club.
6. At present it is not possible to deal with this in view of the fact that the State Government has not undertaken any exercise to determine as to what amount represents the right of admission to the entertainment and without having done that the State Government authorities have no basis and cause to make a demand and to ask the petitioner club to pay up the entertainment duty. Therefore, the letter dt. 30th November 1972 and 30th May 1973 of the, Home Department are illegal and without any basis; so also the subsequent letters rejecting the representation of the petitioner and the same are therefore quashed and set aside.
7. In the result, the petition succeeds and the letters dt. 30th November 1972 and 13th May 1973 are quashed and set aside and the respondents, their agents and servants are restrained from enforcing any demand of duty in pursuance of those letters and they are restrained from preventing exhibition of motion pictures at the club on the ground that the petitioner club has not paid entertainment duty in pursuance of those two letters. However, it is clarified that the respondents will be at liberty to determine what amount of the lump sum payment as subscription or of guest charges represents the right of admission to entertainment shows, after calling for relevant particulars and data from the petitioner and after giving a reasonable opportunity of presenting its case before the State Government, decides the question and make any fresh demand. The petitioner, of course, will be at liberty to challenge such decision if it is aggrieved thereby. Rule is made absolute with costs.
8. The learned Counsel for the petitioner has pointed out that the petitioner has deposited a sum of Rs. 1,00,000/- in a scheduled bank as per the interim order of this Court in the present proceedings. The said amount is directed to be refunded to the petitioner.