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2011 Supreme(P&H) 1
PUNJAB & HARYANA HIGH COURT
Mukul Mudgal, M.M.Kumar and Jasbir Singh JJ.
Dlf Golf Resorts Ltd.
Versus
State Of Haryana
C.W.P. No. 9476 of 2009,
Decided On : JANUARY 3, 2011
Entertainment Duty is leviable on Sports Club--Held; entertainment duty is not only on sports but on the Sports Club which is embroiled in score of other activities which included partying, winning and during--Therefore, words Amusements and Entertainment would include sports as well.
Headnote:(A) Punjab Entertainment Duty Act, 1955--Punjab Entertainment Duty Rules, 1956--Entertainment Duty is leviable on Sports Club--Held; entertainment duty is not only on sports but on the Sports Club which is embroiled in score of other activities which included partying, winning and during--Therefore, words Amusements and Entertainment would include sports as well. (Para 30)
(B) Interpretation of statues--Word Include--Word include is generally used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statute; and when it is so used those words or phrases must be construed as comprehending not only such things, as they signify according to their natural import, but also those things which the interpretation clause declares that they should include. (Para 27)
(C) Punjab Entertainment Duty Act, 1955--Punjab Entertainment Duty Rules, 1956--State Legislature is competent to impose duty/tarc on entertainments and amusements, which include sports. (Para 31)
Where the legislative competence of the legislature of State is questioned on the grounds that it encroaches upon the legislature competence of Parliament to enact a law, the question one has to ask is whether legislation relates to any of the entries in List I or III--If it does, no further question need be asked--In a situation like the one in hand the answer to the aforesaid question would be that there is no entry in List I and List III dealing with taxes on sports or sports club--There is no overlapping which may necessitate the application of the doctrine of pith and substance--It would not be possible to sweep the field of taxation on sports or sports club under the residuary Entry 97 of List I particularly when such a field is covered by the expression entertainment used in Entry 62 of List II--On that score also the arguments advanced by learned senior counsel do not merit acceptance. (Para 29)
(D) Punjab Entertainment Duty Act, 1955--Punjab Entertainment Duty Rules, 1956--Entertainment Duty--Levy of--Principles to be followed.
a. The video games are subject to entertainment tax--Even if a person is entertained in a video parlour by his own performance, there is no legal requirement that the owner of the video parlour should organise some entertainment programme like performance in theatre, amusement, games or any sport--In other words, it is no longer sine qua non that performance by a third party organised at the instance of the assessee is imperative in order to attract entertainment tax;
b. The mode of payment is wholly immaterial whether made at the entry or at the time of playing games--Therefore, a lump sum amount paid in the beginning or annual subscription given year after year would hardly make any difference; and
c. A performance becomes public in character when people come to play the game by displaying their own skill for consideration at a place where the members of the public are invited to pay and enjoy the facilities. (Para 39)
(E) Punjab Entertainment Duty Act, 1955--Punjab Entertainment Duty Rules, 1956--Entertainment Duty--Levy of--On Sports Club, having membership fee--Four test laid down by SC are to be satisfied.
For example, the first test provides that the show should be open to public in a hall, theatre or any other place where members of the public are invited or general public attends the show--This test stand satisfied when members of the general public are invited to enroll themselves as member of the club--It is well settled that in taxing statute any pedantic approach needs to be avoided. [see Kesoram Industries case (supra)--The lists in the Seventh Schedule merely provide the fields of legislation which are capable of being construed by enveloping even other areas. Therefore, public nature of the sport is satisfied when services in the club are provided to general public by inviting them to become members--The second test also stands satisfied because by playing a sport the players entertain themselves although by employing their own skill--The example of Tombola in club hall has been held public entertainment although the playing of Tombola also involves some skill--The third test is also satisfied because admission is for consideration and not free and the fourth test is also satisfied as the players pays fixed amount for playing the game for a limited time and entertain themselves. (Para 40)
M.M.KUMAR, J.
1. A Division Bench of this Court, of which one of us was a member (M.M. Kumar, J.), has made a reference in a bunch of petitions to this Full Bench raising significant and common questions of law concerning validity of the levy of entertainment duty on Sports Clubs under the Punjab Entertainment Duty Act, 1955 (as applicable to Haryana) [for brevity, the Act] and the Punjab Entertainment Duty Rules, 1956 (as applicable to Haryana) [for brevity, the Rules]. It would be apposite to advert to the reference order dated 3.8.2009, which reads thus:
" Challenge in this bunch of three petitions is to the levy of entertainment duty and its application to the Sports Clubs like the present petitioners who patronise the Sports of Golf. Learned senior counsel have, inter alia, submitted that Entry 62 of the State List in the 7th Schedule of the Constitution specifically omit the use of expression Sport, which authorises the State Legislature to levy taxes on entertainments, amusements, betting and gambling. They have also drawn our attention to Entry 33, which in addition to other things used the expression Sports, entertainments and amusements. They have also submitted that the intention of the framers of the Constitution is to restrict the power of legislation concerning imposition of tax, which has been saved by Entry 97 of the First List for framing of legislation by the Parliament. The necessary intendment by omission of expression sports from Entry 62, is leaving the subject of taxing sports to the Parliament under residuary Entry 97 of the First List. They have also submitted that if clubs like the petitioners are taxed then educational institutions, Universities and colleges where sport is played, would also be hit by the duty. Another argument raised is that in the Division Bench judgment of this Court in M/s. Chrysalis International (P) Ltd. V/s. State of Haryana and others (C.W.P No. 19345 of 2004, decided on 29.8.2008) (reported in 2008 (4) Rec Civ R 699) the question of constitutional validity of the Entertainment Duty was neither raised nor adjudicated and, therefore, the view of the Division Bench cannot be considered binding. It has also been submitted that the judgment of Honble the Supreme Court in M/s. Geeta Enterprises V/s. State of U.P., AIR 1983 SC 1098, which has been relied upon by the Division Bench of this Court in M/s. Chrysalis International (P) Ltd. (supra) lays down four tests and the Division Bench of this Court has applied only the first test whereas a perusal of the judgment shows that all the four tests have to be satisfied before entertainment duty could be imposed. The submission made is that the Division Bench judgment would require another look. On the other hand, Ms. Ritu Bahri, learned State Counsel has placed reliance on the judgment of Honble the Supreme Court in the case of Y.V. Srinivasamurthy V/s. State of Mysore, AIR 1959 SC 894 and argued that cinema was included to be covered by Entry 62 and, therefore, sports can also be included. During the course of arguments, on a specific reference being made by one of us (Jaswant Singh, J.) that he is member of three Golf Clubs and occasionally plays Golf, learned State Counsel has expressed no objection to the hearing of the cases by this Bench nor learned counsel for the petitioners has raised any such objection. Heard. Admitted. Keeping in view the fact that imposition of entertainment duty is likely to affect the larger public interest and the Division Bench judgment in the case of M/s. Chrysalis International (P) Ltd. (supra) would require a relook, we are of the considered view that the matter requires consideration at length by a larger Bench. The constitutional validity of various provisions of the Punjab Entertainment Duty Act, 1955 (as applicable to Haryana) and the Rules framed thereunder has also been challenged. Accordingly, we direct that the papers be placed before Honble the Chief Justice for constituting a larger
