Case: Geeta Enterprises And Others Vs. State Of U.P. And Others

The facts of these cases lie within a very narrow compass and may be stated thus:-The first petitioner is a partnership firm which had launched an entertaining and ingenious enterprise for the running of a Video Parlour at 3, Chauhan Market, Delhi gate, Agra. The modus operandi of t he petitioner was as follows. A machine with a video screen is installed in the parlour of the petitioner. The petitioner permits persons to enter the premises without any charge to view a show on the video which consisted mainly of sports games etc. played On the screen of the video. According to the petitioner he did not Charge any admission fee but the Electronic Machines imported from Japan having educational value for persons playing the games were meant to provide educational entertainment by showing sea warfare, battle field space warfare sports and many other things which were likely to provide both education and entertainment to the viewers, particularly to young children. The mechanism for playing the machine was so designed that a coin of 50 naya paise was to be inserted into a strong box built within the machine, the keys of which were with the manufacturer. After the show was over a representative of the manufacturing company would come, open the box, collect the money and pay the share of the hirer-petitioner out of the collected sale proceeds. It was further alleged that no admission or gate entry fee was charged for entering the House or Parlour to watch or play the game or for entering in to the adjacent snack shops. The shows were operated by an operator from the audience and SO paise coin was inserted into the aforesaid box before the show could start. The charge of inserting the coin was realised only from those who wanted t o operate the video machine at the rate of SO paise for a show lasting up to 30 seconds.The petitioners thus contended that the manner in which the game was shown to the viewers and operated by the person playing the games was not an entertainment within the meaning of section 2 (3) of the Act. To Buttress this argument the petitioners cited the example of several States where identical shows were not exigible to entertainment tax. It is manifest that the manner and the mechanism by which the operation of the video was done would be eligible to tax could not be determined merely because some other States did not choose to charge any entertainment tax for the video shows.

Court's reasoning:
And the Gujarat High Court in N. T. Gursahaney v. State and Anr.(2) has taken a similar view. Apart from the wrong line of reasoning adopted by the Madhya Pradesh High Court it seems to have completely overlooked certain important aspects of the question which we have dealt with in our judgment. Moreover even the language of the charging provision of the Act which fell for interpretation in that case does not appear to be absolutely in pari-materia with t he language of the various sections of the U. P. Act. Even so the pivotal conclusions derived by the Madhya Pradesh High Court and the Gujarat High Court do not appeal to us. The mere fact that payment is not made at the time of entering the premises is irrelevant. Payment made at a later, stage by inserting a coin is nonetheless for being admitted to a place of entertainment. Thus the fee being charged in a different manner at a different stage is in any case for providing entertainment. We, therefore, with due respect to the High Courts, disapprove their decisions. For the reasons given above we hold that the decision of the Allahabad High Court is correct and we hereby over rule the decisions of the Gujarat and Madhya Pradesh High Courts. In our opinion, the video show in the instant case is clearly exigible to tax under section 3 of the Act.It is true that in the case of Harrish Wilson v. State of Madhya Pradesh and Ors.(1) the Madhya Pradesh High Court had taken a contrary view and held aswhat 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 own performance with the help of the tools can not be held to be payment to that an other 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."