Bombay High Court Upholds Entertainment Duty Demand Of Rs. 71 Lakhs On Film & Television Producers Guild Of India For 2006 APSARA Awards

The Bombay High Court on Thursday upheld the state government's demand for entertainment duty of Rs. 71,87,500 on the Film & Television Producers Guild of India (FPGI) for organizing the APSARA Awards Function in 2006.

A division bench of Justice KR Shriram and Justice Jitendra Jain, however, struck the penalty of the same amount imposed of FPGI.

“(a) The entertainment duty of Rs.71,87,500/- imposed and confirmed by the Appellate Authority vide order dated 28th September 2007 is upheld. (b) Fine / Penalty of Rs.71,87,500/- confirmed by the Appellate Authority is deleted. (c) Impugned order dated 28th September 2007 is modified accordingly”, the court directed.

The petitioner, Film & Television Producers Guild of India (FPGI) primarily engages in promoting Indian cinema and television globally. The dispute stemmed from an entertainment duty demand of Rs. 71,87,500 imposed by the authorities for the APSARA award function held on January 21, 2006, at the Jamshedji Bhabha Auditorium in Mumbai. The function was organized in collaboration with Speed Bright, Sony TV, NDTV, Hungama Events, and Reliance Communications, among others.

The Maharashtra government, through its flying squad, observed during the event advertisement banners and performances that it said qualified as "entertainment" under the Maharashtra Entertainments Duty Act, 1923 (the Act). On March 7, 2006, the Additional Collector issued an order demanding an entertainment duty of Rs. 71,87,500 and imposing a penalty of two times the duty, i.e., Rs. 1,43,75,000. The penalty was later reduced to Rs. 71,87,500 by the Appellate Authority on April 17, 2007.

Challenging this order, the petitioner contended that the APSARA award function did not fall within the ambit of "entertainment" as defined under Section 2(a) of the Act, especially considering the amendments introduced in 2010 which specifically included "award function" within the scope of entertainment subject to concessional rates. The petitioner argued that since the function was held prior to 2010, it should not be subjected to entertainment duty.

The State argued that any performance, including awards ceremonies with intermittent dances and songs, constituted "entertainment" under the Act irrespective of the amendment year. The state maintained that the sponsorship amounts received, including from Reliance Communications, constituted "payment for admission" under Section 2(b) of the Act, thereby attracting entertainment duty.

The court noted that while the definition of "award function" was formally inserted into the Act in 2010, the scope of "entertainment" had always encompassed performances and exhibitions, irrespective of the amendment year.

The court rejected the petitioner's contention that subsequent insertion is to be construed to mean that award function would not fall within the definition of “entertainment” prior to 2010 as “misconceived”.

“…on the contrary the insertion makes it clear “that the award function” was always intended to fall within the definition of the term “entertainment” as defined in Section 2(a) of the said Act. The definition of “entertainment” includes performance since inception and definition of “award function” also includes performance. Therefore the corollary is that “award function” with intermittent songs or dance always fell within the definition of “entertainment””, the court held.

Therefore, the APSARA award function fell within the definition of "entertainment" as per the Act, the court held.

"Payment for admission" under Section 2(b)(viii) includes sponsorship amounts received for events organized exclusively for invitees without ticket sales. The petitioner's receipt of substantial sponsorships, acknowledged in their submissions and confirmed by evidence, was equivalent to payment for admission under the Act, the court held.

Consequently, the court affirmed that all prerequisites for levying entertainment duty, as stipulated in Section 3 of the Act, were satisfied.

Regarding the penalty imposed, the court noted that the original order did not specify the statutory basis for the penalty. Moreover, the appellate authority incorrectly referenced Section 9A of the Act, which pertains to compounding offences, rather than Section 5, which addresses penalties for non-compliance.

Consequently, the court ruled that the penalty imposed by the Appellate Authority was unjustified and struck it down.

Case no. – Writ Petition No. 2346 of 2007

Case Title – Film & Television Producers Guild of India (FPGI) ) v. State of Maharashtra and Ors.

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