Duration Of Show Wholly Irrelevant: Bombay HC Upholds Entertainment Duty Of ₹71.87 Lakhs Imposed On FPGI

The Bombay High Court upheld the entertainment duty of Rs. 71,87,500/- imposed on Film & Television Producers Guild of India (FPGI) for ‘APSARA’ award function organised by it in the year 2006.

FPGI filed a writ petition challenging the order by which the Appellate Authority confirmed the demand of entertainment duty of Rs. 71,87,500/- and reduced the penalty from Rs. 1,43,75,000/- to Rs. 71,87,500/-.

A Division Bench of Justice K.R. Shriram and Justice Jitendra Jain remarked, “The contention of petitioner that performance was for only 53 minutes out of 253 minutes and in the absence of any machinery provision to levy duty only on 53 minutes is to be rejected. The amount of duty is to be calculated by applying rates specified in Section 3 on payment for admission. In this case, rate applicable to Petitioner is 25 per cent being an event prior to 2010 and held within limits of Brihan Mumbai Municipal Corporation. The amount of “payment for admission” as discussed earlier is the sponsorship amount received from Reliance & Others. Therefore, the rate and sum to which such rate is to be applied is clearly satisfied. The activity of performance is charged and the duty is to be calculated by applying aforesaid rate to sponsorship amount. … Our view is supported by the decision of the Supreme Court in the case of Geeta Enterprise v. State of U.P. wherein it is held that duration of the show is wholly irrelevant in judging the actual meaning of the word “entertainment”.

The Bench noted that FPGI cannot make machinery provision unworkable by contending that only 53 minutes is to be charged out of 253 minutes.

Advocate Nirman Sharma appeared for the petitioner while Additional G.P. Jyoti Chavan appeared for the respondents.

Brief Facts -

FPGI/petitioner being a company engaged in activities of promoting Indian Cinema and Television in India and Worldwide, organised ‘APSARA’ award function in January 2006 at Jamshedji Bhabha Auditorium for felicitating distinctive achievements in cinema and television. The said function was organised in association with Speed Bright, Sony TV, NDTV, Hungama Events, Reliance Communications, etc. Reliance Communications vide a letter in December 2005, informed that they had entered into an agreement with FPGI for sponsorship, containing details of offer and monetary value in relation to the said award function. The total monetary value worked out to Rs. 4.90 crores which was attributable to Free Commercial Time on NDTV channels, Press Advertisement, Internet, Venue Branding, Collateral Branding etc.

Reliance also informed that the sponsorship amount was Rs. 2,87,50,000/-. However, no tickets were sold but only guild members were invited to attend the function. On the day of function, flying squad of respondents visited the function and observed that there were banners of Reliance and other companies which advertised brand name of ‘Reliance’ and other corporates and their products. The squad also, inter alia, reported dance being performed to Hindi cinema tunes. In March 2006, the Additional Collector passed an order, directing FPGI to pay the entertainment duty of Rs. 71,87,500/- and fine of Rs. 1,43,75,000/- being two times the duty. Such order was challenged in appeal and the Appellate Authority confirmed the entertainment duty but reduced the penalty. Still aggrieved, the petitioner approached the High Court.

The High Court in view of the facts and circumstances of the case observed, “… the award function falls within the meaning of the term “entertainment” as defined by Section 2(a) and further the amount contributed by Reliance Communication and others would fall within definition of sponsorship amount as defined by Section 2(g-3) which would consequently fall within the definition of “payment of admission” as defined as per Section 2(b) of the said Act. Therefore, all the ingredients specified in Section 3 for levy of entertainment duty namely the activity, rate, amount to which rate is to be applied and persons liable are satisfied and, therefore, petitioner is liable for payment of entertainment duty on the award function as adjudicated and confirmed by the Appellate Authority.”

The Court noted that the sponsorship amount would amount to “payment of admission” and, even in case where tickets are not sold. It said that the insertion of definition of award function by 2010 Act is only for the purpose of granting concession in the rate of entertainment duty and the same would not mean that it was not included in the definition of the term “entertainment”.

“The original authority ought to have referred to the Section of the Act which empowers levy of fine and how the ingredients of that Section are satisfied in a particular case. In the absence of such a discussion imposition of fine is without application of mind”, it added.

The Court said that the fine/penalty order cannot be sustained. It further noted that the Adjudicating Authority levied fine of 200% of the duty demanded which was reduced by it to 100% on the basis that it is penalty and the petitioner is promoting Indian film and is not for profit organization.

“It is important to note that the issue raised by petitioner is based on the interpretation of various definitions of the said Act which we have analysed above and, therefore, one cannot say that petitioner had any intention to evade the duty and was not under the bonafide belief that its award function is not covered by the said Act. The issue is purely on questions of law and it being a debatable issue certainly one cannot attribute any intention on the part of petitioner to evade duty. Therefore, in our view, this is not a fit case where the Authorities ought to have imposed the fine / penalty”, it concluded.

Accordingly, the High Court disposed of the petition, upheld the entertainment duty, and deleted the penalty amount.

Cause Title- Film & Television Producers Guild of India (FPGI) v. State of Maharashtra & Ors. (Neutral Citation: 2024:BHC-OS:8902-DB)

Appearance:

Petitioner: Advocates Nirman Sharma, Ansh Karnawat, and Viveka Truman.

Respondents: Additional G.P. Jyoti Chavan

Click here to read/download the Judgment