Provisions Of KLEAT Act Indicate That Tax Is Payable On “Admission”: Kerala HC Directs Municipality To Refund Tax On Unsold Tickets

The Court was hearing a Writ Petition seeking the refund of the entertainment tax and prevention of its appropriation to the relief fund after the petitioner's appeal to refund the tax on unsold tickets was dismissed by the Municipality Council.

The bench of Justice Gopinath P. perused Sections 2(1) and 2(2) of the Kerala Local Authorities Entertainment Tax Act, 1961 and observed, “The definitions of 'admission' and 'admission to an entertainment' as contained in sub sections (1) and (2) of Section 2 r/w provisions of Section 3 of the 1961 Act indicate that tax was payable on an 'admission' and the petitioner was entitled to refund of the entertainment tax paid on the unsold tickets.”

Advocate K.I. Mayankutty Mather appeared for the Appellant and SC T.R. Rajan appeared for the Respondent.

Brief Facts-

The petitioner JTPAC, a performance arts centre, planned a music concert at Hotel Le Meridian and submitted 1020 tickets for stamping under the Kerala Local Authorities Entertainment Tax Act, 1961 and Rules, 1962. The Respondent Municipality required payment for entertainment tax, service cess, and a deposit, which the petitioner paid. Permission for the event was granted, and the tickets were stamped. Only 265 tickets were sold, and the petitioner requested a refund for the tax on the 755 unsold tickets, but the Municipality only refunded the security deposit, appropriating the tax to the Chairperson's Distress Relief Fund. Despite the petitioner's offer to contribute Rs.10,000 to the fund, the tax on unsold tickets was not refunded. Later the Municipal Council also dismissed his appeal. Hence, this Writ Petition.

The Court mentioned the decision of the full bench of the HC in Municipal Council, Kottayam v. K. Mahadeva Iyer; 1970 KLT 577 and quoted, “…which requires the local authority to repay to the proprietor the value of unused and unspoiled stamp returned by him after a small deduction, a provision similar to the provisions for the refund of the value of unused court fee or general stamps.”

The Court while agreeing with the contention of the Petitioner observed, “the tax could be imposed or collected only by authority of law and since the provisions of the charging section in the 1961 Act indicate that the entertainment tax as per 1961 Act could be levied only on the number of tickets that had actually been sold, any other appropriation of the amounts paid as tax would fall foul of Art.265 of the Constitution of India.”

Finally, the Court allowed the Writ Petition and directed the respondent Municipality to allow the claim of the petitioner for refund of tax on the unsold tickets in accordance with the provisions of Rule 19 of the 1962 Rules.

Cause Title: JTPAC v. Maradu Municiplaity (Neutral Citation: 2024:KER:43994)

Appearance:

Appellant: Adv. K.I. Mayankutty Mather and Adv. R. Jaikrishna 

Respondent: SC T.R. Rajan

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