Government cannot levy entertainment tax on fees charged by the club to carry a mobile phone inside the racecourse: Bombay HC

The Bombay High Court recently ruled that the Maharashtra government cannot levy entertainment tax on the fees charged by the Royal Western Indian Turf Club for allowing people to carry a mobile phone inside the racecourse. .

The ordinance was passed by a Divisional Bench consisting of Justices KR Shriram and Milind Jadhav while hearing a plea filed by the Royal Western Indian Turf Club (RWITC).

The court was hearing a petition from the RWITC challenging the Maharashtra government’s resolution of December 2001. The GR said that charges levied for carrying a mobile phone onto the race course during a race should be treated as payment for the admission as defined in Section 2(b)(iv) of the said Bombay Entertainments Duty Act. It was therefore decided to levy a tax on entertainment in accordance with the provisions of the law.

RWITC had decided to charge an additional Rs 1,200 to members who wanted to take their mobile phones inside the race course. The HC observed that this cannot be considered a ‘payment for admission’ as it was neither a requirement to participate and view the race nor be charged to all persons.

“The fee paid to bring the mobile phone to the races, additionally paid by the sponsor of the race, is in addition to the registration fee or the admission fee to participate in the races. It cannot be said to be a condition to attend or continue to attend (horse racing) entertainment as such a condition is not uniformly applicable to all persons entering the race course,” the HC said.

The court said that, in its opinion, unless such a condition is uniformly applicable to all persons entering the racecourse and is obligatorily payable by all, whether or not he has a mobile phone, one cannot say it is an “Admission Payment” as defined in the Bombay Entertainments Duty Act.” Therefore, up to the amounts paid for bringing the mobile phone to the races, this cannot be subject to the payment of amusement tax at the rates prescribed by said Act,” observed the HC.

RWITC’s lawyer, Shyam Mehta, argued that carrying mobile phones while racing did not constitute entertainment, nor was it related to entertainment, for the purposes of the law. The royalties collected do not meet the parameters for defining “payment for admission”.

The court observed that the government would have been justified in imposing such a tax if the club charged this additional fee to each person entering the race course, whether or not they took their mobile phone with them.

Upholding RWITC’s plea, the court ordered the government to repay the amount deposited by RWITC under the said law.

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