Kochi: The Kerala High Court on Wednesday directed the Maradu Municipality to refund the entertainment tax levied on unsold tickets of a music concert. Justice Gopinath P stated that entertainment tax could only be charged under Section 3 of the Kerala Local Authorities Entertainment Tax Act, 1961 for sold tickets and not on unsold tickets.
The Court's observation came during consideration of a petition by Jose Thomas Performing Arts Center (JTPAC). The JTPAC had organized a music concert within Maradu Municipality's jurisdiction. The petitioner complied with the Kerala Local Authorities Entertainment Tax Act, 1961 and Kerala Local Authorities Entertainment Tax Rules, 1962, paying an entertainment tax of Rs 1,24,080, Service Cess of Rs 3,102, and a security deposit of Rs 50,000 for 1020 tickets. Each ticket was priced at Rs 600, but only 265 were sold, leaving 755 unsold tickets.
Upon returning the unsold tickets to the Municipality, the petitioner requested a refund of the security deposit and the advance entertainment tax paid on the 755 unsold tickets. While the security deposit was refunded, the Municipality retained the entertainment tax paid on the unsold tickets, later deciding to transfer it to the Chairperson's Distress Relief Fund. The Municipal Council dismissed the petitioner's appeal against this decision, prompting the petitioner to approach the High Court.
The petitioner's Counsel argued that entertainment tax could only be levied on tickets that were sold, citing the Full Bench decision in Municipal Council, Kottayam v K Mahadeva Iyer (1970), and contended that transferring entertainment tax on unsold tickets to the Chairperson's Distress Relief Fund was unconstitutional under Article 265.
In response, the Municipality's Counsel contended that the petitioner had no statutory right to claim a refund on the remitted entertainment tax. The Court clarified that entertainment tax applies only to tickets sold for admission to places of entertainment, and cited precedents allowing refunds on unsold, unused entertainment tax stamps. Additionally, the Court ruled that the Municipality lacked authority to transfer entertainment tax paid on unsold tickets to the Chairperson's Distress Relief Fund.
Consequently, the Court directed the Municipality to refund the entertainment tax on the unsold tickets to the petitioner, deducting the Rs 10,000 already paid to the Chairperson's Distress Relief Fund.
(With LiveLaw inputs.)
