MUMBAI: The Bombay High Court on Thursday upheld the Maharashtra government’s right to levy entertainment tax on convenience fees charged during online ticket bookings, whether or not the platform is owned by multiplexes.
The ruling was delivered by a division bench comprising Justice MS Sonak and Justice Jitendra Jain, while hearing petitions filed by the FICCI-Multiplex Association of India and Big Tree Entertainment Pvt Ltd. The petitioners had challenged the state’s authority to levy entertainment tax on convenience fees under the Maharashtra Entertainments Duty (Amendment) Act, 2014.
The petitioners had challenged the 2014 amendment, which enabled the state to impose a tax on convenience fees collected when tickets are booked online. They argued that entertainment tax should only apply to the base ticket price, and that convenience fees – being a separate charge – should not be added to the ticket value for the purpose of taxation. They also contended that such fees are already taxed under the Finance Act, 1994, a central law, and therefore fall outside the purview of the state’s taxing authority.
“What is sought to be taxed is the form of entertainment and admission thereto, which features a movie/film, and there is no dispute that the members of the petitioner No 1 (Multiplex Association) are engaged in the business of featuring movies/films. This is the subject matter of the tax or duty,” the court observed in its ruling.
The bench further reasoned that access to a movie requires a ticket, and when such tickets are booked online, the associated convenience fees become a precondition to entry. “A person cannot buy an online ticket without paying the convenience fees, and consequently, he would not be entitled to entertainment, nor would the theatre owner permit such an individual to enter,” the judges stated. Hence, they concluded that the payment of convenience fees is inherently linked to the right of entry into the entertainment venue.
The court also drew a distinction between the Finance Act, 1994, and the Maharashtra Entertainments Duty Act, 2014, noting that while the former imposes a service tax on activities, the latter levies duty on admission to entertainment. “For calculating the duty, one of the measures of tax to be included is the amount charged as convenience fees,” the court said, thereby upholding the validity of the state legislation.