LexSTATE OF MADHYA PRADESH AND ORS. versus HOME DECORATORS AND FINANCE (PVT.) LTD. AND ANR.
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A STATE OF MADHYA PRADESH AND ORS. HOME DECORATORS AND ~ANCE (PVT.) LTD. AND ANR. \__ MAY 3, 1990 B [B.C. RAY, A.M. AHMADI AND P.B. SAWANT, JJ.] The (Madhya Pradesh) Entertainments Duty (And Advertisement Tax) Act. 1936. Organisation of entertainment programmes under an ostensible savings scheme-Entry open to members of scheme on payment of non-refundable admission fee of Rs.2 and refundable mem- ;... C bership subscription of Rs. JO-Membership cards and money receipts collected from the persons at the time of entry to programme-No performances staged for members in future-Held issue of cards amounted to sale of tickets and hence liable to entertainment duty. ........ _ ' ) The respondents organised two music programmes by formulat- D ing an ostensible savings scheme under which the entry to the programme was open to persons on becoming members of the scheme by paying an admission fee of Rs.2, non-refundable, and membership subscription of Rs.IO, refundable after IO years. The entry to the programme was strictly on the production of invitation card as well as membership card. Many persons paid the admission fee and the mem- . '( E bership subscription. At the time of giving entry to the programme, the 1 respondents collected the membership forms and money receipts from the persons concerned as a result of which they were left neither with membership form nor with the money-receipts. Although the promise was that such programmes would be repeated for 10 years yet no such performances were arranged. The result was that members of the F public were defrauded of their money and the State Government of its + tax-revenue. The Entertainment Tax Collector checked the receipts of the respondent on both the dates of performances and accordingly issued notices to them demanding the tax and the duty-surcharge thereon G under the Madhya Pradesh Entertainments Duty and Advertisement Tax Act, I936. The respondents challenged the validity of the notices by filing a --\. writ petition in the High Court which allowed the petition and quashed ' the notices by holding that the assessment of tax was arbitrary because H (i) there was no allegation that the invitation cards were sold; and (ii) 1000 - STATE OF M.P. v. HOME DECORATORS 1001 J membership subscription of Rs.10 was not divided by 10 since the A - entertainment tax could be collected only on Re.I per year for the next 10 years. Hence this appeal by the State. Allowing the appeal and setting aside the decision of the High Court .• this Court .• -( HELD: The Scheme was not meaut for promoting music. It was a pure business-preposition meant to collect money and earn profits. and . it was to be used as a device to evade the entertainment duty. The receipts aud the invitation cards were nothing but tickets for the show - I'- and only for one show, and were collected at the door. Therefore. whatever be the description given to the receipts or cards they were liable to the entertainment duty. Tbe impugned notices were properly J.. issued by the appellants. Since the High Court completely missed the crucial point and, therefore, mis-directed itself, it is not possibte to accept its reasoning that Rs. IO collected by the respondents were the membership subscription or that the duty could not have been coilected at a time on Rs.JO. [JOOSE-F; 1003D] .f.. CIVIL APPELLATE JURISDICTION: Civjl Appeal No. 1416 of 1975. From the Judgment and Order dated 2.12.1974 of the Madhya Pradesh High Court in M.P. No. 565 of 1974. Sakesh Kumar and S.K. Agnihotri for the Appellants. S.S. Khanduja, Y.P. Dhingra and B.K. Satija for the Respondents. The Judgment of the Court was delivered by SAW ANT, J. This is an instance of how a resourceful mind can find ingenious method to circumvent the law. The first respondent in this case is the Home Decorators & Finance (P} Ltd. of which the second respondent is the Managing Director. The appellant-Govern- ment collects entertainment tax under the Entertainment Duty and Advertisement Tax Act, 1936 (hereinafter referred to as the 'Act') from the organisers of the entertainment-programmes whenever the entries to such programmes are charged. The entertainment tax is recovered at the rate of 36 per cent of the fee charged. In order to evade this tax, the respondents evolved a stratagem and organised two B c D E F G H A B c D 1002 SUPREME COURT REPORTS [1990] 2 S.C.R. performances
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