HOTEL RAJDOOT PVT LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) PETITIONER is a private limited company which, inter alia, owns and operates Hotel Rajdoot, Mathura Road, New Delhi. The hotel commenced its operation in the year 1965. Two distinct restaurants were opened in the hotels, namely "el Dorado" and "pussycat Discotheque". The "el Dorado" restaurant provided entertainment to customers by way of music played by live band and daily cabaret shows and Indian dances. The customers were not permitted to dance there. While having food they enjoyed live band played as well as cabaret shows. Petitioner was paying entertainment tax from the entry fee charged from customers of aforesaid restaurant. The other restaurant i. e. "pussycat discotheque" had a different menu and atmosphere as compared to "el Dorado" restaurant. A dance floor was provided there to customers for dancing to the recorded music. Timing of the discotheque was from 9 P. M. to Midnight and on saturdays from 9 P. M. to 2 A. M. Lighting arrangement was kept low. Only couples were provided entry to provide them an element of privacy. Customers were also served with hard and soft drinks with their meals. Couples who visit discotheque were charged with an entry fee of Rs. 100 i. e. @ Rs. 50/- per head. Out of an amount of Rs. 50 per head, Rs. 25/- was charged towards temporary echo is on. membership and balance Rs. 25/- was adjusted towards their bill of food and beverages. On 29. 9. 1981 a communication was sent to the petitioner by respondent no. 2 i. e. Entertainment Tax Officer stating that "discotheque" in the hotel fall within the definition of "entertainment" as defined under Section 2 (Clause 3)of U. P. Entertainment and Betting Tax Act, 1937 as extended to Union Territory of Delhi and petitioner was asked to furnish the necessary information along with complete statement of account of the discotheque so that entertainment tax can be levied. On 12. 2. 1985 another letter was sent by respondent No. 2 wherein petitioner was informed that it was liable to pay the entertainment tax under section 3 (3) of the Act. Petitioner was asked to submit details of accounts so that the levy of entertainment tax can be sorted out. In response to above the petitioner submitted written submissions giving details of activities being carried out in "discotheque" and submitted that no entertainment tax could be levied. Vide communication dated 7. 11. 1986 General manager of petitioner was called on 12. 11. 1986 along with records of "discotheque". Petitioner appeared before respondent No. 2 on the said date and reiterated its stand by again submitting written submissions and submitted that no entertainment tax under Section 3 (3) of the said Act is leviable. As respondent no. 2 was not inclined to agree with the submissions of petitioner, it filed the present petition. Petitioner also challenged the constitutional validity of U. P. Entertainment and Betting Tax Act, 1937 as extended to Union Territory of Delhi (hereinafter referred to as the Act) alleging that same is an illegal restraint on the petitioner"s right to carry on business and, thus, violative of Article 14 and 19 (1) (g) of the Constitution of India. During the pendency of the writ petition, this court vide its order dated 20. 1. 1987 directed respondent No. 2 i. e. Entertainment Tax Officer to decide preliminary point i. e. as to whether the entertainment tax was leviable from the petitioner for the programme in "pussycat Discotheque" and, if so, the quantum of entertainment tax payable by the petitioner. Thereafter, petitioners furnished details as demanded by respondent No. 2 and after hearing the petitioner, order dated 20. 4. 1990 was passed holding that "discotheque" is a place of "entertainment" and the temporary membership fee is payment for admission to an entertainment and, thus, petitioner is liable to pay entertainment tax and computed the same as Rs. 7,10,459/- as from November, 1976 to 19th November, 1988 (till the date of closure ). Thereafter, petitioner amended the petition and challenged the aforesaid order also.

(2.) LEARNED counsel for the petitioner contended that "discotheque" provides food and drinks with provision of dance floor for guests who wished to dance to recorded music, as such "discotheque" does not come within definition of "entertainment" within the meaning of Section 2 (3) of the Act. It is contended that impugned order is based on wrong interpretation of judgment of hon"ble Supreme Court in M/s Geeta Enterprises vs. State of U. P. and Ors. , (1983) 4 SCC 202, and the said case has no applicability to the facts of the present case. It is contended that no entertainment was provided in the discotheque by way of cabaret, live band or Indian dance etc. as such there was no entertainment and no entertainment tax could have been levied. It is further contended that the entry fee charged from guest towards temporary membership was only for restricting the entry of anti-social elements and also on account of space constraints in the discotheque and the same was not charged for "entertainment" or "amusement".

(3.) ON the other hand, counsel for the respondent argued that the present case is covered by the judgment of Supreme Court in Geeta Enterprises v. State of U. P. and Ors. (supra) wherein certain tests are laid down for a show to be an "entertainment" within the meaning of the Act. It is contended that applying echo is on. the judgment of Supreme Court in aforesaid case, Bombay High Court (East India hotel vs. State of Maharashtra) 1985 BLR 90 as well as this Court (East India hotel vs. Union of India in WP (C) 43/1987 and 44/1987 decided on 24. 9. 2004) on a similar issue in respect of a different hotel has held that discotheque where there is a dance floor and recorded music is being played and an entry fee is charged is liable to pay entertainment tax under the Act.