KARNATAKA ENTERTAINMENT TAX
As per section 2(e) of KET Act, “Entertainment” means a horse race or live telecast of a horse race to which persons are admitted on payment, Cinematograph show including video shows or exhibition of films or moving pictures which are viewed and heard on the television, Any amusement or recreation or any entertainment provided by a multi system operator or exhibition of performance or pageant or a game or sport whether held indoor or outdoor to which persons are admitted on payment. The game or sport shall mean Cricket, Hockey, Food Ball, Basket Ball, Tennis, Golf, Volley-Ball, Badminton, Kabbadi, Swimming, Athletics, Base-Ball, Weight Lifting, and any other sport or game the Government may notify.
The Rate of Entertainment Tax in case of Horse race is 70% of admission price. The Rate of Entertainment Tax in case of Non regional language films is 30% of admission price. The Additional Tax is Rs. 1 per admission for air conditioned and air cooled theater and Rs. 0.50 for other theaters.
No tax shall be levied under the said sections on cinematograph show of a Kannada, kodava, Konkani, Tulu or Banjara film which is not a dubbed version of a film of other language subject to production of a certificate by the proprietor.
In respect of Cinema theaters paying tax under the composition in the manner specified in section 4-A the show tax are. If tickets does not exceed Rs.8/- then Rs. 40/- per show and if the ticket cost does not exceed Rs.10- 15/- then Rs. 45/- per show and if the ticket price exceeds Rs.15/- then Rs.50/- per show.
Additional Tax on Cinematograph shows: In case of Non regional language films if the payment for admission excluding entertainment tax of a person to the highest class of seat or accommodation. If ticket does not exceed Rs.5/- then Rs. 43/- per show, if ticket cost does not exceed Rs. 15/- then Rs. 55/- per show and if between Rs.15-Rs. 20/- then Rs. 68/- per show and if the ticket price exceeds Rs. 20 then Rs. 118/-.
Collection of service charges: In case of Air conditioned and Air cooled theaters it will be maximum of three rupees on each payment for admission. In case of other theaters but excluding touring talkies it will be maximum of two rupees on each payment for admission.
Special provision in respect of video shows: In case of assesse within City Municipal Corporation it is Rs. 15000/- per month, and within limits of All Municipal councils it is Rs. 7500/- per month and other than above it is 5000/- per month.
The entertainment tax shall be levied in respect of each payment for admission or each admission on a complimentary ticket or pass or invitation and shall be calculated and paid on the number of admissions. If payment for admission excluding the amount of tax is less than fifty rupees then no entertainment tax is payable. Even if complimentary tickets are issued for nil payment, the holder of such a ticket will be deemed to have been admitted on full payment.
If the seat or accommodation which the holder of such complimentary ticked is entitled is different from the classes or seat inside the auditorium or place of entertainment then the holder of such ticket shall be deemed to be entitled to occupy or use the highest class or seat or accommodation as if he has made full payment.
Special provision in respect of certain Entertainment: If the Cable TV operators are providing entertainment through antennae and Cable Television or antennae twenty rupees per month per connection will be charged and if operators provide entertainment through Cable Television exclusively Fifteen Rupees per month per connection. Payment of any contribution or subscription or installation and connection charges or any other charges collected. No tax will be collected if connection is provided less than 15 days and also no tax shall be payable if the proprietor is providing television signals under the Direct to Home Scheme and also no tax shall be payable under this section of the proprietor is receiving television signals from a Multi system operator paying tax under Section 4-G
Composition amount in respect of cable TV operator: Within Bangalore City Municipal Corporation area. Rs.6500 per month, City Municipal Corporations: Rs. 3000 per month and other than above Rs. 1500 per month/600 per month (population size 25000/-).
Tax on amusement: Tax shall be levied and collected at the rate of 5% on each payment for admission to or participation in an amusement. Provided that no tax shall be levied where the payment for admission excluding tax is less than Rs. 50
Tax on recreation Parlors: Tax shall be levied and collected at the rate of 5% on each payment for admission to or participation in an amusement, provided that no tax shall be levied where the payment for admission excluding tax is less than Rs. 50.
Tax on Multi System Operator and Direct to Home service provider: Tax shall be levied and collected at the rate of 10% on the amounts received or receivable by a multi system operator towards distributing satellite television signals, communication network, including production and transmission of programmes and packages and by a direct to home service provider towards providing television signals under the Direct to Home scheme.
Entertainment Tax is payable at the rate of 10% of each payment for admission excluding the amount of tax. If payment for admission to an entertainment is made wholly or partly by means of a lumpsum paid as subscription or contribution or sponsorship fee or advertisement charges or by whatever name called to any institution or any other person, for a season ticket or for the right of admission to a series of entertainments or to any entertainment during a certain period of time, the entertainments tax shall be paid on the lumpsum.
In case of Dish TV India Limited (Formerly Known as M/s ASC Enterprises Limited) Bangalore Vs. Karnataka Appellate Tribunal) 2016 (85) Kar. L.J. 96 (Tri.) (DR)
The State legislature is empowered to levy entertainment tax under section 4-G of Karnataka Entertainment Tax Act on Multi system operator (MSO) and DTH service provider by virtue of Entry 62 of State List. The Appellant is also the DTH service provider and there is levy of tax liability on service tax component which is included in total amount received by DTH provider towards providing television signals under the DTH Scheme. The issue was whether there should be levy of Entertainment Tax on the gross amount which includes the service tax component. It was analyzed that when the gross amount charged by the service provider who has collected the gross amount inclusive of service tax payable, the gross amount is liable for Entertainment tax and not the net amount as Sec 4-G of KET Act uses the expression “on the amounts received or receivable” is liable for entertainment tax at 6%.
The Appellant contends that Sec 3(1) and Sec 4-G contradict each other. It is stated that the enactment has been done by separating MSOs and DTH service providers by two separate charging sections envisaging two different tax rates. Sec 3 levies tax as per payments for admission to entertainments whereas Sec 4-G is upon transmission of signals to customers directly. Therefore rejects the contention of the appellant that section 3(1) and section 4-G contradict each other.
The Authority has charged entertainment tax on gross amount which includes service tax component. The appellant has not complied with mandatory condition of indicating amounts charged exclusive of taxes under The Telecommunication (Broadcasting & Cable) Services Tariff Order and hence, deduction of entertainment tax from gross amount charged not permissible under KET Act & Rules.
The above litigation between central levy and State levy may be condensed as the Entertainment and amusement Tax except when levied by the local bodies will be subsuming into GST as per Draft GST Model law and accordingly Entertainment tax Act will be repealed.
CA Srikanth Acharya and CA Annapurna Kabra