Case Note & Summary
The Supreme Court considered whether coin-operated video game machines installed by the appellant were exigible to entertainment tax under the U.P. Entertainment and Betting Act, 1979. The appellant operated video game machines consisting of a machine with a display screen that activated only after a coin was inserted into a slot, whereupon the screen lit up and the game commenced. The appellant's own case was that the operator received nothing in return other than the pleasure derived from exercising or building up skill in operating the machine. The State of Uttar Pradesh had issued a notification dated 24 July 1981 under Sections 3(1) and 4(1) of the Act prescribing rates of admission; since no specific enumeration existed for video games, clause (v) of the notification imposed 30 per cent of the admission fee as entertainment tax. The appellant challenged the levy, contending that such machines did not fall within the definition of entertainment under Section 2(g) of the Act. The High Court had upheld the levy, and the matter reached the Supreme Court in appeal. The Supreme Court noted that the controversy was squarely covered by its earlier decision in Geeta Enterprises & Ors. v. State of U.P. & Ors., which had considered the same provisions and held that the charge for inserting the coin was realised only from those who wanted to operate the video game at the rate of 50 paise for a slot lasting up to 30 seconds, and that this amounted to entertainment within the meaning of Section 2(g) of the Act, making video games exigible to entertainment tax. The Court relied on this precedent and the wide language of the definition of payment for admission under Section 2(1)(iii), (iv) and (v) of the Act. It held that the appellant was liable to pay the entertainment tax and found no illegality in the High Court's view warranting interference. The appeals were dismissed with no order as to costs.
Headnote
A) Taxation - Entertainment Tax - Coin-Operated Video Game as Entertainment - U.P. Entertainment and Betting Act, 1979, Sections 2(a), 2(g), 2(1)(iii), 2(1)(iv), 2(1)(v), 3(1), 4(1) - The appellant had installed video game machines with display screens activated only by inserting a coin, and the State levied 30% entertainment tax on admission fee under notification dated 24.07.1981. The appellant contended that the operator receives only pleasure or skill and no taxable entertainment. The Supreme Court followed Geeta Enterprises & Ors. v. State of U.P. & Ors. and held that realising a charge for inserting a coin to operate the video game amounts to entertainment under Section 2(g) and is exigible to entertainment tax; appeals dismissed with no costs.
Issue of Consideration
Whether a video game machine operated by inserting a coin amounts to 'entertainment' within the meaning of Section 2(g) of the U.P. Entertainment and Betting Act, 1979 and is liable to entertainment tax under the State's notification dated 24.07.1981.
Final Decision
The appeals were dismissed with no order as to costs. The appellant was held liable to pay entertainment tax on coin-operated video game machines under the U.P. Entertainment and Betting Act, 1979 and the notification dated 24.07.1981.
Law Points
- Coin-operated video game activated by inserting a coin amounts to entertainment under Section 2(g) of U.P. Entertainment and Betting Act
- 1979
- charge for admission is realised from those who operate the machine
- such machine is exigible to entertainment tax
- notification dated 24.07.1981 prescribing 30% tax valid.
