Mumbai: The Bombay High Court has upheld the constitutional validity of a 2014 amendment to the Maharashtra Entertainments Duty Act, which allows the State to levy entertainment duty on convenience fees exceeding Rs 10 charged by cinema owners or ticketing platforms for online booking of movie tickets.
A bench of Justices MS Sonak and Jitendra Jain dismissed two petitions filed by the FICCI-Multiplex Association of India and Big Tree Entertainment Pvt. Ltd., ruling that convenience fees are an integral part of online ticket purchases and can be taxed.
Court: Convenience Fee Integral to Online Ticket Purchase
“Making payment of convenience fees is an inextricable part of buying the ticket online for entertainment,” the bench said. “The composite price paid goes a long way in enhancing the entertainment experience, i.e., watching the film or gaining seamless admission to the place of entertainment.”
The 2014 amendment had added a proviso to Section 2(b) of the Act, exempting online booking charges up to Rs 10 per ticket but including any amount above that within the definition of “payment for admission,” making it subject to entertainment duty.
The petitioners argued that convenience fees were for a separate service unrelated to the entertainment itself and were already taxed under the Finance Act, 1994. They claimed the State had no authority under Entry 62 (List II) of the Constitution to levy such a tax, and the amendment violated Articles 14 and 300A, lacked proper assessment machinery, and improperly altered the tax base through a proviso.
Amendment Held Within Legislative Powers
Rejecting these arguments, the Court held that the amendment did not create a new tax but only changed the measure of an existing one. “The character of the levy remains unchanged by the rate imposed or by the measure of tax,” it said.
The Court noted that the definitions in Sections 2(a) and 2(b)(iv) were broad enough to include convenience fees, as they involve payments in connection with entertainment.
It also dismissed concerns about overlap with Union taxation, stating, “Merely because charges for online booking are included in the tax measure does not imply that the State has encroached upon the Union List.”
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Terming the amendment a valid exercise of legislative power, the Court concluded: “The impugned proviso… is held to be intra vires and not unconstitutional or beyond the State’s legislative competence.”
Last month, the HC had upheld the right of multiplexes to charge convenience fee on online ticket bookings.
