Vengad Resorts & Retreats Limited Vs Union of India (Kerala High Court)
Kerala High Court held that the omission of sub-clause (j) to Section 66D of the Finance Act and, resultantly, imposition of service tax on ‘access to amusement facilities’ is unconstitutional. Accordingly, order set aside and appeal allowed.
Facts- The petitioner in the writ petition – a public limited company – stated to be engaged in running an ‘amusement park’, seeking to challenge the judgment of Single Judge dated 22.03.2016, rejecting the challenge against the demand of ‘service tax’ on the activities carried out by the appellant.
The appellant points out that “admission to entertainment events or access to amusement facilities”, by virtue of its inclusion u/s. 66D(j) of the Finance Act, 1994, under the negative list, was not liable to taxation. However, by the Finance Act, 2015, sub-clause (j) to Section 66D was omitted, on account of which “admission to entertainment events or access to amusement facilities” was no longer in the negative list of services, consequent to which they became a taxable activity under the Finance Act, 1994, with effect from 01.06.2015. The appellant contends that the Finance Act, 1994, is traceable to Entry 97 of List I of the Seventh Schedule to the Constitution of India and insofar as with reference to Entry 62 of List II of the Seventh Schedule to the Constitution of India dealing with ‘taxes on luxuries, including taxes on entertainments, amusements, betting and gambling’, the State Government has enacted the Kerala Local Authorities Entertainments Tax Act, 1961, providing for levy of tax on the price for admission to entertainment in the facilities of the appellant, there cannot be any levy of service tax under the Finance Act, 1994. To put it otherwise, the appellant’s case is that the omission of sub-clause (j) to Section 66D referred to above by the Union, amounts to trenching upon the legislative powers of the State and hence is ultra vires the Constitution of India.
