The Bombay High Court has upheld the constitutional validity of the seventh proviso inserted into Section 2(b) of the Maharashtra Entertainments Duty Act, bringing within its scope the additional amount charged by cinema proprietors for online booking of movie tickets. The bench, comprising Justices M.S. Sonak and Jitendra Jain, emphasized that online ticket booking is not to be distinguished from offline ticket booking and is squarely taxable under Entry 62, List II of the Constitution.
The amendment exempted convenience or booking charges up to ₹10 per ticket, provided monthly data is furnished, but declared any amount beyond ₹10 as “payment for admission,” making it subject to entertainment duty. The petitioners challenged the amendment, arguing that online booking constitutes a separate business activity, unrelated to entertainment, and hence beyond the state’s taxing power. They also contended that the amendment amounted to colourable legislation by altering the tax base through a proviso. The court dismissed these arguments, holding that the amendment merely adjusted the measure of an existing levy, without creating a new tax. It clarified that Sections 2(a) and 2(b)(iv) of the Act are broad enough to include convenience fees as payments linked to entertainment.
Rejecting the distinction between online and offline booking, the bench noted that online booking charges are directly connected with the act of buying a ticket for entertainment. Without paying such fees, a patron cannot access the theatre. The court deemed the attempt to segregate entertainment and non-entertainment facets as superfluous. It also applied the “pith and substance” doctrine, affirming the state’s competence under Entry 62, List II to legislate on entertainment taxation.
Moreover, the court discredited the claim of encroachment upon Union powers, observing that inclusion of charges for online booking in the tax measure does not infringe on central taxation authority. It likewise held that the amendment did not constitute a colourable exercise of power, even though the stated purpose was to curb excessive convenience fees.
In earlier proceedings, the court had also quashed two Government Orders issued in 2013 and 2014 by Maharashtra, which prohibited cinema owners from levying convenience fees for online tickets. Those orders were struck down as infringing upon the fundamental right under Article 19(1)(g) to practice business, noting that a state cannot unreasonably restrict a lawful business activity without legislative basis.
In sum, the High Court affirmed that convenience fees form part of the overall cost of accessing entertainment and can be legitimately taxed under the Maharashtra Entertainments Duty Act when they exceed ₹10 per ticket. The writ petitions were consequently dismissed.
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