The tax was levied on internet service provided by cinema owner was based on the 1939 Act. Madras HC held that entertainment tax cannot be levied under this Act.
Justic Nagarathna asked, "For what purpose are these customer paying extra Rs. 30 while purchasing the online ticket? This is the simple question."
The counsel replied that they are getting ticket at the luxury of their home so they have to pay this extra money in addition to Rs 120 for the movie ticket.
To this Justice Nagarathna replied, "so instead of going directly to the theatre where I can get the ticket directly, I am buying it from my home, so that is the charge you are taking for your service. How will that come under entertainment tax? I am getting a ticket through luxury instead of going to talkies or theatres. Will this be under entertainment tax?"
She further pointed out that one person who is buying a ticket from the theatre is only paying the price of ticket i.e., Rs 120. "But when he is buying the same from home using digital means, you are charging money as part of the service that is being given. How can this charge vary from person to person who are buying the same ticket?"
Justice Singh also pointed out that the extra charge is not for entertainment but it is for the convenience of the people who can book the ticket online without having to travel all the way to the cinema theatres.
"Petrol/Diesel saved, parking fees etc. This is the convenience charge that is being taken. How can it be under entertainment tax?" Justice SIng said.
The Supreme Court junked the petition and held that entertainment tax cannot be levied on customers for booking tickets online.