The Supreme Court of India decreed that online ticket booking fees for movies cannot be subjected to the Tamil Nadu Entertainment Tax Act. This decision reaffirms the October 2020 judgment by the Madras High Court, which previously determined that the 1939 Act does not cover digital booking services provided by cinema operators.
The Supreme Court’s decision upheld the earlier ruling which clarified that the Tamil Nadu Entertainment Tax Act, originally enacted in the pre-Internet era, does not apply to the online service charges incurred when purchasing movie tickets via the internet.
Justices B.V. Nagarathna and N. Kotiswar Singh scrutinized the argument posed by the state tax authorities, questioning how a service charge for online booking could be classified under entertainment tax.
The state commercial tax department had contested the ruling, targeting prominent cinema chains including PVR INOX Ltd, AGC Cinemas Pvt Ltd, and Mayajaal Entertainment.
However, the Supreme Court rejected these appeals, agreeing with the High Court’s finding that online booking fees—such as the Rs 30 charged by cinema halls in addition to ticket prices—represent an ancillary service rather than a core element of the taxable entertainment receipt.
The High Court had previously noted that the Tamil Nadu Entertainment Tax Act, a remnant of colonial legislation, was not designed to address modern technological advancements like online booking platforms.
The court observed that the Act, formulated long before the advent of the Internet, was never intended to encompass such digital service charges.
