Levy of Service Tax on Access to Amusement Facilities Is Unconstitutional: Kerala High Court

The Kerala High Court has held that the levy of service tax on access to amusement facilities is unconstitutional, as the activity falls exclusively within the State’s taxing domain.

The Court said that the entire activity falls within the State’s exclusive taxing power under Entry 62 of List II of the Constitution, which covers taxes on entertainments and amusements.

It observed that once the activity is squarely classifiable as entertainment, the Union cannot impose service tax on the same transaction. Such a levy, the Court said, amounts to encroachment upon the State’s legislative field and violates the constitutional scheme governing distribution of taxing powers.

Accordingly, the service tax demand was struck down.

[Amusement Facility Operator v. UOI]