Introduction:
In a significant ruling, the Indore Bench of the Madhya Pradesh High Court, in T.V. Today Network Limited Through Its Authorized Representative vs. The State of Madhya Pradesh and Others (WP No. 9491 of 2025), directed the Indore Municipal Corporation to release musical instruments and sound systems seized from a concert featuring Singer Honey Singh due to alleged non-payment of entertainment tax. The case arose when the Indore Municipal Corporation issued a demand notice requiring the petitioner, T.V. Today Network Limited, to deposit ₹50 lakh as entertainment tax. The corporation relied on GST portal data reflecting ₹32.8 crore for all ten events in different cities, while the petitioner contended that the total ticket sales in Indore amounted to only ₹78.47 lakh, with ₹7.84 lakh already paid as entertainment tax. The Court, considering the urgency of the situation, allowed the release of equipment based on an undertaking that the petitioner would fulfill its tax liabilities once finalized. Additionally, it ordered each petitioner in related writ petitions to deposit ₹5 lakh within three working days. The Court scheduled the next hearing for April 25, 2025, to resolve the tax dispute comprehensively.
Arguments of Both Sides:
The petitioner’s counsel, Advocates Jagdish Baheti, Prabuddha Singh, and Mohit Matta, argued that the Indore Municipal Corporation’s actions were arbitrary and based on incorrect financial assumptions. They contended that their client was sponsoring Honey Singh’s pan-India musical event, with upcoming concerts in Pune, Mumbai, Delhi, Lucknow, Ahmedabad, Bengaluru, Chandigarh, Jaipur, and Kolkata. The abrupt seizure of musical instruments, sound systems, and related equipment belonging to Sound.com Pvt. Ltd., an associate of the petitioner, posed a severe financial risk and could lead to event cancellations and potential law-and-order disturbances. The counsel emphasized that the petitioner had entered into an agreement with Ojas Entertainment, which, in turn, had contracted Sound.com Pvt. Ltd. The seized equipment was crucial for subsequent concerts, and its continued confiscation would result in heavy losses and reputational damage to all parties involved.
Additionally, the petitioners challenged the demand notice, arguing that the ₹50 lakh tax estimate was excessive. They stated that the municipal authorities had merely extracted figures from the GST portal, which showed ₹32.8 crore for all ten events rather than considering the Indore event separately. The actual ticket sales in Indore amounted to ₹78.47 lakh, with ₹7.84 lakh already deposited as entertainment tax. They also argued that their chartered accountant was in the process of preparing an audit report to determine the precise tax liability. The petitioners maintained that any further tax liabilities would be duly settled once the audit was completed and the exact figures were determined.
On the other hand, the respondent, represented by Advocate Shashank Shrivastava, defended the Indore Municipal Corporation’s actions, asserting that the seizure was a legitimate measure to ensure compliance with tax regulations. The municipal corporation argued that entertainment tax is a statutory obligation, and event organizers must comply with the prescribed rules before hosting large-scale concerts. The respondents contended that the petitioner’s financial statements were unclear and that the corporation had the authority to estimate the tax liability based on available financial data. They further argued that the petitioner’s voluntary payment of ₹7.84 lakh did not absolve it of the total tax liability, which was yet to be determined. Additionally, the respondents highlighted that municipal authorities had the right to take preventive actions, including asset seizure, to recover pending dues and ensure tax compliance.
Court’s Judgment:
After hearing both sides, the single-judge bench of Justice Subodh Abhyankar ruled in favor of the petitioner concerning the immediate release of musical instruments and sound equipment. The Court recognized the commercial implications of withholding the equipment, especially given the ongoing concert series spanning multiple cities. Justice Abhyankar noted that the Indore Municipal Corporation’s reliance on GST data covering all ten events was misleading, as it failed to differentiate between the Indore event and concerts in other cities. The Court held that taxation must be assessed based on actual ticket sales within the specific jurisdiction rather than an aggregate revenue estimate from multiple locations.
The Court also found merit in the petitioner’s argument that the ongoing audit process would provide a precise tax liability assessment. It agreed that any further liabilities should be determined only after the audit report was submitted and reviewed. In light of these considerations, the Court directed the immediate release of the seized musical instruments and equipment, conditional upon an undertaking from the authorized officer of the petitioner confirming that all tax liabilities would be fulfilled once finalized. This ensured that the concerts in Pune and subsequent cities could proceed without disruption.
Furthermore, to balance the interests of the Indore Municipal Corporation, the Court directed each of the petitioners in WP No. 9491/2025 and WP No. 9488/2025 (Sound.Com Pvt. Ltd. Through Authorised Signatory Binda Prasad vs. The State Of Madhya Pradesh) to deposit ₹5 lakh each with the municipal corporation within three working days. The Court acknowledged the corporation’s responsibility to ensure tax compliance but held that arbitrary seizures based on incomplete data could not be justified. The next hearing was scheduled for April 25, 2025, during which the petitioner’s tax obligations would be further examined based on the final audit report.
This ruling underscores the importance of fair and transparent tax assessments in large-scale commercial events. It highlights the necessity of distinguishing between voluntary compliance and coercive enforcement while ensuring that administrative actions do not unfairly disrupt business operations. By ordering the release of the seized equipment, the Court prioritized commercial continuity while safeguarding the state’s right to collect taxes through lawful means.