The Gem and Jewellery Export Promotion Council v. The State of Maharashtra

Mr. Sharan Jagtiani with Mr. Kunal Vajani, Mr. Ankit Virmani and Mr. Ameya Malkan i/by M/s. Wadia Ghandy & Co. for petitioner. Mr. Nitin Dehspande, A.G.P. for respondents. CORAM: DR. D.Y. CHANDRACHUD & R.D. DHANUKA, JJ. DATED : MAY 10, 2012. P.C.

1. The Petitioner is a company incorporated under Section 25 of the Companies Act, 1956 and, in its Memorandum of Association, its main object is to promote the export of gems and jewelery. The Petitioner organizes annual exhibitions providing a platform for interaction between exporters and other jewellers as well as foreign buyers who visit the show. The Petitioner claims that these events are purely held on a business to business basis with exhibitors and visitors being primarily traders or manufacturers of gems and jewelery. According to the WP No.4527 pf 2012 Petitioner, the members of the general public and individual customers are strictly banned from registering and entering the exhibitions. In order to scrutinize visitors, an application form has to be filled in and the entry fee is charged at a relatively high amount to encourage only business visitors. In the past the petitioner had paid entertainment duty under the Bombay Entertainments Duty Act, 1923.

2. The Petitioner had organized an exhibition called IIJS 2011 in August 2011. An NOC was required of the Additional Collector, Mumbai Suburban District. The Petitioner tendered a sum of Rs. 38.91 lakhs to the Additional Collector, the second respondent, under protest, the contention of the petitioner being that IIJS 2011 was not an entertainment within the meaning of section 2(a) of the Bombay Entertainments Duty Act, 1923. The second respondent granted permission to the petitioner on 29 July 2011 subject to the payment of entertainment duty under Section 4(2) of the Act and the exhibition was held in the month of August 2011. The Petitioner paid an aggregate sum of Rs.62.67 lakhs on 9 August 2011. The Petitioner once again sought to organize an exhibition in the month of January 2012 and sought an NOC from the second respondent, stating that the event was not an entertainment within the meaning of section 2(a) of WP No.4527 pf 2012 the Act. The Petitioner was informed by the second respondent that the entertainment tax could not be determined since the petitioner had not furnished details of the event being organized. In a letter dated 7 December 2011, the petitioner stated that it was not seeking an exemption from payment of entertainment duty under section 6(3) of the Act but was seeking an NOC from respondent no. 2 on the basis that no entertainment duty is chargeable in respect of IIJS 2012. A hearing was held by the Entertainment Duty Officer on 9 December 2011. The Petitioner addressed a further communication on 14 December 2011 to the second respondent since no decision was being taken. On 24 December 2011 the concerned police station at Vanrai insisted on an NOC from second respondent. On 3 January, 2012 the petitioner made payment of entertainment duty in the sum of Rs.11.96 lakhs under protest. The second respondent granted an NOC and the event was held in the month of January 2012. The Petitioner sought a refund of an amount of Rs.11.96 lakhs by a letter dated 24 January, 2012. On 17 March 2012 the impugned orders were passed by the second respondent requiring the petitioner to deposit an additional amount of Rs.1.32 Crores as entertainment duty in respect of the event which was held in the year 2011 failing which coercive measures have been threatened. WP No.4527 pf 2012

3. The grievance of the petitioner is that the impugned order has been passed by the second respondent levying a demand of Rs.1.32 Crores without furnishing an opportunity to the petitioner of being heard. According to petitioner, the levy of entertainment duty is not attracted since the events which are conducted by the petitioner do not come within the purview of section 2(a) of the Act.

4. The impugned order dated 17 March 2012 has been passed by the Additional Collector, Mumbai Suburban District without furnishing to the petitioner an opportunity of being heard. Consequently, though an appeal would lie against the impugned order, we are not inclined to relegate the petitioner to the remedy of an appeal since the order has been passed in violation of the principles of natural justice. The rule requiring the exhaustion of alternate remedies is subject to various exceptions, among them being a breach of the principles of natural justice. The Petitioner also has a substantial issue to urge whether the events which it organizes would fall within the meaning of "entertainment" as envisaged in section 2(a) of the Act. Though that expression is defined to include any exhibition, performance, amusement, game or sport to which persons are admitted for payment as also exhibition of cinematographs, the petitioner WP No.4527 pf 2012 contends that the expression exhibition must be construed in the context in which it appears in section 2(a). The case of the petitioner is that the events which are conducted by it are on business to business basis and that these are purely trade shows and not "entertainment" within the meaning of section 2(a). Since, the Additional Collector has passed the impugned order dated 17 March 2012 without hearing the petitioner and without considering the basic issue of jurisdiction, we set aside the impugned order without expressing any opinion on the merits of the rival contentions. The Additional Collector shall pass fresh orders after furnishing to the petitioner an opportunity of being heard. A speaking order indicating reasons shall be passed in accordance with law. The petitioner shall appear before the Additional Collector for directions on 28 May, 2012 so as to facilitate the passing of a direction as to hearing. The Additional Collector shall pass a reasoned order within a period of one month thereafter. The Petition is accordingly disposed of. There shall be no order as to costs. DR. D.Y. CHANDRACHUD.J. R.D. DHANUKA, J.