High Court · 2007

IN THE HIGH COURT OF JUDICATURE AT MADRASDated : 19.07.2007Coram :THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIANandTHE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJAWrit Appeal No.1801 of 20001. State of Tamil Nadu, rep.by Secretary to Government Commercial Taxes and Religious Endowment Department, Fort St.George Madras – 92.The Assistant CommissionerCommercial Taxes)Vellore Commercial Taxes DistrictVellore, North Arcot District.3.The Entertainment Tax Officer Vellore (South) Vellore, Nort Arcot District. Appellantsv.Apsara TheatreVelloreNorth Arcot Districtrep.by its Licensee Respondent Writ Appeal filed under clause 15 of the Letters Patent against theorder dated 15.04.1999 made in writ petition No.17151 of 1990. Thispetition presented to this Court under Article 226 of constitution ofIndia to issue a writ of certiorari calling for the records of the 2ndrespondent made in AP.No.14/88-89 dated 21.9.89 and the quash the same.For Appellants:Mr.Haza NazirudeenSpl.G.P.(Taxes)For Respondent:No Appearance https://hcservices.ecourts.gov.in/hcservices/ JUDGMENT(Judgment of the Court was delivered byK.RAVIRAJA PANDIAN, J.)The writ appeal is filed against the order dated 15.4.1999 made inW.P.No.17151 of 1990, wherein the respondent herein – the ApsaraTheatre, Vellore sought for the relief of issuance of writ of certioraricalling for the records of the Assistant Commissioner, CommercialTaxes, Vellore, the second appellant herein, dated 21.9.1989 made inA.P.No.14/88-89 and quash the same. 2. The precise facts of the case were that the respondent was aproprietor of the Cinema theatre and was paying entertainment tax as perthe Tamil Nadu Entertainments Tax Act, 1939. Under Section 4(1) of theAct, the respondent was charging Rs.2.90ps as the rate for admission toFirst Class. On the respondent making an application for revision ofrate of admission, the licensing authority -District Collector, NorthArcot District permitted the petitioner to increase the rate ofadmission to Rs.3/- by his proceedings dated 18.1.1985. Accordingly, theEntertainment Tax Officer – appellant No.3 herein fixed the rate ofentertainment tax and surcharge on entertainment tax at the rate ofRs.3.00 as follows:Net price for admission : Rs.1.56Entertainment tax : Rs.0.52Surcharge on entertainment tax: Rs.0.52Additional surcharge on entertainment tax: Rs.0.40 ---------- Total : Rs.3.00 ----------Subsequently, the Entertainment Tax Officer – appellant No.3 hereinon the view that the net price of admission was more than Rs.1.50, theentertainment tax should be fixed at 2/5th of the net amount, calculatedthe rate of tax, surcharge at the rate of 2/5th of the net amount asunder:Net price for admission : Rs.1.56Entertainment tax : Rs.0.62Surcharge on entertainment tax: Rs.0.62Additional surcharge on entertainment tax: Rs.0.40 In view of the revision of the tax component, the Entertainment TaxOfficer made a re-assessment under Section 7B(2) of the EntertainmentsTax Act for the period from 12.4.1985 to 7.10.1085 and demanded a sum ofRs.8750.80 towards entertainment tax and a likesum towards surcharge onentertainment tax by his order dated 28.12.1988. Against the said order,the respondent filed an appeal in A.P.No.14/88-89 before the AssistantCommissioner of Commercial Taxes, Vellore, the second appellant herein,who by his order dated 21.9.1989 dismissed the appeal on the groundthat it was for the respondent/proprietor to collect the correct amountof entertainment tax and surcharge on entertainment tax as per theprovisions of Entertainments Tax Act. Since the respondent failed to https://hcservices.ecourts.gov.in/hcservices/ collect the correct amount of tax, as per the statutory provision, therespondent has to make good the short levy from out of his own funds.The respondent challenged the said order of the Assistant Commissionerdated 21.9.1989 made in A.P.No.14/88-89 dated 21.9.1989 by filing writpetition. 3. Learned single Judge after taking note of Section 4, as it wasobtaining during the relevant period of time, has rendered a finding tothe effect that the said Section was not happily worded. The operationof the proviso has given innumerable difficulties and the instant casewas one of the typical illustration for the difficulty that has arisen.The learned Judge after taking into consideration of the entireprovisions of Section 4 along with the proviso, has found that theoriginal rates approved by the Entertainments Tax Officer were correctand the revision made by the Entertainment Tax Officer subsequently,which was affirmed by the Assistant Commissioner of Commercial Taxes,could not be regarded as correct. The correctness of the said order isnow canvassed in this writ appeal.4. The learned Government Pleader appearing for the revenue hassubmitted that on a correct reading of the statutory provision, Section4(1), particularly, clause (iii) of sub-section (1), which provides thatif the payment inclusive of the amount of tax is more than Rs.1.50ps,the entertainment tax payable would be 2/5th of the amount and the 2/5thof the amount represents only Rs.0.62ps and hence the revision is inaccordance with law.5. We are not able to countenance the argument of the learnedGovernment Pleader. Section 4(1) of the Entertainments Tax Act, whichwas obtaining during the relevant period is as follows:"4. Tax on payment of admission to entertainments. - (i) Oneach payment for admission to any entertainment, there shall belevied and paid to the State Government (except as otherwiseexpressly provided in this Act), a tax (hereinafter referred to asthe entertainment tax) calculated at the following rates, namely:- Where such payment (inclusive of the amountof the tax) - (i)is not more than thirtypaise-one-fourth of such payment(ii)is more than thirty paise -one-third of such but is not more than one payment. rupees and fifty paise (iii)is more than one rupee-Two-fifths of suchand fifty paisepayment.Provided that in the case of cinematograph exhibitions, thetax shall be calculated at the rates specified above on eachpayment for admission, after excluding such payment, theamount of the tax." https://hcservices.ecourts.gov.in/hcservices/

6. From a reading of the entire provision Section 4 with theproviso, it could be discernible that for the purpose of Cinematographexhibition, the tax should be calculated at the rate specified in themain provision after excluding from such payment the amount of tax. Fromwhich, it is clear that where the net payment exceeds Rs.1.50 (in thiscase, Rs.1.56), the tax shall be calculated first on the net sum ofRs.1.50 at 1/3rd of said sum. Thereafter, on the excess sum over andabove Rs.1.50, the tax has to be calculated at 2/5th. If the aboveworking method is adopted for the admission rate of Rs.1.50, and the taxis charged at 1/3rd, the tax amount would be Rs.0.50ps. On the balanceof Rs.0.06 paise, which is over and above Rs.1.50, the tax would be0.02.4 paise which could be rounded off to Rs.0.02 paise. When addedwith tax amount of Rs.0.50 on Rs.1.50, the total entertainment tax wouldbe 0.52, the equal amount of Rs.0.52 paise surcharge and additionalsurcharge 0.40 is added, the total amount fixed for admission wouldcome to Rs.3.00. 7. If the argument of the learned Government Pleader that theamount is more than Rs.1.50ps, the tax should be 2/5th of such amount,is taken in an abstract manner and calculated at Rs.0.62ps., the total,which include admission rate, entertainment tax, surcharge onentertainment tax, additional surcharge would come to Rs.3.20ps.,whichis not the price fixed by the licensing authority. Hence, the onlyplausible method of calculation is the method by which the EntertainmentTax Officer calculated the amount by his proceedings dated 8.1.1985. 8. Further, it is contended by the respondent that as per theprovisions of the Entertainment Tax Act and Rules, the collection of taxhas to be approved by the authorities, which approval is authenticatedby affixing the seal. Hence, the collection made by the respondent isonly as per the fixation of the tax by the Entertainment Tax Officer.The respondent should not be faulted for the mistake, if any, committedby the Department. Even otherwise, it is the contention of therespondent that the tax, surcharge and additional surcharge fixed bythe Entertainment Tax Officer prior to revision was correct and is inaccordance with the statutory provision. We also approve the contentionfor the reasons stated supra.9. The learned Government Pleader on instructions submitted thatthe instant case is the only case of this nature. The increase of rateat Rs.0.10 and fixation of rate at Rs.1.56 is the cause for suchconfusion. 10. From the above and also taking note of the fact that theSection has been amended from 1989 onwards, the only way ofinterpretation which gives life to the provision is as stated above andas done by the learned single Judge. The interpretation sought by therevenue is not only against the provision but defeat the workability ofthe very provision. https://hcservices.ecourts.gov.in/hcservices/

14. The learned Judge in paragraph No.4 of the order elaboratelydiscussed the fallacy or the incongruity of the revised calculationmade by the Entertainment Tax Officer by demonstrating the workingmethod of entertainment tax on the rate of admission prevailing prior tothe raise by Rs.0.10. Thus, the subsequent revision is not in accordancewith the statutory provisions. Hence, the order of the Entertainment TaxOfficer revising the rate and demanding a sum of Rs.8750.80ps towardsthe entertainment tax and equal amount of Rs.8,750.80ps towardssurcharge on entertainment tax and the order of the Appellate Authorityin A.P.No.14/88-89 dated 21.9.1989 confirming the order of assessmentcannot be legally sustainable and the order of the learned single Judgeis in conformity with the statutory provision, and based on moreplausible interpretation, which requires no interference in this appealand the appeal is therefore dismissed. However, there is no order as tocosts. uskSd/-Asst.Registrar/true copy/ Sub Asst.RegistrarTo1.Secretary to Government Commercial Taxes and Religious Endowment Department, State of Tamil Nadu Fort St.George, Madras – 92.The Assistant CommissionerCommercial Taxes)Vellore Commercial Taxes DistrictVellore, North Arcot District.3.The Entertainment Tax Officer Vellore (South) Vellore, Nort Arcot District+1 cc to Speicial Government Pleader Sr.No.44053.AKR(CO)dcp/27.7.07WA.No.1801 of 2000