2009 (7) TMI 755 - SC - VAT and Sales Tax

Court quashes demand for entertainment duty, upholds exemption benefit for multiplex owners.

State of Maharashtra and others Versus Swanstone Multiplex Cinema (P) Ltd.

State of Maharashtra and others Versus Swanstone Multiplex Cinema (P) Ltd. - [2009] 24 VST 552 (SC), 2009 AIR 2750, 2009 (11) SCR 378, 2009 (8) SCC 235 Issues Involved:1. Legality of the impugned notices and orders demanding entertainment duty.2. Nature of the exemption granted under the Bombay Entertainments Duty Act, 1923.3. Calculation of entertainment duty payable by multiplex theatre owners.4. Application of the doctrine of unjust enrichment.Detailed Analysis:1. Legality of the Impugned Notices and Orders:The petitioner sought to quash the impugned notices and orders demanding entertainment duty, arguing that they were entitled to an exemption under the Bombay Entertainments Duty Act, 1923 (BED Act). The court ruled that the impugned notices and orders (exhibits A-1, A-2, and H) were invalid as they demanded full entertainment duty without considering the exemption granted to the petitioner.2. Nature of the Exemption Granted:The petitioner contended that the exemption was a 'retention benefit,' allowing them to collect entertainment duty from patrons but not pay it to the State during the exemption period. The court agreed, stating that the exemption was intended to support the capital-intensive nature of multiplex theatres and was not meant to benefit the patrons. The exemption allowed multiplex owners to retain the collected duty for the first three years and pay only 25% of the duty for the next two years.3. Calculation of Entertainment Duty:The court examined the method of calculating entertainment duty under the BED Act. The petitioner argued that the duty should be calculated on the net ticket price, and they were liable to pay only 25% of the normal duty during the fourth and fifth years. The court upheld this method, stating that the petitioner correctly calculated and paid the duty as per the provisions of the BED Act and the Government Resolution (GR).4. Application of the Doctrine of Unjust Enrichment:The State argued that the petitioner unjustly enriched themselves by collecting full entertainment duty from patrons but paying only a portion to the State. The court rejected this argument, stating that the petitioner was entitled to retain the collected duty during the exemption period as per the BED Act. The court emphasized that the exemption was a legislative incentive for multiplex owners and not a case of unjust enrichment.Conclusion:The court ruled in favor of the petitioner, quashing the impugned notices and orders demanding full entertainment duty. The court affirmed that the exemption granted under the BED Act was a retention benefit for multiplex owners, allowing them to collect and retain the duty during the exemption period. The calculation of entertainment duty by the petitioner was deemed correct, and the State was not entitled to recover more than the prescribed duty during the exemption period. The appeal was allowed, and the petitioner was not held liable for unjust enrichment.