Entertainment tax under Section 5 applies only after Rule 27 compliance and issuance of the prescribed permit.

Section 5 of the Andhra Pradesh Entertainments Tax Act, 1939 operates only where the proprietor follows rule 27 of the A.P. Entertainment Tax Rules, 1939 by applying in form III, undergoing verification of eligibility, securing determination of security, and obtaining a permit in form IV. A mere statement by the theatre proprietor does not by itself create liability under section 5. In the absence of the prescribed procedure and permit, tax cannot be demanded under section 5, and liability remains under section 4 of the Act.

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Issues: Whether the petitioner could be required to pay entertainment tax under section 5 of the Andhra Pradesh Entertainments Tax Act, 1939 on the basis of its statement dated 14 April 1984 without compliance with rule 27 of the A.P. Entertainment Tax Rules, 1939, or whether it remained liable only under section 4 of the Act.

Analysis: Section 5 permits a theatre proprietor to pay tax in lieu of the tax otherwise payable under section 4, but only subject to the conditions prescribed. Rule 27 requires the proprietor to apply in form III, the Entertainment Tax Officer to verify eligibility and determine security, and thereafter the grant of a permit in form IV. The liability under section 5 arises only after this prescribed procedure is followed and the permit is issued. As no permit in form IV had been granted and the statutory procedure was not followed, the petitioner's statement by itself could not fasten liability under section 5.

Conclusion: The demand of tax under section 5 was not sustainable, and the petitioner remained liable only under section 4. The issue is decided in favour of the assessee.

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