1996 (2) TMI 523 - AT - VAT and Sales Tax

Tribunal decision: petitioner to pay tax within 15 days; administrative schemes can't override statutory exemptions

The Tribunal partially allowed the petition, directing the petitioner to pay Rs. 2,529 for additional entertainment tax and advertisement tax within 15 ... - Issues Involved:1. Liability to pay entertainment tax under a composition order when an exemption is granted.2. Applicability of sections 4, 6, and 7 of the Rajasthan Entertainments and Advertisements Tax Act, 1957.3. Scope of the composition scheme under section 6(3)(a).4. Exemption from additional entertainment tax and advertisement tax.Detailed Analysis:1. Liability to pay entertainment tax under a composition order when an exemption is granted:The petitioner, a partnership firm operating a cinema hall, sought exemption from entertainment tax for exhibiting a tax-free Rajasthani film. The State Government granted this exemption. However, the Commercial Taxes Officer insisted on payment of entertainment tax as per the composition order. The Tribunal found that the composition order is effective only where tax is payable under the Act. Since the State Government granted an exemption, no entertainment tax was payable during the exemption period. The Tribunal emphasized that the composition order, which is a contract, must align with the Act's provisions, particularly section 7(2), which allows for exemptions.2. Applicability of sections 4, 6, and 7 of the Rajasthan Entertainments and Advertisements Tax Act, 1957:Section 4 is the charging section for entertainment tax. Section 6 provides two modes of tax payment: collecting tax on each ticket or paying a fixed sum under a composition order. Section 7 lists exemptions from entertainment tax. The Tribunal noted that sections 4 and 6 must be read harmoniously with section 7. The exemption granted under section 7(2) meant that no entertainment tax was payable during the exemption period, overriding the composition order's terms.3. Scope of the composition scheme under section 6(3)(a):The composition scheme allows for a fixed sum payment of entertainment tax to simplify tax collection. However, the Tribunal clarified that this scheme applies only when tax is payable. Since the State Government granted an exemption under section 7(2), the composition scheme did not apply during the exemption period. The Tribunal highlighted that the composition scheme is an administrative tool and cannot override statutory provisions.4. Exemption from additional entertainment tax and advertisement tax:The exemption notification did not mention sections 4A and 6A, which levy advertisement tax and additional entertainment tax, respectively. Therefore, the petitioner was still liable to pay these taxes. The Tribunal directed the petitioner to pay Rs. 2,529 for additional entertainment tax and advertisement tax for the exemption period.Conclusion:The Tribunal allowed the petition in part, directing the petitioner to pay Rs. 2,529 for additional entertainment tax and advertisement tax within 15 days, with interest for late payment. The rest of the demand was canceled. The Tribunal emphasized that the Act's provisions, including exemptions under section 7, must be harmonized and that administrative schemes like the composition order cannot override statutory exemptions. The petition was partly allowed, with no order as to costs.