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Issues: (i) Whether a composition order under section 6(3)(a) of the Rajasthan Entertainments and Advertisements Tax Act, 1957 continued to require payment of entertainment tax during the period for which the State had granted exemption under section 7(2) of the Act; and (ii) whether the exemption from entertainment tax also covered additional entertainment tax and advertisement tax.
Issue (i): Whether a composition order under section 6(3)(a) of the Rajasthan Entertainments and Advertisements Tax Act, 1957 continued to require payment of entertainment tax during the period for which the State had granted exemption under section 7(2) of the Act.
Analysis: Section 6 provides two modes of payment of entertainment tax, including composition of tax by a fixed sum under sub-section (3), but that scheme operates only in respect of tax otherwise payable under the Act. Section 7(2) separately empowers the State Government to reduce or remit entertainment tax where it is chargeable, and once such exemption is granted, no entertainment tax remains payable for that period. The composition scheme is only an administrative arrangement under the Act and cannot override the statutory effect of an exemption under section 7(2). The provisions of sections 4, 6 and 7 have to be read harmoniously, and section 7(2) prevails where no tax is payable because of an exemption notification.
Conclusion: The demand for entertainment tax under the composition order for the exempted period was not enforceable and the assessee succeeded on this issue.
Issue (ii): Whether the exemption from entertainment tax also covered additional entertainment tax and advertisement tax.
Analysis: The exemption notification granted relief only in respect of entertainment tax leviable under sections 4 and 6 of the Act. It did not refer to the levy of additional entertainment tax under section 6A or advertisement tax under section 4A. Since the exemption was confined to entertainment tax alone, the statutory liability to pay the other two levies remained unaffected.
Conclusion: The assessee was liable to pay additional entertainment tax and advertisement tax.
Final Conclusion: The petition succeeded only to the extent that entertainment tax could not be recovered for the exempted period, but the separate levies of additional entertainment tax and advertisement tax were upheld.
Ratio Decidendi: A statutory composition arrangement for tax payment cannot be enforced for a period during which the competent authority has granted a valid exemption from the underlying tax, but such exemption does not extend to distinct levies not covered by the exemption order.
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