Entertainment tax exemption cannot imply a right to retain patron collections; unauthorised amounts remain recoverable by the State.

A cinema exemption scheme was construed strictly: where the Government Order granted total or partial entertainment tax exemption, it did not expressly authorise the cinema owner to retain tax collected from patrons, so no implied right of appropriation arose and estoppel could not operate against the statute. The statutory charging scheme was also applied to hold that entertainment tax collected from cinema goers, but not lawfully retainable, remained recoverable by the State. The decision emphasises that tax collection authority does not include a right to keep the tax unless the exemption scheme clearly says so.

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Issues: (i) Whether, under the Government Order dated 11 August 2000 granting exemption to a newly established cinema hall, the petitioner was entitled to retain entertainment tax collected from cinema goers. (ii) Whether the amount collected as entertainment tax could be recovered from the petitioner under the charging scheme of the U.P. Entertainments and Betting Tax Act, 1979.

Issue (i): Whether, under the Government Order dated 11 August 2000 granting exemption to a newly established cinema hall, the petitioner was entitled to retain entertainment tax collected from cinema goers.

Analysis: The exemption scheme was construed on its plain terms. The earlier Government Orders had provided a grant-in-aid mechanism linked to collection of entertainment tax, but the Government Order dated 11 August 2000 made a conscious departure and granted total or partial exemption without any corresponding provision permitting the cinema owner to retain tax collected from patrons. The Court held that nothing could be added to or subtracted from the scheme and that no implied right to appropriate the tax could be inferred. Inaction of departmental in allowing collection could not confer a right to retain the amount, since there can be no estoppel against statute.

Conclusion: The petitioner had no right to retain the entertainment tax collected from cinema goers.

Issue (ii): Whether the amount collected as entertainment tax could be recovered from the petitioner under the charging scheme of the U.P. Entertainments and Betting Tax Act, 1979.

Analysis: Section 3 of the Act was treated as the charging and collection provision, under which entertainment tax is levied on admission payments and collected by the proprietor for deposit with the Government. The Court held that the statutory authority to collect tax does not include authority to pocket it. Relying on the statutory scheme and the principle of unjust enrichment, the Court held that amounts realised from cinema goers, if not lawfully retainable, were recoverable by the State. The absence of a specific provision authorising retention under the exemption order reinforced this result.

Conclusion: The amount collected from cinema goers was recoverable from the petitioner.

Final Conclusion: The exemption scheme did not permit appropriation of entertainment tax by the cinema owner, and the demand for repayment of the unauthorisedly collected amount was legally sustainable.

Ratio Decidendi: Where a tax exemption scheme does not expressly authorise the beneficiary to retain tax collected from consumers, the beneficiary cannot claim retention by implication, and any such collected tax is recoverable by the State; estoppel cannot operate against the statute.

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