High Court quashes orders on entertainment tax exemption for Kannada film "Krishna" due to lack of natural justice

The High Court set aside the communication, assessment order, and demand notice regarding entertainment tax exemption for a Kannada film "Krishna." The Court found that the orders were issued without following principles of natural justice, as the petitioner was not given an opportunity to be heard. The matter was remanded to the relevant authorities for reconsideration in compliance with the law, emphasizing the importance of due process.

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Issues:
Challenge to communication and assessment order regarding entertainment tax exemption for a Kannada film "Krishna."

Analysis:
The petitioner sought to quash the communication dated January 30, 2008, the final assessment order dated February 29, 2008, and the demand notice dated July 11, 2008 concerning entertainment tax exemption for the film "Krishna." The petitioner argued that they should not be liable to pay entertainment tax from the date of certification for 100% tax exemption until the communication of the order of cancellation or withdrawal of the exemption certificate. The third respondent initially granted 100% exemption on October 5, 2007, but later suspended it based on a complaint. Subsequently, the second respondent directed to collect the tax for the film, which was screened during the exemption period. The fourth respondent passed the assessment order and demand notice without waiting for the decision on the complaint against the producer, leading to the petitioner's grievance and the writ petition.

The High Court observed that the impugned order of January 30, 2008, was based on the communication suspending the tax exemption for the film "Krishna." Despite a request not to collect taxes until the criminal case was decided, the assessment order and demand notice were issued without affording the petitioner an opportunity to be heard. The Court held that the orders were in violation of the principles of natural justice. Therefore, without delving into the case's merits, the Court set aside the communication, assessment order, and demand notice, remanding the matter to the relevant respondents to make a decision in compliance with the law.

In conclusion, the Court disposed of the writ petition by setting aside the impugned communication, assessment order, and demand notice. The matter was remitted back to the concerned respondents to reconsider and make an appropriate decision after receiving communication orders from the competent authority, emphasizing the need to proceed in accordance with the law.

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