Retrospective entertainment tax enhancement invalidated, and the demand based on the barred backdated rate was quashed.

Retrospective enhancement of entertainment tax under the U.P. Entertainment and Betting Tax Rules, 1981 was held impermissible where earlier binding decisions had already invalidated operation of the notification from 1 April 1990, though the revised rate from 1 April 1991 had been upheld. Because the petitioner was paying tax under the compound payment scheme, the demand notice founded solely on the invalid retrospective rate could not stand. The retrospective operation of the notification was quashed, and the consequential demand notice was also set aside in favour of the assessee.

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Issues: Whether the notification dated 26 March 1991 enhancing the entertainment tax rate could operate retrospectively from 1 April 1990, and whether the consequent demand notice was sustainable.

Analysis: The petitioner had been paying entertainment tax under the compound payment scheme under Rule 24A of the U.P. Entertainment and Betting Tax Rules, 1981. The retrospective enhancement of the rate to 22 per cent from 1 April 1990 had already been held invalid in earlier binding decisions dealing with the same notification, while the revised rate from 1 April 1991 had been upheld. Following that reasoning, the retrospective application of the enhanced rate was not permissible and the demand raised on that basis could not stand.

Conclusion: The retrospective operation of the notification enhancing the tax rate from 1 April 1990 was quashed, and the demand notice based on it was also quashed, in favour of the assessee.

Final Conclusion: The writ petition succeeded, and the tax demand founded on the invalid retrospective enhancement was set aside.

Ratio Decidendi: A tax notification enhancing liability cannot be given retrospective effect where that retrospective operation has been held invalid, and any demand based solely on such invalid retrospectivity must fail.

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