Entertainment tax exemption for multiplexes prevailed where licence conditions showed nil tax and the State failed to supersede the earlier notification.

An exemption notification for newly built cinema halls, extended by a later notification, was treated as operative where the licensing authority issued licences reflecting nil entertainment tax and the State did not revoke or modify those conditions under the Act. The Court noted that the Commercial Taxes Department and the licensing authority, both State limbs, could not adopt contradictory positions. Because the later multiplex-specific notifications did not expressly supersede the earlier exemption and the assessees had not collected tax under the licence regime, the Revenue could not recover entertainment tax for the covered period. The Revenue's revisions failed and the assessees obtained relief on exemption and liability.

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Issues: Whether multiplex cinema halls were entitled to entertainment tax exemption under the notification dated 15 March 1996 as extended by the notification dated 30 March 2000, and whether the Revenue could levy tax contrary to the licences issued by the licensing authority and the later notification regime.

Analysis: The exemption under section 7(2) of the Rajasthan Entertainments and Advertisements Tax Act, 1957 was first granted to newly built cinema halls subject to commencement of commercial exhibition by the prescribed date, which was later extended. The Court found that, up to the issue of the later multiplex-specific notification, the earlier general notification had been acted upon by both the assessees and the licensing authority, and the licences themselves reflected nil entertainment tax. The Court further held that the Commercial Taxes Department and the licensing authority, both being limbs of the State, could not take contradictory positions, particularly when no steps were taken to modify or revoke the licence conditions under section 11. The later notifications did not expressly supersede the earlier exemption notification, and the assessees had not collected the tax because the licence conditions did not permit it. In this setting, the Revenue could not insist on recovery of tax for the period covered by the operative exemption and the licence conditions.

Conclusion: The assessees were entitled to relief on the common issue of exemption and liability for the relevant period, and the Revenue's challenge failed on that question.

Final Conclusion: The common reasoning led to dismissal of the Revenue's revisions and allowance of the assessees' revisions to the extent that the tax demand could not be sustained contrary to the applicable exemption and licence conditions.

Ratio Decidendi: Where an exemption notification is acted upon by the licensing authority and the State does not supersede it or alter the licence conditions, the Revenue cannot levy and recover entertainment tax from the assessee for the covered period, especially when the tax was not collected under the licence regime.

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