Entertainment tax exemption must benefit viewers, not theatre owners, where the ticket price includes the tax component.

Under the Tamil Nadu Entertainment Tax Act, the tax on admission was treated as part of the ticket price, with the theatre acting only as the collecting conduit and the proprietor liable for remittance. Reading Sections 4, 7 and 8(2) together, the Madras HC stated that an exemption granted to promote Tamil language and culture was intended to relieve the viewers' tax burden, not to let theatre owners retain the benefit. The contrary claim that the exemption inured only to proprietors was rejected, and retention of the tax component after exemption was treated as unjust enrichment.

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Issues: Whether the benefit of exemption from entertainment tax under the Act was to be passed on to the viewers or retained by the theatre owners.

Analysis: The levy under Section 4 of the Tamil Nadu Entertainment Tax Act, 1939, is on each admission and the tax is calculated on the gross payment for admission, while Section 7 makes the proprietor liable to pay the tax collected. Section 8(2) empowers the State to grant exemption subject to conditions. Reading these provisions together, the Court held that the tax burden is ultimately borne by the viewers because the ticket price includes the tax component and the theatre acts only as the collecting conduit. The exemption was granted in aid of Tamil language and culture and, in substance, was intended to relieve the viewers' tax burden rather than permit the theatre owners to appropriate the benefit. The plea that the exemption was meant only for the theatre owners was rejected. The Court also held that retention of the tax component after exemption would amount to unjust enrichment.

Conclusion: The exemption benefit had to be passed on to the viewers, and the contrary stand of the respondents was rejected.

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