2017 (2) TMI 1230 - HC - VAT and Sales Tax

Court Upholds Excess Payment, Revokes Penalty Imposition for Entertainment Tax Violation

Tvl. Sivam Theatre Rep. by Proprietor Thiru R. Elangovan Versus Assistant Commissioner [CT], (FAC), Mettupalayam Circle Coimbatore, Tahsildar, Mettupalayam, Coimbatore Dist.

The Court upheld the directive for the excess payment of Rs. 8,92,862 but set aside the penalty imposition of Rs. 13,39,293 on the petitioner for ... Make over of the excess collections qua movie tickets - penalty - The inspection, apparently, revealed that the petitioner was collecting the component of entertainment tax as well from the viewers, although, the subject movie had been exempted from tax - Held that: - A perusal of the contents of the said reply would show that the petitioner has not denied the fact that cash, amounting to ₹ 8,92,862/-, purporting to be proceeds of sale of tickets, was found in his premises - A perusal of the reply would show that the petitioner was not able to explain the difference in the two products arrived at by the first respondent. The first product was arrived at by multiplying the number of tickets sold with the rates stipulated qua tickets, albeit, net of taxes, while the second product involved the multiplication of tickets sold by rates, which included the component of tax. The variation in the two products, according to the first respondent, was equivalent to the cash found, on inspection in the premises of the petitioner. This variation, the petitioner was not able to address in the reply. I find no error in the order - the theatre owner cannot illegally collect tax and, then, keep the proceeds with himself. Penalty - Held that: - the provision invoked does not apply, to the instant circumstances - penalty is set aside. Petition allowed - decided partly in favor of petitioner. Issues:1. Excess collections of admission fee and penalty imposed on petitioner.2. Validity of the order dated 01-02-2016 by the first respondent.3. Application of Section 5-G of the Tamil Nadu Entertainments Act, 1939 for penalty imposition.Analysis:1. The writ petition challenged an order directing the petitioner to refund excess collections of admission fees for movie tickets and pay a penalty. The excess amount was found to be Rs. 8,92,862, with an additional penalty of Rs. 13,39,293. The order was based on an inspection revealing the petitioner collected entertainment tax from viewers for a tax-exempt movie. Notices were issued, and the petitioner's replies were considered, leading to the impugned order.2. The impugned order detailed the excess collections based on ticket rates and unissued tickets found during inspection. The petitioner disputed the findings, claiming the seized tickets did not belong to their theater and were properly accounted for in their returns. The first respondent relied on the judgment in K. Viswanathan Vs. State of Madras to justify the directive for excess payment and penalty imposition.3. The petitioner contended that the excess amount was not collected against issued tickets, rendering the directive illegal. They also argued that Section 5-G of the Act, allowing penalty imposition for unlicensed film exhibitions, was inapplicable to their case. The Government Advocates defended the order, stating the petitioner failed to provide a satisfactory explanation for the excess cash found during inspection.4. Upon review, the Court found the petitioner unable to explain the discrepancies in the calculations provided by the first respondent, leading to the conclusion that the excess cash found was indeed from ticket sales. The Court upheld the directive for the excess payment but set aside the penalty imposition, acknowledging that Section 5-G did not apply in this scenario.5. In conclusion, the writ petition was partially allowed, with the penalty being revoked while the directive for excess payment was upheld. The connected miscellaneous petition was closed without any costs being awarded.