2015 (5) TMI 126 - HC - Indian Laws

Court quashes entertainment tax assessment order, finding lack of proper notice. Remands for fresh decision.

The court ruled in favor of the petitioner, quashing the impugned order on entertainment tax assessment. The court found that the petitioner was not ... Principles of natural justice - show cause notice - reassessment under Section 9(3) of the Gujarat Entertainment Tax Act, 1977 - opportunity of being heard - compounding of offenceReassessment under Section 9(3) of the Gujarat Entertainment Tax Act, 1977 - show cause notice - principles of natural justice - Impugned assessment/reassessment under Section 9(3) was passed without issuing the statutory show cause notice and without affording opportunity of hearing, and therefore cannot be sustained - HELD THAT: - The court found that no notice calling upon the petitioner to show cause as to why an order under Section 9(3) should not be passed was issued or served; the department had issued a different show cause notice relating to prosecution under Section 18. In these circumstances determination of entertainment tax under Section 9(3) was in breach of the provisions of the Act and the principles of natural justice. Consequently the orders under Section 9(3) passed by the Mamlatdar, and confirmed by the revisional/appeal authorities, were quashed and set aside insofar as they relate to assessment/reassessment under Section 9(3). The matter was remanded for de novo consideration in accordance with law and on merits after giving the petitioner an opportunity to be heard. [Paras 4, 5]Orders under Section 9(3) quashed and set aside; matter remanded to the Mamlatdar for fresh decision after giving opportunity to the petitioner.Show cause notice - opportunity of being heard - Order dated 30.3.2013 to be treated as a show cause notice and petitioner permitted to file reply within two weeks, after which Mamlatdar to pass appropriate order under Section 9 on merits - HELD THAT: - For procedural convenience and to ensure compliance with principles of natural justice the court directed that the impugned order dated 30.3.2013 shall be regarded as a show cause notice. The petitioner was allowed two weeks to file a written reply and submissions. Thereafter the Mamlatdar, Entertainment Tax, Surat is directed to pass an appropriate order in accordance with law and on merits under Section 9 after considering the petitioner's submissions and communicate the decision. [Paras 4, 5]Order dated 30.3.2013 treated as show cause notice; petitioner to reply within two weeks; Mamlatdar to decide afresh under Section 9 after hearing.Compounding of offence - Prosecution under Section 18 stands compounded as petitioner has deposited the compounding amount and the matter in respect of prosecution is concluded - HELD THAT: - The petitioner had deposited the amount required for compounding and sought to compound the offence to avoid prosecution. The court recorded that, insofar as prosecution is concerned, the matter ends and the petitioner is permitted to compound the offence upon the deposited amount being treated as full and final for that purpose. This direction was given without prejudice to the petitioner's right to dispute the tax liability on reassessment. [Paras 1, 5]Prosecution permitted to be compounded; matter relating to prosecution concluded.Final Conclusion: The petitions succeed in part: orders under Section 9(3) are quashed and set aside and the matter is remanded to the Mamlatdar for fresh adjudication under Section 9 after treating the order dated 30.3.2013 as a show cause notice and allowing the petitioner two weeks to reply; prosecution under Section 18 is permitted to be compounded and the matter in that regard stands concluded. Issues:Challenging the impugned order passed by the Mamlatdar on assessment/reassessment of entertainment tax under Section 9(3) of the Gujarat Entertainment Tax Act, 1977.Analysis:The petitioner requested to compound the offense instead of facing prosecution under Section 18 by paying double the tax amount. The petitioner had already deposited the required amount with the Mamlatdar. The petitioner agreed not to claim any refund if the matter is remanded for reassessment/assessment. The petitioner contended that the order passed by the Mamlatdar was without providing an opportunity as no show cause notice was issued, breaching natural justice principles and Section 9 of the Act.Analysis Continued:The respondent argued in support of the Mamlatdar's order, stating that the number of seats in the theater exceeded the prescribed limit based on video evidence. The respondent acknowledged the absence of a show cause notice before passing the order under Section 9(3) of the Act. The court noted that the petitioner was not served with a notice to show cause for the order under Section 9(3) but only for launching prosecution under Section 18.Analysis Continued:After hearing both parties, the court found that the impugned order passed by the Mamlatdar and confirmed by the Appellate/Revisional Authority could not be sustained as the petitioner was not given a proper opportunity. The court quashed the orders and remanded the matter to the Mamlatdar for a fresh decision after treating the previous order as a show cause notice. The petitioner was given two weeks to respond, and the Mamlatdar was directed to pass a new order after considering the reply.Analysis Continued:The court ruled in favor of the petitioner in part, quashing the previous orders and remanding the matter for a fresh decision by the Mamlatdar. The petitioner was required to respond to the treated show cause notice within two weeks. The court clarified that the prosecution matter ended as the petitioner was allowed to compound the offense by depositing the required amount. The rule was made absolute to this extent, and direct service was permitted.