TaxTMI 
TaxTMI 
2007 (9) TMI 395
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....e necessary application in form III as per rule 27 of the Andhra Pradesh Entertainments Tax Rules, 1939 (for short, "the Rules") which was accepted by the respondent and issued form IV permitting it to pay tax under section 5 of the Act applying the multiplier applicable to III grade Municipality-Serilingampally Municipality was a III grade Municipality during the assessment year 2001-02. It paid tax regularly and its permit to pay tax under section 5 of the Act was being renewed from time to time. While so, the respondent issued show cause notice dated June 24, 2005 proposing to revise form IV permit and also to levy and collect entertainment tax at a higher rate on the ground that it was a short levy of entertainment tax, since Serilingampally Municipality was upgraded to selection grade municipality with effect from May 18, 2001 through G.O. Ms. No. 208, Municipal Administration (J2) Department, dated May 18, 2001. The said notice refers to the judgment of this court in Writ Petition No. 18553 of 2002, which has no relevance to the period in dispute. As per the notice of the respondent, the weekly tax to be fixed in the revised form IV permit is as follows: It is also stated by....
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....dicating the nature of the theatre as air-cooled and the place where it is situated as Serilingampalli Municipality showing it as III Grade Municipality and offered to pay a sum of Rs. 47,333 as weekly entertainment tax [Rs. 18,562 being gross collection capacity of the theatre per week multiplied by 15 per cent and further multiplied by 17 shows as per column (f) to the table appended to G.O. Ms. No. 789, Revenue (CT-III) Department, dated December 29, 1995]. Form III application filed by the petitioner was verified and the said theatre is in III Grade Municipality. Accordingly, form IV permit was issued on May 25, 2001 fixing the weekly tax payable by the petitioner at Rs. 47,333 for the period from April 3, 2001 to June 30, 2001, as the form B licence issued by the licensing authority under the Cinematographic Act was only for three months. However, the local area, Serilingampally, was upgraded as a selection grade municipality with effect from May 18, 2001 through G.O. Ms. No. 208, dated May 18, 2001. Consequent on this upgradation, the petitioner, by force of law, was required to file revised form III before the respondent or at least the petitioner should have filed form III ....
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....l Taxes appearing for the respondent. The only question that falls for consideration is whether form IV issued in the year 2001-02 can be revised in 2005-06 on the ground that the entertainment tax was collected on the basis that Serilingampally Municipality was a III grade municipality in spite of the fact that it was notified as special grade municipality with effect from May 18, 2001. Learned counsel for the petitioner relied upon a reported judgment of this court in Swamy Theatre v. Deputy Commercial Tax Officer, Hyderabad [1992] 15 APSTJ 63 and submitted that the issue involved in the case on hand is no more res integra and covered by the said judgment. Only during the option period, the authorities are empowered to vary the tax and not after completion of the above period and at length of time, as per sub-section (6) of section 5 of the Act. The words "at any time" occurring in sub-rule (13) of rule 27 of the Rules must, therefore, be interpreted as limiting the power to vary the tax "during the period of option". Therefore, the impugned order amounts to varying tax beyond the option period and collecting the tax with retrospective effect. Per contra, learned counsel for th....
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.... effect from May 18, 2001, only during the period of option and not otherwise. Assuming that the option was available up to the last quarter of 2001-02, no such steps were taken by the department before end of that quarter. Therefore, varying of tax at this length of time is impermissible apart from being illegal, in view of sub-section (6) of section 5 read with rule 27(13) of the A.P. Entertainments Tax Rules. The relevant provisions of the Act and the Rules read thus: "Section 5 of the Act: 5. Option to pay tax in lieu of tax payable under section 4.-(1) to (5) . . . (6) It shall be lawful for the prescribed authority to vary the amount of tax payable by the proprietor under sub-section (1) during the period of option permitted under this section at any time,- (a) where the amount of tax payable under sub-section (1) has been modified by law; or (b) if there is an increase in the gross collection capacity per show in respect of the place of entertainment by virtue of an upward revision of the rate of payment for admission therein or of the seating capacity or accommodation thereof; or (c) where the local area in respect of which permission is granted is upgraded; or ....
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.... STC 287 (AP); [1992] 14 APSTJ 25 arose under different circumstances, as noticed above. Therefore, it has no relevance to the facts of this case. Admittedly, in this case, the option period was in between the assessment year of 2001-02, but the show cause notice was issued on June 24, 2005, i.e., much after the expiry of the option period. Further, the impugned orders amount to varying the tax with retrospective effect, i.e., beyond the option period for the assessment year 2001-02, which is not permissible under the law. As such, the impugned orders are liable to be set aside and are accordingly, set aside. In the result, the writ petition is allowed. No order as to costs. That Rule Nisi has been made absolute as above. [Against this decision the department filed an appeal before the Supreme Court.] JUDGMENT The judgment of the court was delivered by S.B. SINHA J.-Delay condoned. Leave granted. Interpretation of sub-section (6) of section 5 of the Andhra Pradesh Entertainments Tax Act, 1939, in the facts and circumstances as obtaining herein falls for our consideration in this appeal which arises out of a judgment and order dated January 6, 2006, passed by a Division Be....
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....01. The mistake was pointed out only by the Office of the Accountant General. A show cause notice in terms of section 5(6) of the Act was, therefore, issued on the respondent on or about June 24, 2005. The question which arose for consideration before the appellant and, consequently, before the High Court was as to whether in terms of sub- section (6) of section 5 of the Act read with sub-rule (13) of rule 27, the words "during the period of option" referred to the power of the prescribed authority to vary the amount of tax payable or only the amount of tax payable. The respondent in support of its plea that an order varying the quantum of tax could be passed only during the currency of the period for which such tax is to be paid submitted that the said words restrict the power of the assessing authority to vary the amount of tax payable which would mean that on the expiry of the said period, the power to vary the amount of tax also comes to an end. Such a construction appears to have found favour by the Andhra Pradesh High Court in Swamy Theatre, Sanatnagar v. Deputy Commercial Tax Officer, Sanatnagar, Hyderabad [1992] 15 APSTJ 63. Having heard learned counsel for the parties, ....