TaxTMI 
TaxTMI 
1988 (10) TMI 273
X X X X Extracts X X X X
X X X X Extracts X X X X
....out Rs. 5 lakhs. It is a semi-permanent theatre located in a town panchayat village. The petitioner obtained form "C" licence on 6th October, 1978 and started to screen pictures from 9th October, 1978 onwards. The permitted capacity of the auditorium is 690 seats. The total gross collection when the theatre is houseful is Rs. 427.75 per show. The petitioner is paying taxes under the compounding system provided in section 5-B of the Tamil Nadu Entertainments Tax Act, 1939. 3.. It is further submitted that the petitioner obtained a loan of Rs. 1 1/2 lakhs from State Bank of India for the construction of the theatre for which he is paying interest every month. For the sum of Rs. 5 lakhs invested by the petitioner, the interest works out at Rs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ontended on behalf of the petitioner that the object of the compounding system is laudable as it eliminates unnecessary harassment by the officials and at the same time avoid evasion of taxes by the owners. But the method adopted by the State for fixing the amount of tax is arbitrary and unjust. It is seen from the charging section, namely, section 4, that the character and incidence of the levy is on the entry or admission to the entertainment and on the person who is being admitted to the entertainment though, for the sake of convenience recoverable from the proprietor, who is supposed to collect the same as part of the rate of admission. Hence it is the actual admission which is the taxable event under the Act and could be the subject-ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ads as follows: "On each payment for admission to any entertainment, there shall be levied and paid to the State Government (except as otherwise expressly provided in this Act), a tax (hereinafter referred to as 'the entertainments tax') calculated at the following rates, namely ..............................." In order to give effect to the compounding system for payment of taxes the sections 5-A and 5-B were introduced giving the option to the theatre owners to choose the method contemplated under section 5-A or 5-B. 10.. Section 5-A reads as follows: "Tax on shows held in certain theatres.-Notwithstanding anything contained in this Act or in the Tamil Nadu Local Authorities Finance Act, 1961 (Tamil Nadu Act 52 of 1961) (hereinafter r....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... capacity for a show. According to this method, an owner has to pay tax for certain number of shows on the basis that all the shows are houseful irrespective of the actual number of shows and the actual amounts collected by him. It is also averred in the affidavit that the provisions of sections 5-A and 5-B of the Tamil Nadu Entertainments Tax Act, 1939, as amended by Amendment Act (Act I of 1983) are arbitrary, unconstitutional and against the principles of natural justice. 11.. According to the respondents, the department has no knowledge about the expenses incurred by the petitioner in constructing and maintaining the theatre. The theatre is paying a tax of Rs. 960 at the compounded rate. According to the amendment to section 5 introduc....