TaxTMI 
TaxTMI 
1991 (11) TMI 237
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....t granted a permit in form IV in favour of each one of the petitioners. At the time when the permit in form IV was granted, the area in which the theatres were situated, was a gram panchayat. By a notification published in A.P. Gazette dated September 7, 1987, the State Government declared under sub-section (3) of section 3 of the A.P. Municipalities Act (6 of 1965) that the local area which was within the jurisdiction of Kamareddy gram panchayat shall be Kamareddy municipality with effect from September 7, 1987. Thus, the gram panchayat, Kamareddy, became Kamareddy municipality with effect from September 7, 1987. Subsection (22) of section 2 of the A.P. Municipalities Act provides as under: " 'Municipality' means any of the following gr....
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....yment of tax at 16 per cent of the gross collection capacity multiplied by 21 with effect from September 7, 1987. This tax is leviable in respect of a theatre situated in second grade municipality. As we have already mentioned, at the time when permit in form IV was granted in favour of the petitioners, the tax was at 15 per cent of gross collection capacity multiplied by 14. Questioning the validity of the demand notices, these writ petitions are filed. It is submitted by Sri. M.R.K. Chowdary, the learned counsel for the petitioners, that Kamareddy municipality was declared as second grade municipality only by notification published in the A.P. Gazette dated April 11, 1988 and therefore the Entertainments Tax Officer is not justified in....
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....ssued the notification under sub-section (3) of section 3 of the A.P. Municipalities Act constituting Kamareddy municipality which was published in the A.P. Gazette dated September 7, 1987. From subsection (22) of section 2 of the A.P. Municipalities Act, it is evident that municipalities can be classified into different grades such as third grade, second grade, first grade, special grade and selection grade, depending upon the annual income of the municipality. It provides that the grade of a municipality shall be declared by notification published in the A.P. Gazette. The grade of a municipality has relevance with reference to some of the provisions of the A.P. Municipalities Act. So far as the A.P. Entertainments Tax Act, 1939, is ....
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....sued to the petitioners long before the notification was published in the A.P. Gazette declaring Kamareddy as a second grade municipality and the petitioners were asked to pay at the higher rate of tax with effect from September 7, 1987. Sub-section (5) of section 5 of the A.P. Entertainments Tax Act provides that the option permitted under section 5 of the A.P. Entertainments Tax Act shall continue to be in force till the end of the financial year in which such option is granted. The option exercised by the petitioners in the instant case was due to expire by March 31, 1988. Sub-section (6) of section 5 of the A.P. Entertainments Tax Act provides that it shall be lawful for the prescribed authority to vary the amount of tax during the peri....