TaxTMI 
TaxTMI 
2015 (10) TMI 2602
X X X X Extracts X X X X
X X X X Extracts X X X X
....on from entertainment tax has been granted by the Government. Despite the exemption, Rs. 120/- per ticket was collected by the 5th Respondent. On enquiry, the Petitioner was informed that the 5^th respondent is only following the instructions in the impugned circular. Aggrieved and agitating that the exemptions are granted to promote the viewers and the benefit must be passed on to the viewers, this Writ Petition has been filed, challenging the above said circular of the 4th Respondent. 3. In reply, the respondents have independently filed their courter affidavit and sought for dismissal of this Writ Petition, raising the following objections:- (a) The Government only fixes the minimum and maximum rates and it is only the licensing authority, who decides on the rate of tickets and the licensee cannot alter the rates. (b) The exemptions are granted to uplift the movie industry and promote Tamil culture and not to the viewers. (c) Without challenging the Government Orders, based on which the circular was issued, this Writ Petition is not sustainable, (d) There is no provision under the Entertainment Tax Act, permitting the licencee to sell the tickets at a lesser rate ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Vs. Solar Pesticides P Limited and another), 2004 (11) SCC 1 (Indian Bank Association, Bombay and others Vs. Devikala Consultancy Service and others), 2009 (8) SCC 235 State of Maharashtra and others Vs. Swanstone Multiplex Cinema Limited), AIR 1961 Mad 525 K.Vishwanathan Vs. The State of Madras by Commissioner of Commercial Taxes Board of Revenue, 1985 (2) SCC 544 State of MP Vs. Vyankalal and another, 1999 (6) SCC 104 K.S.Sathyanarayana Vs. V.R.Narayana Rao), the learned senior counsel sought for allowing this Writ Petition as prayed for. 5. Per contra, Mr.A.L.Somayaji, the learned Advocate General, assisted by Mr.T.N.Rajagopalan, the learned Special Government Pleader for the Respondents 1 and 2 and Mr.V.Haribabu, the learned Additional Government Pleader for the Respondents 3 and 4, contended that the exemption granted is only for the benefit of the Theatre owners and not for the viewers. The learned Advocate General also contended that the tax quotient in the tickets are borne by the Theatre owners and not collected from the viewers and therefore, necessarily when the benefit is granted, the benefit of exemption is enjoyed by them. The exemption is for promoting Tamil movie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....plate levy on the Theatre owners and not on the viewers and naturally, the benefit of exemption is also available only to the Theatre owners. The learned counsel also placed upon a similar chart to show as to how the rate is arrived at and sought for the dismissal of this Writ Petition. 7. This court heard and considered the submissions made by the learned counsel on either side and also perused the materials placed on record. Heard all the parties. 8. Upon considering the rival contentions of the learned counsel on either side, the point that arises for determination is as to whether the benefit of exemption is to be passed on to the viewers or not? 9. The learned senior counsel for the Petitioner has contended that since the tax portion is included in the price of ticket paid by the viewer, the benefit of exemption must also be passed on to the viewers. The learned counsel also submitted that the provisions are very clear and hence, the Petitioner is entitled to claim refund. In support of his contentions, the Petitioner has placed reliance upon the following judgements. 10. In 1997 (5) SCC 536 (Mafatlal Industries Limited and others Vs. Union of India and others), th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stoms Act, both before and after the 1991 (Amendment) Act are constitutionally valid and have to be followed and given effect to. Section 72 of the Contract Act has no application to such a claim of refund and cannot form a basis for maintaining a suit or a Writ Petition. All refund claims except those mentioned under Proposition (ii) below have to be and must be filed and adjudicated under the provisions of the Central Excise and Salt Act or the Customs Act, as the case may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal - which is not a departmental organ - but to this court, which is a civil court. (ii) Where, however, a refund is claimed on the ground that the provision of the Act under which it was levied is or has been held to be unconstitutional, such a claim, being a claim outside the purview of the enactment, can be made either by way of a suit or by way of a Writ Petition. This principle, is however, subject to an exception: Where a person approaches the High Court of the Supreme Court challenging the constitutional validity of a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iate that that amount is retained by the State, i.e., by the people. There is no immorality or impropriety involved in such a proposition. The doctrine of unjust enrichment is a just and salutary doctrine. No person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his purchaser at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law. The power of the Court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to the State. State represents the people of the country. No one can speak of the people being unjustly enriched." 11. In 2000 (2) SCC 705 (Union of India and others Vs. Solar Pesticides P Limited and another), it has been held thus:- "17. The use of the words "incidence of such duty....." is significant. The words "incidence of such duty'' mean the burden of duty. Section 27(1) of the Act talks of the incidence of duty being passed on and not the duty as such being passed on to another person, To put it differently the expression "incidence of such duty" in relation to its being pass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the duty thereon passed on to the purchaser of the finished product or that the imported goods are sold as such with the incidence of tax being passed on to the buyer. In either case the principle of unjust enrichment will apply and the person responsible for paying the import duty would not be entitled to get the refund because of the plain language of Section 27 of the Act. Having passed on the burden of tax to another person, directly or indirectly, it would clearly be a case of unjust enrichment if the importer/seller is then able to get refund of the duty paid from the Government notwithstanding the incidence of tax having already been passed on to the purchaser." 12. In 2004 (11) SCC 1 (Indian Bank Association, Bombay and others Vs. Devikala Consultancy Service and others), it has been held thus:- "18. In the event, the contention of the appellants is accepted, the same would give rise to incongruous results. Such an interpretation, as is well-known, must be avoided, if avoidable. Furthermore, a statutory impost must be definite. Having regard to Article 265 read with Article 366(28) of the Constitution of India nothing is realizable as a tax or by way of recovery of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....from the cinema-goers, they would be entitled to retain the benefit thereof. Whether a statute expressly confers power on an assessee to realize the amount of tax payable to the State from its customers or not, in our opinion, is wholly immaterial. The fact remains that it has to collect such taxes which are to be collected from the consumers and are required to be levied. 25. Once the taxes are levied, Section 3 of the Act entitles the State to collect the same from the owner of the multiplex theatre complex, subject, of course, to the concession which had been given to them. The term "concession" is a form of privilege. {See V. Pechimuthu v. Gowrammal (2001) 7 SCC 617]; P. Ramanatha Aiyar, Advanced Law Lexican (New Delhi: Wadhwa & Company, Nagpur, 2005) Vol. 1 p. 944]. The term "exemption" is also a form of privilege. When a statute confers a privilege, the same must be confined only to the extent provided for therein. 26. A proprietor of a multiplex cinema theatre when collects tax by way of entertainment duty from the cinema-goers, it would be entitled to collect such tax which is subject to levy and collection by the State. The authority in this behalf is implicit. For t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... this Act), a tax (hereinafter referred to as the entertainments tax) calculated at the following rates... Provided that in the case of cinematography exhibitions the tax shall be calculated at the rates specified above on each payment of admission, after excluding from such payment the amount of the tax" (the rest of the section is omitted as unnecessary." Section 7(1) states:- "The entertainments tax shall be levied in respect of each person admitted on payment, and shall be calculated and paid on the number of admissions." Sub clause (2) states:- " The entertainments tax shall be due and be recoverable from the proprietor." It will be seen that under the provisions extracted above the management of a cinema for example is made the collecting agent for the tax. The amount so collected is a tax on the individual attending the entertainment. It being a tax will be due to the Government and not to the proprietor of the cinema. There is however no evidence in this case to show whether the Appellant collected the tax by adding the sum of one anna to a four anna ticket, or by collecting five annas in lump sum from the picture goes undertaking to pay whatever tax that may....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Government; if under these circumstances, an excess was paid as tax it must be out of the monies belonging to the management, who would therefore be entitled to recover the same on proving that there was a mistake of law in making the payment. We cannot however agree that what was collected in the instant case was a consolidated sum. While charging an individual picture goes five annas for a particular seat the management in the instant case intended to charge only four annas for itself and one anna for the entertainments tax.. While it may be accepted that what the Appellant paid was in excess of what was due, the excess payment was not of the Appellant's money but represented the excess collected from the various persons who attended the cinema shows during the relevant period by purchasing five annas tickets. The question whether a person entrusted by a statute with the duty of collecting a tax as a part of his business can be said to receive it as his business income, arose under the Madras General Sales Tax Act in Velayudhan Vs. Agricultural Income Tax and Sales Tax Officer, Perumbavoor, 1953 4 STC 338 (AIR 1953 Trav-Co 618). Subramania Iyer J while considering the quest....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rson who had paid. The Appellant could have no cause of action in respect of such excess collection which was made and paid over to the Government. 8. Agreeing with the lower court, we are of the opinion that the excess amount of tax paid to the Government by the Appellant was not his property so as to entitle him to recover such excess payment from the Government. The appeal fails and is dismissed with costs." 15. In 985 (2) SCC 544 (State of MP Vs. Vyankalal and another), it has been held thus:- "14. The principles laid down in the aforesaid cases were based on the specific provisions in those Acts but the same principles can safely be applied to the facts of the present case inasmuch as in the present case also the respondents had not to pay the amount from their coffers. The burden of paying the amount in question was transferred by the respondents to the purchasers and, therefore, they were not entitled to get a refund. Only the persons on whom lay the ultimate burden to pay the amount would be entitled to get a refund of the same. The amount deposited towards the Fund was to be utilised for the development of sugarcane. If it is not possible to identify the persons o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hom money is paid, or thing delivered, by mistake or under coercion.- A person to whom money has been paid, or any thing delivered, by mistake or under coercion, must repay or return it." 17. In 2011 (8) SCC 161 (Indian Council for Enviro Legal Action Vs. Union of India and others), it has been held thus:- "151. Unjust enrichment has been defined as: "A benefit obtained from another, not intended as a gift and not legally justifiable, for which the beneficiary must make restitution or recompense." See Black's Law Dictionary, Eighth Edition (Bryan A. Garner) at page 1573. A claim for unjust enrichment arises where there has been an "unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience." 152. `Unjust enrichment' has been defined by the court as the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience. A person is enriched if he has received a benefit, and he is unjustly enriched if retention of the benefit would be unju....
X X X X Extracts X X X X
X X X X Extracts X X X X
....swami, speaking for the Bench,laid down that even without framing statutory rules, the government can issue administrative instructions regarding the principle to be followed in promotions of the officers concerned to selection grade posts. The learned Judges held that administrative instructions cannot amend or supersede statutory rules, but if the rules are silent on any particular point government can fill up the gaps and supplement the rules and issue instructions not inconsistent with the rules already framed." 19. In AIR 2007 Mad 317 (P.Sankara Narayanan Vs. State of Tamil Nadu), it has been held as under:- "10. In spite of the valiant efforts made by the learned Special Government Pleader, we are not impressed by the submission made on behalf of the State justifying the imposition of entertainment tax at a higher rate for the films dubbed in Tamil. First of all it has to be remembered that burden of entertainment tax is ultimately borne by movie goer rather than by a Producer, distributor or film exhibitor. The taxing event under the Act is on the entertainment of the movie goer. The rate of tax is determined on the basis of the amount collected from such person. We fa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of excise duty on the articles listed in the table at the end of the said notification. Tyres and tubes were items 18 and 19 in the said schedule. The exemption provided in the notification was to the following effect. In respect of the goods listed in the table at the end of the notification and cleared from one or more factories in excess of the base clearances by or on behalf of a manufacturer from so much of the duty of excise leviable thereon as in excess of 75 per cent of such duty. The base clearance is the clearance of excisable goods, which is liable to payment of full excise duty. The exemption of 25 per cent is available only on that clearance which is in excess of the base clearance during the basic period. If the base clearance is to be found out with reference to the value of the goods as if to be done in respect of tyres and tubes manufactured by the manufacturer, then the method set out in paragraph 2(1)(b) of the notification is to be followed which is as follows :- "For the purpose of determining the basic period, where the clearance of all specified goods are compared in terms of value as specified in column (4) of the said table, such value shall be value as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uty is chargeable only on value of the goods at the time of the clearance of the goods from the factory does not, therefore, fix the point of the incident of the duty. It only fixes the point of the assessment of the duty. It is true that Section 4 of the Act refers to the value of the goods which is the normal selling price of the goods and ordinarily the producer of the goods would add the excise duty leviable on the goods to his cost of production and the margin of profit before fixing tariff wholesale price of the goods. But Section 4 is not the charging section. That is Section 3. Section 4. is the manner of the levy of duty according to selling price. It is true that in assessing the duty the Government would take into consideration either the selling price or the weight or the volume or the number or the tariff value of the goods. Nevertheless, this does not mean that the excise duty is imposed on the selling price of the goods. This is demonstrated by the fact that it may be imposed only on the weight or volume or number irrespective of either the selling price or the tariff value. Further, it is quite open to the Government to grant an exemption subject to conditions. I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....able value, if the duty is then to be calculated it would not be the same as before and in this manner the calculation would keep on changing. Such a procedure would lead to an absurd situation." The learned Judges also pointed out that any other interpretation of the notification would lead to discrimination in that the benefit of rebate of duty is required to be passed on to be consumers only in cases where the duty is to be calculated on the basis of the assessable value determined under S. 4 of the Act and not in cases where the duty is calculated on the basis of fixed tariff values or weight or number. With respect, we are inclined to agree with the view taken in that case. 13. The plain wording of the notifications indicates that from the excise duty leviable certain are to be made. We do not see how the notification could be interpreted as applicable only in cases where the excise duty is reduced from the wholesale price and the benefit of exemption is passed on to the consumers. As already pointed out the number in which the exemption notification is interpreted by the excise authorities involves the application of the notification twice, while the method adopted by t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Court rather than through these petitions now. 6.Learned Counsel for the petitioners have also submitted that exemptions have been granted inappropriately to certain films for which they have made representations. If such representations had been made, the concerned body dealing with the same will examine the worth of the representations and take a decision on the same within a time bound manner. We would consider a time period of one month suffice to consider such representations." 22. Before going into the rival contentions, upon perusal of the orders of the Division Bench of this Court, it is clear that the petitions, in which the Government orders that were challenged, were not decided on merits and the same was left open to be decided in appropriate cases, as the various Government orders have culminated into the impugned circular. Hence, this court is of the view that the order of the Division Bench of this Court does not prevent this court from deciding the dispute on merits. 23. Section 4 of the Tamil Nadu Entertainment Tax Act reads as follows:- "4. Tax on payment for admission to entertainments.- (1) There shall be levied and paid to the State governme....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... entertainment tax is payable." 25. It can be seen that the tax is to be calculated on each admission, implying that on the number of seats occupied and not on the total seats. The power to grant exemption is derived from Section 8, which reads as under:- "8. Power to exempt or remit tax:- (2) The State Government may, subject to such conditions as they deem fit, by general or special order, exempt any entertainment or class of entertainments from liability to the entertainments tax payable under this Act." 26. The chart produced and accepted by both parties is quoted below for reference:- Break Up of Ticket Price at Rs. 120/- Unexempted New Tamil Movies Net Rate of Admission Rs. 83.30 Entertainment Tax @ 30% of Rs. 119 Rs. 35.70 Maintenance Charge Rs. 1/ Total Ticket Price paid by Viewer Rs. 120/- Unexempted Old Tamil Movies Net Rate of Admission Rs. 95.20 Entertainment Tax Rs. 23.80 Maintenance Charge Rs. 1/- Total Ticket Price paid by Viewer Rs. 120/- Exempted Tamil Movies Net Rate of Admission Rs. 119/- Entertainment Tax Nil Maintenance Charge Rs. 1/- Total Ticket Price paid by Viewer Rs. 120/- 27. The admission amount....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd Registration Department, dated 30.3.2007. 4. GO (Standing) No.159, Commercial Taxes and Registration Department, dated 22.8.2007. Order In the G.O. read first above, total exemption was given to new films titled in Tamil. In the second G.O. read above, the entertainment tax exemption was extended to old films also. In the third G.O read above, entertainment tax exemption was extended to those possessing copy right for Tamil films. In the fourth G.O read above, a committee was constituted to review and recommend whether the Tamil title of old and new films screened were in keeping with Tamil culture and dignified. 2. Just because films were titled in Tamil, it could not be ensured that the core of the stories of such films were in keeping with Tamil culture and dignified. Moreover, some films without standard get tax exemption just because they are titled in Tamil. 3. In the above circumstances, along with the condition that the films should be titled in Tamil for getting entertainment tax exemption, the following stipulations are determined and order issued. 1. Such a film should have obtained 'U' certificate from the Film Censor Board. 2. The core o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....P No 31064/2014 would be correct stand. It is also unfair and arbitrary to contend that when there is no exemption, the tax would be borne by the viewer and when there is exemption, the theatre owners would appropriate it. 30. In so for as unjust enrichment is concerned, as rightly contended by the learned senior counsel for the Petitioner, the collection and retention of tax against the provisions of law is unjustifiable and would amount to unjust enrichment. As evident from the various cases relied upon by the learned senior counsel for the Petitioner above, once it is found that the tax is collected against the statute, the same is liable to be refunded. Any levy of tax or any amount in the like nature would be amenable to Article 265 of the Constitution of India. This court has already held that what is paid by the 5th Respondent is only the amount collected from the Petitioner and other viewers. Hence, the Petitioner is entitled to refund of Rs. 107/-. In so for as any similar claim, since it is not possible to refund the sums, the amounts shall be remitted to the Respondents 3 and 4. 31. The impugned circular reads as under:- "Circular No.14/2014 Acts Cell IV/130....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lms. Substandard movies also got exemption from entertainment tax only for the reasons that the films were titled in Tamil. 5. Therefore, the Government issued orders in GO.Ms.No.159, Commercial Taxes and Registration (C1) Department, dated 22.08.2007, restricting the concession not to those old or new Tamil films bearing Tamil titles, but only to those conforming with Tamil culture and dignity. 6. In GO.Ms.No.89, Commercial Taxes and Registration (C1) Department, dated 21.07.2011, the following additional eligibility criteria were prescribed for grant of exemption from payment of entertainment tax, in addition to the titling of the films in Tamil. i. The film should have 'U' certificate from the Censor Board of Film Certification. ii. The story should have explicit elements promoting Tamil language and Tamil culture. iii. The dialogue in the film should be in Tamil except these scenes which warranted usage of other language(s) depending upon the context. iv. Vulgarity and violence beyond the tolerable level will make the film ineligible for exemption. 7. Government also ordered constitution of a Committee to watch films that they confined to the above ....