TaxTMI 
TaxTMI 
2008 (10) TMI 704
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....ble by the petitioner along with other ancillary reliefs. 2. The petitioner is interalia engaged in the business of operating a multiplex theatre named as FAME ADLABS in the city of Mumbai at Andheri. It is the petitioner's contention that on the basis of the statements and objects of the Ordinance and on the basis of Section 3 13(a) of the Bombay Entertainment (Amendment) Act, 2001 (Mah II of 2002), the petitioner applied for exemption and setting up the multiplex for which the petitioner invested huge capital, time and efforts. On the assurance of the respondent Nos. 1, the petitioner went ahead and set up the multiplex on the clear understanding that the nature of exemption was retention benefit whereby the petitioner was entitled to collect the entertainment duty from the patrons and not to pay the same to the State during the exemption period and, therefore, according to the petitioner, respondent No. 4 by virtue of the aforesaid incentive granted to the proprietors of multiplex is estopped from demanding entertainment duty as set out in the impugned orders / impugned notices. 3. The State of Maharashtra has enacted the Bombay Entertainment Duty Act, 1923 (for short ....
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....tre is to be fixed by the proprietor of the Multiplex. For the sake of convenience Table below Section 3(1)(c) is reproduced which is as under: Serial No. Area Rate of entertainment duty on payment for admission by the proprietor 1 Within the limits of Brihan Mumbai Municipal Corporation 45 percent 2 Within the limits of all other Municipal Corporations and Cantonments 40 percent As such, the rate of entertainment duty must be on the payment for admission fixed by the proprietor. Therefore, it is clear that the rate of entertainment duty can only be on net price after which the gross is arrived at. Further, Section 4 sets out the manner in which the entertainment duty payable is to be levied. There is a clear break up between the entertainment duty which is calculated on the net price, and the gross. On plain reading of Sub-section 2(a), it is clear that the gross comprises the payment for admission to the entertainment and payment on account of the duty. (c) Thus, under the various provisions mentioned above of the Act, the calculation of the entertainment duty collected and payable by the Multiplex Theatre Owners/Operato....
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....y Act, 1923 (BED Act). Section 3 of the said BED Act, inter alia, stipulates the rate of Entertainment Duty on payment for admission fixed by the Proprietor. The prescribed rate of Entertainment Duty on the payment for admission fixed by the Proprietor within the city limits of Brihanmumbai Municipal Corporation is 45% and for other Municipal Corporations and Cantonments the rate of Entertainment Duty is 40% and the other areas have a rate as prescribed under the aforesaid Section. (ii) The growth of Multiplex Theatres can be traced in an Ordinance dated 17th August, 2001 promulgated by the Government of Maharashtra being Ordinance No. 24 of 2001 to commemorate the birth centenary of Chitrapati late Shri V. Shantaram (hereinafter referred to as Ordinance), a copy of which is annexed as Exhibit 'B', under which the Government sought to amend the BED Act. The statement and objects and reasons of the Ordinance which are as follows: (i) As a result of the onslaught of Cable Television and advancement in the field of Information Technology, the average occupancy in cinema theatres has fallen considerably and hardly any new theatres have been started in the rece....
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....ns of Sub-section (2), wherever applicable. (iv)Explanation: For the purposes of this Sub-section, (i) The date on which the Multiplex Theatre Complex is opened to the public for admission shall be deemed to be the date of commencement of the Multiplex Theatre Complex; (ii) The change in the management of Multiplex Theatre Complex, or the change in the name of the complex shall not be construed as a fresh commencement of the Multiplex Theatre Complex. (b) The concession in duty as provided under Clause (a) shall be available to the proprietor of the Multiplex Theatre Complex subject to following terms and conditions, namely:( i) The proprietor shall not charge less payment for admission than the prevailing highest rate for admission at any given time, in any of the cinema theatres in the district in which the complex is situated, till the period of concession under Clause (a) is over; (ii) one theatre n the complex shall be reserved for a total period of not less than one month, in a year, exclusively for Marathi Cinemas; (iii) The proprietor of a complex shall not levy the service charge, till the period of concession ....
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....Pra.Kra.76/T-1. 11. It is important to mention that in order for an Applicant to be eligible for exemption from payment of Entertainment Duty on the basis of the Act read with the said GR, all Applicants were required to submit applications to Respondent No. 3 from 17th August, 2001 to 16th August, 2002 to be considered for such exemption. In the light of Section 3(13)(a) of the said B.E.D. Act, read with Para 5 - E(i) of the said GR, the nature of exemption/concession granted to an Applicant is from payment of Entertainment Duty to the Government, while the petitioner is permitted to collect Entertainment Duty from the patrons and exempted from payment of the same. As such, for the first three years an Applicant is exempted from paying the entire Entertainment Tax and for the next two years from paying 75% of the Entertainment Duty. In the light of the aforesaid it is reasonable to state that the concession / exemption granted under Section 3(13) (a) of the said B.E.D. Act and para 5(E) (i) of the said GR to the Applicant, in whose favour the eligibility certificates are granted / issued under the , is in the nature of the exemption from payment of Entertainment duty by the Mul....
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....or. 15. It is the case of the petitioner that from 7th June 2005, the petitioner has duly made payment of the entire Entertainment Duty to respondent No. 3 in accordance with the Act read with the G.R.s issued pursuant thereto. 16. On 1st June, 2005, the petitioner addressed a letter to the Principal Secretary, Revenue Department of Respondent No. 1. In the aforesaid letter, the petitioner informed the principal Secretary of respondent No. 1 that the Multiplex became eligible for exemption from payment of Entertainment Duty from 7th June, 2002. Further, the petitioner submitted that they were in the Fourth year from the Date of Commencement and were by virtue of Section 3(13)(a)(ii) of the said B.E.D. Act read with paragraph 5(E)(I) of the said GR, eligible to pay 25% of the amount of Entertainment Duty with effect from 7th June, 2005. Further, in the said letter, the petitioner also pointed out that it had come to the petitioner's knowledge that Adlabs Films Limited had made payment of Entertainment Duty for the IMAX-ADLABS Multiplex Theatre at Wadala under protest. This payment was also in respect of Entertainment Duty payable in the Fourth year of exemption. In the lig....
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....r addressed a letter dated 10th December, 2005 to respondent No. 4 in which the petitioner contended the following: (i) First, the petitioner was unclear as to how respondent No. 4 had arrived at the Duty of Rs. 1,16,95,846/-. It was also unclear how the 24% interest was being levied. (ii) Secondly, the petitioner contended that respondent No. 4, in arriving at the aforesaid duty, had levied the full Entertainment Duty at the rate of 45% without considering the exemption available to the petitioner from paying 75% of the Entertainment Duty; (iii) The petitioner further stated that the actual number of tickets for Screen I was 49139 and not 65245 and the actual number of tickets in Screen 5 was 56005 and 58005. As such, the petitioner indicated to respondent No. 4 that (even on that count) there was an error in calculation. Furthermore, the petitioner contended that 24% interest under Section 9B levied by respondent No. 4 would come into play only after the expiry of the 30 day period as contemplated under Section 9B of the Act and as such the petitioner was unable to comprehend as to how the respondent No. 4 arrived at the said interest. The petitioner al....
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....e than that. It has been stated that these instructions must be passed on to the Owners of Multiplex Theatre Complexes. It is pertinent to point out that this clarification has been issued for the first time and the same is inconsistent with the said B.E.D Act and the said GR. (Exhibit "L" is a copy of the said Circular). The petitioner also craves leave to refer to and rely upon the Ordinance dated 29th November, 2005 which is converted into an Act on 27th December, 2005. 23. On 21st January, 2006, respondent No. 4 issued another impugned notice/impugned order of Demand (Notice No. 3) calling upon the petitioner to make a payment of Rs. 70,39,529/-on the basis of a statement attached. (Exhibit-"M" is a copy of the said Notice dated 21st January, 2006). The petitioner submits that this Notice has, once again, been issued without taking into account the exemption available to the petitioner by virtue of the eligibility certificate issued by the respondent No. 3 in effect from 7th June, 2002. In response to the aforesaid Notice No. 3, the petitioner by letter dated 30th January 2006 responded to the said Notice of respondent No. 4 and set out in its response, inter alia the gro....
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....petitioner has collected entertainment duty from the patrons, a xerox copy of the ticket of Multiplex Theatre 'Fame Adlabs' of the petitioner has been annexed as Exhibit - '1'. 26. It is the case of the respondents that a meeting was convened by the Government on 23.08.2005 to discuss the issue of computation of entertainment duty, when the representatives of Multiplex Theatre Complex were also present. According to the representatives, the Proprietor is not entitled to collect entertainment duty on net rate of ticket as applicable and is also entitled to retain 100% of the entertainment duty for the first 3 years. It was pointed out to the representatives of the Multiplex Theatre Complexes that the "retention benefits" as is interpreted by the representatives of the Multiplex Theatre Complexes was incorrect and the method of computation of Entertainment Duty was also explained. Therefore, according to the respondents, the contention of the petitioners to allow them to charge entertainment duty at full rate and to pay only one-fourth of that amount to Government would amount to misrepresentation to the customer who would be made to believe that full entertainment....
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....ny, have been adjusted. Therefore, according to the respondents, petitioners are liable to pay to the Government a sum of Rs. 1,98,10,806/-(1,16,95,846 + 70,39,529 + 10,75,431) till date and the petitioner be directed to pay the said amount along with further interest to the Government and the petition be dismissed with costs. 28. The petitioner has tried to explain their case in Rejoinder by pointing out that the petitioner has not increased the gross ticket price; hence the patrons are not burdened with any extra amount by way of entertainment duty or otherwise as wrongly portrayed by the Respondents, in their Affidavit-in-Reply. While the exemption from payment of entertainment duty to the multiplex theatre complexes was introduced, under the Bombay Entertainments Duty (Amendment) Act, 2001 (Mah. II of 2002) on the terms and conditions specified therein (i.e. 100% exemption from paying the entertainment duty for first three years and 75% exemption from paying the entertainment duty for the fourth and firth year), until the 5th January, 2006 Circular, it was not clear as to how the entertainment duty amount should be reflected on the tickets, during the fourth and fifth year o....
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....d notices and orders have been issued by the respondent Nos. 4 without taking into account the exemption available to the petitioner from paying 75% of the Entertainment Duty by virtue of its eligibility certificate received on 7th June, 2002 and Section 3(13) (a)(ii) of the said B.E.D. Act of 1923. It is submitted that respondent No. 4 has arrived at the illegal demand of Rs. 1,16,95,846/-by levying the full Entertainment Duty at the rate of 45% under Section 3(c) of the Act notwithstanding the exemption available to the petitioner by virtue of eligibility certificate received on 7th June, 2002. As such, the figure of Rs. 1,09,15,148/-towards Entertainment Duty under Notice No. 1 is on the basis of full Entertainment Duty at the rate of 45%. He further submitted that the levy of entertainment duty at the rate of 24% as sought to be imposed under Section 9B of the said B.E.D. Act contemplates interest payable at the rate of 24% on failure to pay duty after an expiry of 30 days. It is submitted that prior to 5th December, 2005, there was no demand made on the petitioner and the period of 30 days as contemplated under Section 9B, had in fact not begun or expired. Therefore, as the le....
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....h, where the legislation wants to preclude the Proprietor/Operator from levying any charge, the same has been explicitly mentioned and in respect of payment of Entertainment Duty, there is no stipulation under the Act like in the case of Service charge under the aforesaid Sub-section from not levying the same on the patrons. 36. It is further submitted that Sub-section (c) of Section 13 provides that in case of violation of condition (i) or (v) of Clause (b) , the concession shall be withdrawn and the Proprietor/Operator would become liable to pay duty from the date of commencement of the Multiplex Complex. From this, it is very clear that the Proprietor/Operator would become liable to pay duty collected from the patron/consumer during the concession period. Therefore, according to Mr. Tulzapurkar, it is abundantly clear that the nature of exemption is a retention benefit and not a benefit for the patrons as contended by respondent Nos. 4 and respondent No. 1. In the aforesaid premise, the Multiplex Proprietor/Operator is entitled to collect admission fee and not pay Entertainment Duty for first 3 years and only 25% of the duty for next 2 years in the manner prescribed under the....
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.... them during the concessional period five years from the date of issuance of eligibility certificate cannot be interpreted in a way to fasten the liability on the petitioner who were only liable to pay entertainment duty at the prevailing rate of 25% out of the total leviable duty i.e. 45% on admission ticket and therefore, the petition deserves to be allowed. 39. Mr. Nair, the learned Special Counsel for the State submitted that this is a clear cut case of unjust enrichment and the State was justified in claiming the amount of entertainment duty collected by the petitioner from the patrons as shown in the admission ticket to be paid to the Government with interest. 40. Mr. Nair, the learned Counsel for the State has pointed out that the petitioner having disputed that in the admission ticket of the notice period, entertainment duty is shown as 45% and, therefore, the petitioner has no right to retain the duty collected from the patrons. It is submitted that the G.R. dated 20.09.2000 has clearly specified the new procedures to be followed as given in Annexure - 1 and the format of permission to be granted for sale of computerised ticket as shown in Annexure - 2 and it gives i....
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....cial. That means every kind of tax direct or indirect will come within the ambit of Article 265. 43. He has further relied upon Entry Tax Officer, Bangalore and Ors. v. Chandanmal Champalal and Co. and Ors. [1994]3SCR545 wherein it was held as under: It is true that Burmah Shell, Hiralal Thakorlal and Parekh Automobiles were concerned with State enactments which empowered the municipalities to levy the impost, all the same a close reading of the said decisions does indicate that they have read the words 'sale therein' occurring in Entry 52 of List II as meaning 'a matter of fact, in a given case, the goods may be taken out and consumed there. The decisions clearly say that where the goods are sold within the local area for the purpose of being taken out of that local area and are actually taken out, no levy is permissible under Entry 52. It is not possible to distinguish the said decisions on the grounds suggested by the appellant. Besides, octroi or any impost in the nature of that impost has always been looked upon with certain amount of disfavour. Acceptance of the State's contention in this case would ultimately result in driving up the price of these good....
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....ay the amount which is not authorised as a tax at all under the law to Government. It does not provide for a penalty for collecting the amount wrongly by way of tax from purchasers which may have been justified as a penalty for the purpose of carrying out the objects of the taxing legislation. If a dealer has collected anything from a purchaser which is not authorised by the taxing law, that is a matter between him and the purchaser, and the purchaser may be entitled to recover the amount from the dealer. But unless the money so collected is due as a tax, the State cannot by law make it recoverable simply because it has been wrongly collected by the dealer. This cannot be done directly for it s not a tax at all within the meaning of Entry 54 of List II nor can the State Legislature under the guise of incidental or ancillary power do indirectly what it cannot do directly. 47. It is therefore, submitted that the authorities on which reliance is placed on behalf of the respondents is of no assistance to the respondents and, therefore, the contention of the respondents to claim the amount cannot be sustained. 48. On going through the rival contentions and the relevant provision o....
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....the bill was introduced by the then Minister for Revenue in the House is reproduced hereunder: (1) "As a result of the onslaught of Cable Television and advancement in the field of Information Technology, the average occupancy in cinema theatres has fallen considerably and hardly any new theatres have been started in the recent past. Public at large these days prefers to see movies at home. Keeping in view this scenario, a concept of complete family entertainment center, more popularly known as 'Multiplex Theatre Complex' has emerged. These Multiplex Theatre Complexes offer various entertainment facilities for the entire family under single roof. However, those complexes are highly capital intensive, their gestation period is also quite longer, and therefore, need Government support and incentive in entertainment duty. (2) The Government of Maharashtra, therefore, considers it necessary to encourage, by giving incentives for the construction of new cinema theatres and to ensure the healthy cultural development in the State of Maharashtra. (3) Government has therefore, with a view to commemorate the birth centenary of Chitrapati late Shri V.Shantar....
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.... the 17th August, 2001. 7. The Bill is intended to replace the said Ordinance by an Act of the State Legislature. 52. Therefore, it is quite clear that the State wanted to promote and encourage multiplex theatre complexes and, therefore, it decided to offer special concessions as an incentive for a period of 5 years in the entertainment duty subject to certain conditions which have been incorporated by the amending act which introduces sub Section 13 in Section 3 of the principal act after sub Section 12 and sub Section 13(a) (i) provided for the first three years from the date of commencement of the Multiplex Theatre Complex, no duty, i.e. there will be no entertainment duty levied and collected by the State from the proprietor of a Multiplex Theatre Complex and (ii) for the subsequent two years, at the rate of twenty-five percent of the rate of duty leviable under Clause (b) and Clause (c) of Sub-section (1) or, as the case may be, for Sub-section (3) and (iii) from the sixth year, full amount of duty leviable at the rate specified in Clause (b) and Clause (c) of Sub-section (1) or, as the case may be, Sub-section (3) provided that, the duty leviable shall also be sub....
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....ing 75% tax exemption, before circular dt.5.1.06 was issued, the computerised ticket shows admission as Rs. 93.05, entertainment tax Rs. 41.95 and gross total Rs. 135/-. During 75% exemption after Circular was issued, it shows admission Rs. 121.30, entertainment tax Rs. 13.70 and gross total Rs. 135/-. Therefore, what is demonstrated by these three tickets is that gross ticket or admission fee which the Exhibitor wanted to charge was Rs. 135/-during the period of 100% tax exemption and also during 75% tax exemption. The disputed period is in relation to before and after circular dated 5.1.06 came to be issued. There also the gross ticket or admission fee is Rs. 135/-but before the said circular was issued, they have shown entertainment tax as Rs. 41.95 which is 45% of the gross total i.e. Rs. 135/-. Therefore, the net admission fee is shown as Rs. 93.05. This according to the learned Counsel for the petitioner was required to be printed as proprietors of multiplex were not enjoying 100% tax exemption and, therefore, they printed the entertainment tax as per the rate prevalent in the Municipal area which is required to be published on the ticket as per rules but they were liable to ....
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.... the proprietor of a Multiplex Theatre Complex and (ii) for the subsequent two years, at the rate of twenty- five percent of the rate of duty leviable under Clause (b) and Clause (c) of Sub-section (1) or, as the case may be, for Sub-section (3) and (iii) from the sixth year, full amount of duty leviable at the rate specified in Clause (b) and Clause (c) of Sub-section (1) or, as the case may be, Sub-section (3). 58. We are concerned with sub Clause (a)(ii) where the proprietor of multiplex theatre complex is liable to pay duty @ 25% of the rate of duty leviable under Clause (b) and Clause (c) of Sub-section (1) or, as the case may be, for Sub-section (3). In so far as the petitioner theatre is concerned, it was the duty which is required to be levied as specified in the table of Clause (c) of Section 3 i.e. within the limits of Brihan Mumbai Municipal Corporation where the rate of entertainment duty on payment for admission fixed by the State is 45%. 59. Therefore, there is no vagueness about the incidence of tax and the person who is liable to pay tax. On the other hand, there is a clear indication of the character of tax from the incidence of such tax or taxable event whic....