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2008 (10) TMI 704

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.... 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 the said B.E.D.Act) whose object and purpo....

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....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/Operators as per the Petitioner's method (which the petitioner says and submits is the correct method/basis) is ....

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....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 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....

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.... 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 under Clause (a) is over. After the concession period is over, the proprietor may levy service charges as specified in the second proviso to Clause (b) of Section 2; (iv) The Multiplex Theatre Complex shall be continued continuously for te....

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....h 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 Multiplex Theatre Proprietor/operator, (the State Government is not to collect from such Proprietor / Operator, duty for three years and collect duty at 25% of the rate of Entertainment Duty leviable for the subsequent two years). It is the case of the petitioner that he rec....

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....ecretary, 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 light of the aforesaid, the petitioner set out the duty payable in the Fourth year of exemption on the basis of Section 3(13)(a)(ii) of the said B.E.D. Act read with Clause 5(E)(i) of the said GR. Exhibit "E" to the petition is a copy of the said letter. 17. On 18th August, 2005 the respondent No. 1 addressed ....

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....he 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 also called upon respondent No. 4 to clarify the manner in which the respondent No. 4 has arrived at the figure of ₹ 1,16,95,846/-and the statutory provisions under which respondent No. 4 was levying interest at 24%. The petitioner in summation requested respondent No. 4 for a meeting in person so as to enable the petitio....

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....aves 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 ₹ 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 grounds as to how the statement attached to Notice No. 3 was erroneous. The petitioner also in its said response called upon respondent No. 4 not to initiate any action in view of the present Writ Petition pending admission. (Exhibit -"N" is the copy of the said response of the petitioner dated 30th January, 2006). 24. On the other hand, though th....

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....re 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 duty has been charged to him when in fact, the Government would be receiving only one-fourth the amount. Therefore, the interpretation of the Government Resolution dated 4th January, 2003 of the petitioner is not proper and that the petitioner can charge only one-fourth of the normal entertainment duty during two years of period when concessional rate of 25% is applicable. Therefore, the one-fourth entert....

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....ng 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 of exemption. It is only after the meeting dated 23rd August, 2005 with the Revenue Secretary and after the filing of the present petition by the petitioner, that the respondents came out with a clarification vide the Circular dated 5th January, 2006, which for the first time prescribed that, "For the period of first three years from the date of receipt of Eligibility Certificate, the Multiplex Theatre ....

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....ull 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 ₹ 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 levy of 24% interest can take place only after the expiry of the aforesaid 30 days, the said levy of interest are without any basis and on the face of it are unjust and illegal. 33. It is the contention of the learned Counsel for the petitioner that the case of the respondent that the nature of exemption contemplated by virtue of the Act and the Government Resolution (GR's) issued thereafter is in t....

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....e 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 Act and ors thereunder. The petitioner therefore, submits that the contention of respondent No. 4 as set out in the impugned notices/impugned orders that the petitioner must pay to respondent No. 4 the Entertainment Duty collected from the patrons, is erroneous and bad in law. 37. Mr. Tulzapurkar, the learned Sr.Counsel for the petitioner has offered an explanation as to why the petitioners were required to ....

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....te 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 in detail that how the computerised tickets are to be printed and what are the particulars to be printed on it and that sale of tickets of the movie which is exempted from entertainment tax, the tickets should have printed on it "Tax Free" and price of ticket after deduction of tax should be printed on the ticket and in what manner each ticket should be printed in the format as provided and how entertainment duty is to....

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....ame 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 goods to the consumer. It would become another sales tax in effect. 44. In the case of State of Madhya Pradesh v. Vyankatlal and Anr. Sales Tax Cases 1987 Vol. 64 Pg.6 it has been held as under: 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....

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....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 of the said B.E.D. Act, there is no dispute over the fact that it is not that the petitioner's are seeking refund of the amount paid to the State on the ground that the petitioner is entitled to rebate in the entertainment duty and, therefore, entitled to refund of the same. This is a case where the petitioner is claiming that it was granted exemption from payment of entertainment duty in the scheme as incorporated in 3 (13)(a) of the....

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....tainment 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.Shantaram, decided to grant concession in entertainments duty to Multiplex Theatres Complexes to promote construction of new cinema houses in the State. (4) To preserve and promote Marathi Cinema, it is made obligatory on owners of such Complexes to reserve one screen for a total period of one month, in a year, exclusively for Marathi Cinemas. (5) The important salient features of the Bill are as follows: (a) It is one of the conditions that in the Brihan Mumbai Municipal Corpor....

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....ed 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 subject to the provisions of Sub-section (2), wherever applicable and explanation provided for the purpose of this Sub-section which speaks for itself. Therefore, it is quite clear that this was by way of an incentive offered to the proprietors of multiplex theatre complex on the terms and conditions specified in the Act in Section 3 Sub-section (13) of the said B.E.D. Act. 53. Mr. Tulzapurkar, the learned Sr.counsel rightly submitted that this is not a case that these incentives were provided to the patrons of multiplex theatre complexes and should ....

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.... 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 ₹ 135/-but before the said circular was issued, they have shown entertainment tax as ₹ 41.95 which is 45% of the gross total i.e. ₹ 135/-. Therefore, the net admission fee is shown as ₹ 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 pay 25% of 40% the entertainment tax i.e. ₹ 41.95. After the circular they have corrected it and they have shown entertainment tax as ₹ 13.70 which is 25% of 40% which restricted in showing admission fee as ₹ 121.30, the gross total remaining the same i.e. ₹ 135.00. 55. The petitioner's case, therefore, is squarely covered in so far as their liability to pay entertainment duty for the said period is concerned when they were eligible to enjoy 75% tax exemption. ....

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....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 which takes place on the happening of the event of offering entertainment in the multiplexes. The person on whom legal liability to pay tax falls has also been clearly and unambiguously mentioned in the charging section. The rate of tax have been sought to be specified in the notification. The measure of tax is the "gross receipt" on the basis of which the person is saddled with the liability to pay tax. There fore, it is clear that there is no uncertainty or vagueness in the incentive s....