TaxTMI 
TaxTMI 
2019 (7) TMI 1198
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.... taken up, heard out and are being disposed of. 4. To be noted, learned Standing Counsel for Salem City Municipal Corporation is instructed by a staff from the office of the said Corporation, who is present in Court. This Court is informed that the central theme/core issue in these seven writ petitions is the same. This has impelled this Court to dispose of these seven writ petitions by this common order. 5. Suffice to say that all seven writ petitioners are in the business of Cinematograph exhibition which can be referred to in common parlance as 'cinema theatres'. To be noted, five writ petitions pertain to five different screens in one Multiplex. It may not be necessary to make further elaboration in this regard and it would suffice to say that there is no disputation or disagreement before this Court that all the seven writ petitioners are covered by an Act, which goes by the name 'Tamil Nadu Local Authorities Entertainments Tax Act, 2017 (Act 20 of 2017)', which shall hereinafter be referred to as 'said Act' for brevity. There is also no disputation or disagreement that said Act came into force on and with effect from 28.06.2017. 6. Before this....
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.... writ petitions as mentioned supra, pertain to security deposit, which the writ petitioners have to pay. 13. Methodology for computing the quantum of security deposit to be made and the mode in which such deposits have to be made is adumbrated in by-laws 6 of said by-laws and considering the significance of the said provision in the instant writ petitions, this Court deems it appropriate to extract entire by- law 6. By-law 6 of said by-laws, reads as follows: '6(1) The Entertainments Tax Officer shall, if he proposes to sanction the application, fix the amount and the nature of security to be furnished by the proprietor for the proper payment of entertainments tax and the time within which such security should be furnished. (2) The amount of security deposit so fixed shall, in the case of a temporary (touring) theatre or an open air theatre, be equal to the entertainments tax payable based on the full capacity of the auditorium for a period of seven days. In the case of a permanent or a semi-permanent theatre, the amount of security deposit so fixed shall be equal to seventy-five per cent of the tax payable as aforesaid. For the purpose of calculation of th....
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.... (vi) If at any time the deposit already furnished by a proprietor under clause (i) is found to be inadequate it shall be open to the Entertainments Tax Officer, by notice, to require the proprietor to make an additional deposit within the time specified in the notice. Explanation._ For the purpose of fixing the amount of security, a place licensed for the Exhibition of Cinematograph Film on Television Screen through Video Casette Recorder shall be deemed to be a permanent or semi-permanent theatre.' 14. Second respondent before this Court has raised seven different demands, all dated 14.06.2019, captioned and these seven demand notices have been assailed in each of these writ petitions. 15. A perusal of the demand notices, reveal that prior to the demand notices, there have been communications from the second respondent to the writ petitioners and those communications are dated 04.01.2018, 02.02.2018, 05.03.2018, 14.12.2018 and 05.04.2018. To be noted, these communications are cited as No.3 in Reference in the aforesaid demand notices dated 14.06.2019, which shall hereinafter be collectively referred to as 'impugned demand notices' in plural and &....
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....TRES S.No Name of the Theatre Deposit Amount(Rs. In lakhs) 1 ARRS Multiplex Screen No.1 3.95 2 ARRS Multiplex Screen No.2 3.45 3 ARRS Multiplex Screen No.3 3.45 4 ARRS Multiplex Screen No.4 6.88 5 ARRS Multiples Screen No.5 7.18 6 Sri Rajeswari 2.59 7 Geethalaya 3.90 Total 31.40 20. Out of this Rs. 31.40 lakhs, seven writ petitioners have thus far already paid Rs. 11.40 lakhs. 21. In the aforesaid backdrop, notwithstanding various averments and grounds raised in the affidavits filed in support of the instant writ petitions, learned Senior Counsel for writ petitioners restricted and focused his submission to one pivotal submission and that one pivotal submission is to the effect that the security deposits which have been demanded vide impugned demand notices have been computed on the basis of a percentage of tax payable by taking the tax payable as 30%. 22. As would be evident from the scaling down of tax payable from 30% to various rates which has been set out supra and alluded to elsewhere supra in this order, it is not a uniform scaling down to 8% as contended, but the scaling down is....
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....s depending on the movie, they are liable to pay 15% also as, already mentioned supra, they being permanent theatres. Therefore, the second respondent has taken 15% as the tax payable based on the full capacity of the auditorium for a period of seven days. This takes us to what percentage of this numerical value can be demanded as security deposit. A further careful and close reading of by-laws 6.2 of said by-laws reveals that it can be anything between 75% of the tax so payable and 1 ½ half times the tax so payable. This is a discretion vested in the Entertainment Tax Officer, who without any disputation, is respondent No.2 before this Court. In the instant case, second respondent has adopted the 1 ½ half times of the tax payable yardstick to demand security deposit. 27. Security deposit is for the purpose of ensuring that if there is any default in payment of tax, the exchequer is not left high and dry. Therefore, this Court finds no illegality in the second respondent adopting 1 ½ half times of tax payable i.e., 15% in this scenario for arriving at the security deposit that has been demanded. 28. Moreover, as mentioned supra, this quantum has bee....
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....legality in the mode of deposit also. This is more so, as it is submitted by respondents' standing counsel, on instructions, that the balance of security deposit can be made by seven writ petitioners in any one of the modes adumbrated in the proviso to by-law 6.2 of said by-laws. 33. Before parting with this case, for the purpose of capturing the trajectory of the hearing as comprehensively as possible and for the purpose of completion of hearing, it is necessary to record that it was brought to the notice of this Court that post impugned demand notices, writ petitioners have sent a communication dated 02.07.2019 and the second respondent has sent a reply dated 04.07.2019. Communication said to have been sent by writ petitioners dated 02.07.2019 has not been placed before this Court, but a copy of the communication dated 04.07.2019 from the second respondent has been placed before this Court. A perusal of the same reveals that writ petitioners have referred to some Government Orders, but have not given details of the Government Orders in terms of date, number etc., 34. However, now that this submissions made today before this Court are without any disputation or disagreem....