Model Cinema vs State of Gujarat and Others

S.R. Brahmbhatt, J.—The petitioner, proprietor of a cinema hall has approached this Court under Articles 226 & 227 of the Constitution of

India, challenging the order dated 6/6/1988 passed by Respondent No. 3, holding that on account of breach of conditions of exemption for

exhibiting film / movie (''GANDHI'') on the part of the petitioner, he was liable to pay Rs. 56,153=59 u/s 30 of the Gujarat Entertainment Tax Act,

1977 (hereinafter referred to as ''the Act''), and also order dated 7/8/1993 passed by Respondent No. 2, Entertainment Tax Commissioner,

rejecting revision application filed by the petitioner, assailing order of Respondent No. 3, on the ground that the notice itself was belatedly issued

and was time barred and the authorities did not appreciate the fact that the very basis for treating breach of condition was irrelevant and the

conclusion arrived at in this behalf was without any basis or evidence on record.

Facts in brief deserve to be set out as under:

The petitioner at the relevant time was a proprietor of a cinema hall wherein he was licensed to exhibit films. The film called ''Gandhi'' enjoying

100% entertainment tax exemption was exhibited from 4/2/1983 to 19/5/1983. During this period on some days mentioned in the order, namely

11/2/1983, 17/2/1983, 19/2/1983, 26/2/1983, 27/2/1983, 3/3/1983, 6/3/1983, 12/3/1983 and 13/3/1983 film was also exhibited in the morning

shows as there was mounting demand from various schools, students, and other viewers, and as the demand could not be met by exhibiting the film

only during the regular shows as contended by the petitioner. The return for the income was filed and the tax was assessed and paid. Thereafter,

on account of audit objection in respect of breach of condition of exemption contained in Schedule to Notification dated 8/9/1983, which was, not

to increase the existing rate of admission to the tax exempted film, a show cause notice came to be issued to the petitioner. Respondent No. 3

issued the same on 30/8/1986 calling upon the petitioner to show cause as to why it may not be held that he has committed breach of the said

condition so as to be liable to be proceeded u/s 30 of the Act.

The petitioner submitted his reply inter alia contending that on account of mounting pressure and demand from viewers film was decided to be

exhibited in the morning, but as such the exhibition of film in the morning can not be classified to be exhibition during morning show as sought to be

relied upon by the audit party. Moreover morning shows were not held in this theater since long and therefore, admission charge leviable for

regular shows were actually levied and recovered from the viewers for admission in the morning shows also. In fact the morning shows were not a

morning show but regular shows. At the best it could be said that the exhibition of film in the morning was on account of extra show and not

morning show as such. The extra show cannot be termed to be morning show so as to prevent proprietor of exhibition hall from charging regular

rates for admission. Petitioner also contended that issuance of show cause notice dated 30/8/1986 in itself is beyond the period of limitation

prescribed under the Act, as the so called morning shows were held in the year 1983. The show cause notice was therefore barred u/s 9(2) of the

Act and reading with Rule 15 of the Gujarat Entertainment Rules, 1979, same was not tenable.

The authority, i.e. Respondent No. 3 has elaborately discussed the contentions raised by the petitioner and recorded that the morning shows

were sought to be projected as if they were extra shows but required security for those extra shows was not furnished nor was any special

permission obtained for running those extra shows. Admittedly, admission charges leviable from the viewers for admission to the morning shows

were less than the admission charges leviable during the regular shows. Therefore, when the film, which is exempted from entertainment tax, is

exhibited then it was a condition in the Schedule appended to the Notification that the exhibitor shall not raise or increase the charges for admission

than the normal charges / regular charges. The charges for morning shows were admittedly less than the charges recovered for regular shows by

the petitioner. Therefore it has been held that the petitioner committed breach of condition for exhibiting tax free film in the morning shows by

charging admission fees at the rate applicable to regular shows. As the relevant condition for exhibiting tax free film was violated u/s 30 of

Entertainment Act, the petitioner was liable to pay the amount of Rs. 56,153=50.

The said order came to be passed on 6/6/1988 which was assailed by the petitioner by preferring revision application before respondent No. 2

i.e., Entertainment Tax Commissioner, Gandhinagar. Respondent No. 2 also after elaborately discussing the contentions raised by the petitioner,

came to the conclusion that the plea in respect of limitation u/s 9 read with Rule 15 of the Rules would not be available to the petitioner in view of

the fact that the notice was issued u/s 30 of the Act as there was breach of condition for exhibiting tax exempted film. Respondent No. 2 came to

the conclusion that Rule 15 of the Rules applies only to assessment or reassessment u/s 9 of the Act, and the said Rule does not cover Section 30

of the Act, hence the plea with regard to limitation would not be tenable. With regard to merits also, the findings recorded by the authority at the

first instance i.e. Mamlatdar has been confirmed and ultimately revision came to be rejected vide order dated 7/8/1993.

This Court has heard learned advocates for respective parties and perused the impugned orders. Learned advocate for the petitioner has mainly

contended that the show cause notice was time barred in view of provision of Rule 15 of the Rules read with Section 9 of the Act. Learned

advocate for the petitioner has relied upon a decision of this Court in case of Nathalal Bahechardas Patel Vs. State of Gujarat and Others, and

submitted that the observation of this Court in case of Nathalal Bahechardas Patel (supra) would go to show that in the instant case also the

ultimate effect of hearing u/s 30 would amount to levy and recovery of tax, and therefore, it would be governed by Section 9(2) of the Act, which

had to be resorted to within three years as prescribed.

This Court is unable to accept the submission of learned advocate for the petitioner. Section 9(2) of the Act as well as Rule 15 of the Rules,

operate in altogether different situation. Rule 15 of the Rules does not refer to or relate to the proceedings in any manner under Sections 29 or 30

of the Act, and rightly so because Sections 29 & 30 of the Act envisage a situation whereunder the authorities will have to record satisfaction, after

affording an opportunity to the assessee, as to committing breach of any condition for exhibiting the tax exempted film. Only after recording such

satisfaction can it be said that incidence for collection of tax would arise. As the same is not covered by express provisions of Rule 15 of the Rules,

it can be said that the provisions of Sections 29 & 30 of the Act constitute absolutely separate code by themselves and operate in the field of tax

exemption and lay down procedure in respect of breach of condition for exhibiting tax exempt film. It is required to be noted that both the

authorities whose orders are under challenge have proceeded on the same premises which cannot be said to be contrary to law warranting any

interference under Articles 226 & 227 of the Constitution of India. It is also required to be noted that the order of Respondent No. 3, the authority

who heard the petitioner after issuance of show cause notice is elaborate and clear with regard to petitioner having collected regular charges for

admission to the film hall wherein tax exempted film was exhibited, though in the morning. Admittedly, the admission charges for morning shows

were less than the regular show admission charges. The plea to treat morning show to be extra show was rightly rejected, as the authority has

recorded clearly that the petitioner did not obtain any special permission for exhibiting film for extra show nor did he produce any evidence to

show that extra security deposit required for running extra show had been paid by the petitioner.

In view of the aforesaid observations, this Court is of the considered view that the orders impugned in this petition under Articles 226 & 227 of

the Constitution of India cannot be said to be illegal and / or suffering from any infirmity, so as to call for any interference. The petition therefore

fails and is hereby accordingly rejected. Interim relief granted earlier shall stand vacated. Rule discharged, with no order as to costs.