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Judgment
M. N. Rao, J.—In this writ petition Ordinance No. IX of 1991 which was replaced by Act No. XX11I of 1991 by which sub- section (6) of Section 5 of the Andhra Pradesh Entertainments Act 1939 was amended with retrospective effect from I1-1-1991 adding one more ground for the purpose of varying the amount of tax payable by the proprietor of a cinema theatre is challenged. The petitioner is the proprietrix of an air conditioned theatre called Vijaya Mahal within the municipal limits of Chittoor, a special grade municipality. u/s 4 of the Andhra Pradesh Entertainments Act 1939 (hereinafter referred to for short ''the Act'') the State Government has power to levy tax on the gross collection capacity on every show in respect of entertainments held in the theatres. The table appended to Section 4 specifies the local authority, the nature of theatre and the rate of tax. Section 5 provided for an easy mode of levy by giving option to the owner of a theatre to make payment in accordance with what it lays down. Section 5 reads:
"5. Option of pay tax in lieu of tax payable u/s 4:-- (1) In lieu of the tax payable u/s 4 in the case of entertainments held in the theatres specified in column 2 of the Table below and located in local areas specified in the corresponding entry in column (1) of the said table, the proprietor thereof may at his option and subject to such conditions as may be pre-scribed, pay the amount of tax to the State Government every week as specified In the corresponding entry in column (3) thereof.
Local authority Theatre Amount of tax
(1) (2) (3)
(a) Municipal Corporations and the Secunderabad Cantonment Area (i) Air Conditioned 23% of the Gross Collection Capacity per show multiplied by 22.
(ii) Air cooled 22% of the gross collection capacity per show multiplied by 22.
(iii) Ordinary (other than air conditioned & air cooled) 19% of the gross collection capacity per show multiplied by 22.
(b) Selection Grade Municipalities (i) Air conditioned 22% of the gross collection capacity multiplied by 22.
(ii) Air cooled 21% of the gross collection capacity multiplied by 22.
(iii) Ordinary (other than air conditioned & air cooled) 18% of the gross collection capacity per show multiplied by 22.
(c) Special Grade Municipalities (i) Air conditioned 21% of the gross collection capacity per show multiplied by 21.
(ii) Air cooled 20% of the gross collection capacity, per show multiplied by 21.
(iii) Ordinary (other than air conditioned & air: cooled) 17% of the gross collection capacity per show multiplied by 21.
(d) First Grade Municipalities (i) Air conditioned 20% of the gross collection capacity per Show multiplied by 21
(ii) Air cooled 19% of the gross collection capacity per show multiplied by 21.
(iii) Ordinary (other than air conditioned & air-cooled) 16% of the gross- collection capacity per show multiplied by 21.
(e) Second Grade Municipalities All categories 15% ot the gross collection capacity per show multiplied by 21.
(f) Third Grade Municipalities All categories 14% of the gross collection capacity per show multiplied by 17.
(g) Gram panchayats, town-ships and other local authorities :�
(1) With a population of 15,000 and above (i) Permanent and semi-permanent. 14% of the gross collection capacity per show multiplied by 14.
(ii) Touring and temporary 13% of the gross collection capacity per show multiplied by 10.
(2) With a population of 7,500 above but below 15,000 (i) Permanent and semi-permanent 13% of the gross collection capacity per show multiplied by 14.
(ii) Touring and temporay 12% of the gross collection capacity per show multiplied by 10.
(3) With a population of less than 7,500 (i) Permanent and semi-permanent 12% of the gross collection capacity per show multiplied by 14.
(ii) Touring and temporary 12% of the gross collection capacity per show multiplied by
Explanation:-- For the purpose of computing the gross collection capacity per show in respect of any place of entertainment the maximum seating capacity or accommoda-tion and the maxium rate of payment for admission determined by the licensing autho-rity under the Andhra Pradesh Cinemas (Regulation) Act 1955 (President''s Act IV of 1955) as on the date when the proprietor is permitted to pay tax under this section shall be be taken into account.
The amount of tax under sub-section (1) shall be payable by the proprietor irrespective of the actual number of shows held by him in a week.
(3) Any proprietor who opts to pay tax under this section shall apply in the prescribed form to the prescribed authority to be permitted to pay the tax under this section.
(4) On being so permitted, such proprietor shall pay the tax for every Week as specified in sub-section (1).
(5) The option permitted under this section shall continue to be in force till the end of the financial year in which such option is permitted.
(6) It shall be lawful for the prescribed authority to vary the amount of tax payable by the proprietor under sub-section (1) during the period of. option permitted under this section at any time, if there is an increase in the gross collection capacity per show in respect of the place of entertainment by virtue of an upward revision in the rate of payment, for admission therein or of. the seating capacity or accomodation thereof or where the local area in respect of which permission is granted is upgraded or if it is found for any reason that the amount of tax has been fixed lower than the correct amount.
(6A) Notwithstanding anything contained in sub-section (6), it shall fee lawful for the prescribed authority to reduce the amount of tax payable by the proprietor under subsection (1) during the financial year commencing from the 1st April, 1988 and ending with the 31st March 1989, if there is a deduction in the seating capacity or accommodation of the place of entertainment at any time during the period commencing from the 1st April, 1988 and ending with the 30th September, 1988.
(7) Every proprietor who has been permitted to pay the tax under this section shall intimate to the prescribed authority forthwith such increase in the gross collection capacity per show in respect of the place of entertainments, failing which it shall be open to the prescribed authority by giving fifteen days notice to cancel the option so permitted.
(8) Where a proprietor fails to pay the amount of tax on the due date, such amount of tax shall be recoverable with interest calculated at such rate as may be prescribed.
(9) The amount of tax due under this section shall be rounded off to the nearest rupee and for this purpose, where such amount contains part of a rupee consisting of paise, then, if such part is fifty paise or more it shall be increased to one rupee and if such part is less than fifty paise, it shall be ignored."
So far as special grade municipalities are concerned, the fate of tax liable to be paid under S. 5 in respect of air conditioned theatres is 21%of the gross collection capacity per show multiplied by 21. This method is more advantageous to theatre-owner since the calculation of the rate of tax is confined onlyto21 shows at the rate of 21% of the gross collection capacity even if more shows than 21 are exhibited. Sub-section (6) of section 5 concerns with the power to vary the amount of tax. From a reading, of the aforesaid subsection (6) it is clear that the power to vary the amount of tax has to be exsrcised only for the purpose of upward revision, but not to reduce the amount. Only in respect of a particular period, namely, from 1-4-1988 to 30-9-1988, a, provision was made by sub-section (6A) for reduction of the amount of tax if there is a reduction in the seating capacity or accom-modation of the place of entertainment during the aforesaid period.
By Ordinance I 1991, which came into force with effect from 11-1-1991, the rate of tax, under S. 5 was uniformly .enhanced; in respect of air conditioned theatres in special grade municipalities the enhancement was to 26% as against the earlier rate of 21%. This change was brought about by amending the table under S. 5(1) of the Act without amending sub-section (6). Ordinance No. I of 1991 was repealed by Ordinance No. IX of 1991 promulgated by the Governor of the State on 14th" June ''1991. Clause :(ii) of S. 4 of Ordinance No." IX of 1991 which was brought into force with effect from 11-1-1991, the date on which the earlier Ordinance No. 1 of 1991 came into force, amending sub-section (6) of S. 5 of the Act reads as follows :
"(6) It shall be lawful for the prescribed authority to vary the ampunt of tax payable by the proprietor under-sub-section (1) during the period of option permitted under this section at any time :--
(a) Where the amount of tax payable under sub-section (1) has been modified by law; or
(b) If there is an increase in the gross collection capacity per show in respect of the place of entertainment by virtue of the up-ward revision of the rate of payment for admission therein or of the seating capacity or accommodation thereof; or
(c) Where the local area in respect Of which permission is granted is upgraded; or
(d) If it is found for any reason that amount of tax has been fixed lower than the correct amount."
By Ordinance No. IX of 1991 the rate of tax was reduced to 23% of the gross collection capacity per show with effect from 11-1-1991. Subsequently, Ordinance No. IX of 1991, was replaced by Act No. XXIII of 1991 and the provision dealing with, the amendment of amended sub-section (6) of section 5 came into force with retrospective effect from 11-1- 1991.
From a comparison of the unattended, sub-section (6) with the amended sub-sec tion (6) what is clearly noticeable is that the amended provision has classified in clauses (b), (c) and (d) what was incorporated in the uhamended sub-section (6) and the new addition is clause (a). Presumably this legisla tive device is sought to be resorted to for the reason that sub-section (6) of S. 5 was left untouched by Ordinance No. I of 1991 and so it was felt that the provision relating to .the power to vary the amount of tax also must be suitably amended if the rate of tax was to be increased.
Rule 27 of the Andhra Pradesh Entertainments Rules 1939 contains the procedure for making application understand for the determination of the amount liable to be paid by the owner of a theatre. After effecting scrutiny, the entertainment tax officer, under sub-rule 5 of rule 27, issues permit in Form No. IV to the proprietor who shall pay the amount of tax as indicated therein. The permit issued in Form IV invariably expires b''y''31st March of every year. Clause (d) of sub-rule (10) of Rule 11 says that even if there is a decrease in the existing gross collection capacity the proprietor shall continue to pay the amount of tax fixed by the authority till the end of the financial year, in which the change has taken place. If there is increase in the gross collection capacity, the entertainment tax officer has power under sub-rule 13 to effect upward revision.
The agreement entered into by the Petitioner was confined to the period 1-4-1990 to 31-3-1991. The case of the petitioner is that as a result of Ordinance No. 1 of 1991 she has to pay tax at the enhanced rate for the, period 11-l-1991 to 31-3-1991, the difference, in the rate of tax being two per cent; originally it was twentyone per cent which was increased to twentysix per cent by Ordinance No. IX of 1991 replaced by Act No. XXIII of 1991. The; contention of Shri Raghu Ram, the learned'' counsel for the petitioner, is that when the petitioner had entered into an agreement under Rule 27 she had a vested right flowing from the agreement to pay tax only at the rate of twentyone per cent and the enhancement of the same to twentythrce per cent is clearly arbitrary. The vested rights, according to the learned.counsel, cannot be effected unless the legislation by which the change was brought about has said so explicitly or such an inference follows as a necessary implication. He relies on the decision of the Supreme Court in Controller of Estate Duty, Gujarat I, Ahmedabad Vs. M.A. Merchant, Accountable Person of Late Shri A.G. Merchant, Majirajwadi Road, Bhavnagar and Others, .
As a principle of law what the learned counsel stated is unexceptionable. In the present case, the enhancement of the rate of tax was not done with retrospective-effect. The increase was in the rate of tax with effect from 11-1-1991, the date on which the Ordinance came into force but not with effect from 1-4-1990, the date on which the petitioner entered into the agreement under Rule 27 with the entertainment tax officer, Section 5, the charging section, was amended by Ordinance I of 1991 increasing the rate of tax prospectively and, therefore, we do not discern any unconstitutionally. It is true by Ordinance No. IX of 1991 one more ground, was added for the purpose of varying the rate of tax and this provision cannot, by any means, be said to be unconstitutional. It is settled law that the legislature has power to amend an existing law both prospectively as well as retrospectively. When once the rate of tax u/s 5 was amended it is not open to the petitioner to rely upon the agree-ment concluded under Rule 27 and contend-that the statutory provision is contrary to the agreement and, therefore, the former should be declared unconstitutional. No rule which runs contrary to a statutory provision has! legal validity. In the present case, the agree- ment incorporating the liability to pay tax at the rate of 21% clearly runs counter to the statutory provisions which specifies the rate as 23%. As a consequence of the change in the law, procedural modifications have to be effected and the same could not be done because of the interim order passed by this Court on 12-3-1991. Obviously that cannot be aground to sustain the plea of the petitioner that her liability to pay tax is only at the rate of twentyone percent.
For these reasons, the writ petition fails. and, accordingly, it is dismissed. No costs.
Petition dismissed.