Sikender Picture Palace vs Assistant Commercial Tax Officer

A. Lakshmana Rao, J.

1 .The petitioner is a cinema exhibiting films at Udayagiri, Nellore district. It had been paying tax u/s 4(1) of the Andhra Pradesh Entertainments Tax Act, 1939 (hereinafter referred to as "the Act"). It is stated that the petitioner entered into an agreement with the Entertainment Tax Officer under the then section 5 of the Act agreeing to pay the tax under that provision for the period August 27, 1983 to August 26, 1984. During that period, the State Government issued Ordinance No. 9 of 1984 on March 25, 1984. amending section 5 of the act with the retrospective effect from January 1, 1984. Under the amended provisions of section 5, the exhibitor is given option to pay the entertainment tax specified thereunder in lieu of the tax payable u/s 4 of the Act. It is stated in the counter-affidavit that the Entertainments Tax Officer visited the petitioner-theatre on April 14, 1984 and that the proprietor of the petitioner-theatre had given the following statement to him on that date :

"You have visited our cinema hall today and clarified the legal position obtaining under Ordinance 9 issued by the Government. As per the said Ordinance, I agreed to pay entertainment tax of slab system with effect from 23rd March, 1984, u/s 5(1) of the Act with effect from 23rd March, 1984. I propose to file writ petition questioning the said Ordinance in court of law. Therefore, I will pay entertainment tax in respect of our theatre under slab system u/s 5(1) of the Act until the court gives such verdict. I will file the agreement forms in the office.

I have writ (written) the above statement and found to be correct."

On the basis of this statement, the Entertainments Tax Officer demanded the tax payable u/s 5 of the Act. Questioning the same, this writ petition is filed.

It is submitted by the learned counsel for the petitioner that the Entertainments Tax Officer has not granted any permit in form IV to the petitioner as required u/s 5 read with rule 27 of the A.P. Entertainment Tax Rules, 1939, determining the amount of tax payable u/s 5 and, therefore, the petitioner is not liable to pay tax u/s 5 of the Act. In other words, the contention of the learned counsel is that the petitioner is liable to pay tax only u/s 4 of the Act.

We find force in the contention of the learned counsel for the petitioner. Section 5 provides that in lieu of tax payable u/s 4, the proprietor of any theatre may, at his option and subject to such conditions as may be prescribed, pay the tax to the State Government every week as specified in the section. Rule 27 provides that the proprietor of the theatre, who opts to pay the tax u/s 5, shall signify his intention to do so by applying to the Entertainment Tax Officer in form III furnishing all the information. The Entertainments Tax Officer is required to verify the particulars furnished and if he is satisfied that the proprietor is eligible, shall determine the amount and the nature of security to be furnished by the proprietor for the proper payment of the tax and the time within which such security should be furnished. After the security is furnished, the Entertainment Tax Officer shall grant the proprietor a permit in form IV. Then only the proprietor will be liable to pay the tax u/s 5 of the Act. The procedure prescribed under rule 27 has not been followed by the Entertainment Tax Officer and there is no dispute that in the instant case, he has not issued any permit in form IV. Therefore, the petitioner is justified in stating that he is liable to pay tax only u/s 4 of the Act.

In view of that legal position, we hold that the respondent has no power to demand tax from the petitioner for the period August 27, 1984 to September 6, 1984 and October 26, 1984 to March 31, 1985 on the basis of the petitioner''s statement dated April 14, 1984 without following the prescribed procedure u/s 5 of the Act.

For the reasons stated above, the writ petition is allowed to the extent indicated above. There will be no order as to costs. Government Pleader''s fee Rs. 250.

Writ petition allowed