Sri Veeraju Talkies vs The Entertainment Tax Officer and Another

A. Lakshmana Rao, J.—The petitioner was granted permit in form IV to pay entertainment tax u/s 5 of the Andhra Pradesh Entertainments Tax Act, 1939, at the rate of Rs. 4,637 per week for the year 1985-86. On May 22, 1985, the Joint Collector, East Godavari District granted permission to the petitioner to reduce the seating capacity from 925 to 697. On May 23, 1985, the petitioner applied to the first respondent for modification of form IV in view of the reduction in the gross collection capacity due to the reduction in the seating capacity. The first respondent modified the permit in form IV on May 24, 1985, fixing the amount of tax payable by the petitioner at Rs. 3,594 per week for the period from May 24, 1985 to March 31, 1986. While so, the Commercial Tax Officer, East Godavari District, revised the order passed by the Entertainments Tax Officer and accordingly issued proceedings date March 8, 1986, stating that the petitioner was liable to pay entertainment tax at the rate of Rs. 4,637 per week. Accordingly, the petitioner was asked to pay entertainment tax at the rate of Rs. 4,637 per week. Questioning the validity of this action, the petitioner filed W.P. No. 8200 of 1986 on the file of this Court. This writ petition along with a batch of writ petitioners was petitions was allowed (vide Maruthi Talkies v. Entertainment Tax Office [1988] 71 STC 96) on November 27, 1986, with the following direction :

"For the foregoing reasons, the petitioners in all these writ petitions would be entitled to pay tax at the reduced rate from the date of reduction in the gross collection capacity till the end of the financial year covered by the agreement u/s 5 of the Act."

The impugned notice dated November 18, 1988 was issued to the petitioner demanding payment of entertainment tax for the period from May 24, 1985 to March 31, 1986 at the rate of Rs. 4,637 per week. Aggrieved by this notice, the petitioner has filed present writ petition.

It is submitted by Mr. K. Raji Reddy, the learned counsel for the petitioner that when the writ petition filed by the petition was allowed holding that the petitioner was entitled to pay entertainment tax at the reduced rate of Rs. 3,594 per week from the date of reduction in the gross collection capacity till March 31, 1986 the impugned notice issued contrary to the decision of this Court has to be held to be illegal and invalid. We see force in the contention of the learned counsel for the petitioner. Though rule 27(10) of the A.P. Entertainments Tax Rules, 1939, has been amended in G.O.Ms. No. 197 dated February 23, 1987 with retrospective effect from January 1, 1984, that by itself does not empower the respondents to act in contravention of the judgment of this Court and demand payment of entertainment tax at the rate of Rs. 4,637 per week which was held to be incorrect by this Court. It may also be noticed that though rule 27(10) of the A.P. Entertainments Tax Rules was amended with retrospective effect from January 1, 1984 it does not contain any provision validating the demand made contrary to the judgment of this Court. Though an audit objection was raised against the collection of entertainment tax from the petitioner at the rate of Rs. 3,594 per week on the ground that rule 27(10) of the A.P. Entertainments Tax Rules was amended with retrospective effect, in view of the decision of this Court holding that the petitioner was entitled to pay entertainment tax only at the rate of Rs. 3,594 per week from May 24, 1986 to March 31, 1986 and which has become final we have no other alternative than to hold that the impugned notice of demand issued by the first respondent is illegal and invalid. Therefore, the impugned notice of demand dated November 18, 1988, is quashed.

In the view we have taken, the other contentions raised in the writ petition need not be gone into. The writ petition is accordingly allowed. No order as to costs. Advocate''s fee Rs. 150.

Writ petition allowed.