Andhra HC (Pre-Telangana)
Maruthi Talkies vs The Entertainment Tax Officer, ... on 27 November, 1986
Equivalent citations: [1988]71STC96(AP)
JUDGMENT K. Bhaskaran, C.J.
1. The sole question that falls for decision in this batch of writ petitions is whether, after the reduction in gross collection capacity of the theatre, the proprietor or the exhibitor thereof, who opted for payment of a specified amount every week as agreed to in terms of section 5 of the A.P. Entertainments Tax Act, 1939 (Act 10 of 1939), hereinafter referred to as "the Act", is entitled to claim during the continuance of the agreement, that is from the date of such reduction in the gross collection capacity till the end of the financial year during which the agreement is valid, a reduction in tax in proportion to the reduction in the gross collection capacity of the theatre.
2. We will state the facts in W.P. No.15992 of 1986 for understanding the nature of the question of law raised; the petitioner, who had opted for paying entertainment tax in respect of his theatre under section 5 of the Act, agreed to pay for the year 1984-85 at the rate of Rs. 6,634 per week calculated at 18 per cent. multiplied by 21 shows on gross collection capacity of Rs. 1,755. While so, on 17th November, 1984 the petitioner made an application to the Joint Collector, who is a licensing authority, for reducing the weekly tax payable from Rs. 6,634 to Rs. 5,761 stating that the seating capacity of his theatre had been reduced from 870 to 792, the difference in gross collection capacity having come down from Rs. 1,755 to Rs. 1,524. The Joint Collector, having allowed the application by his order dated 19th June, 1985, the petitioner on 22nd June, 1985 filed revision in form III before the respondent, the Entertainment Tax Officer, and requested him to revise the weekly tax. Though the respondent did not pass any order, since then tax was paid and received at the reduced rate till the end of the year, up to 31st March, 1986. This writ petition has been occasioned by the notice dated 6th October, 1986 issued by the respondent-Entertainment Tax Officer, asking the petitioner to remit a sum of Rs. 34,920 being the differential tax for the period 22nd June, 1985 to 3rd April, 1986 stating that there was no provision to reduce the tax during the period covered by the agreement under section 5 of the Act.
3. The counsel for the petitioner submitted that the respondent had acted illegally in having demanded the differential tax inasmuch as under rule 27(10) of the A.P. Entertainments Tax Rules, the petitioner was entitled to pay tax at the reduced rate whenever there was a reduction in the seating capacity of the theatre. Rule 27(10) relied on by the petitioner reads as follows :
"The proprietor shall intimate in writing to the Entertainment Tax Officer, every proposed change or variation in the gross collection capacity of the place of entertainment either by virtue of any modification or revision of the rate or rates of admission or any change in the accommodation or class or classes of accommodation as approved by the competent authority not less than fifteen days prior to such change. Where the rates of admission are modified or revised the tickets bearing the modified or revised rates shall not be issued until they are intimated in writing to the Entertainment Tax Officers. The tax as per the revised or modified gross collection capacity shall be payable for the shows held thereafter."
4. It was also submitted by him that but for the fact that rule 27(10) contemplated reduction of tax on reduction of the seating capacity, and the resultant gross collection capacity, there was no need at all for a provision like that, particularly in the context of rule 27(13) providing for the manner in which tax has to be paid when there was an upward revision of the tax on account of the increase in the gross collection capacity. Rule 27(13) reads as follows :
"The Entertainment Tax Officer may revise the amount of tax payable by the proprietor under sub-section (1) of section 5 of the Act 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 upward revision of the rate of payment for admission therein or of the seating capacity or accommodation 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 taxable amount."
5. Our attention has also been drawn to the difference between the wording in rule 33(10) as it stood previously before the amendment brought in force on 21st November, 1984 with effect from 23rd March, 1984. Rule 33(10) as it stood prior to the amendment reads as follows :
"The proprietor or the licensee shall inform the Commercial Tax Officer when there is a change in the gross collection capacity of his place of entertainment by virtue of the upward revision of the rates of admission or of additional accommodation as approved by the competent authority within seven days from the date of such change."
6. It was contended on behalf of the State that inasmuch as section 5 of the Act provides a procedure for the benefit of the tax-payer, he could not be heard to say that once he had entered into an agreement to pay a certain fixed amount per week, he was not liable to pay at that rate throughout the currency of the agreement. It is necessary for us in this context, to know the provisions contained in sub-sections (1), (2) and (6) of section 5 which read as follows :
"(1) In lieu of the tax payable under section 4, in the case of the entertainments held in the theatres specified in column (2) of the table and located in the 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 prescribed, pay the amount of tax to the State Government every week as specified in the corresponding entry in column (3) thereof.
(2) 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.
(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 any increase in the gross collection capacity per show in respect of the place of entertainment by virtue of the upward revision of the rate of payment for admission therein or of the seating capacity or accommodation 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."
7. The submission made by the learned Government Pleader on behalf of the State is that if, as a matter of fact, in terms of sub-section (1) of section 5, an agreement has been entered into, by virtue of the provisions contained in sub-section (2) of the section, the owner of the theatre is not entitled to claim any reduction in the tax payable irrespective of the number of shows conducted, much less is right to say that when there is a reduction in the Seating capacity he is entitled to claim corresponding reduction during the currency of the year. It was also submitted that under sub-section (6) of the section only an upward revision of the tax, on increase of the gross collection capacity, alone is contemplated; and that there was total absence of any provision for reducing the tax corresponding to the reduction in the seating capacity during the period of the agreement. Our attention was also drawn to the judgment dated 19th July, 1984 in W.P. No. 6404 of 1984 and batch. A Division Bench, of which one of us (Anjaneyulu, J., was a party), upheld the constitutional validity of section 5 which did make provision for upward revision under sub-section (6) thereof, without any provision having been made to reduce the tax where there was a fall in gross income capacity due to the reduction in seating capacity.
8. The learned Government Pleader also has brought to our notice the decision of the Supreme Court in Central Bank of India v. Their Workmen . In paragraph 20 at page 23 of the judgment it is stated as follows :
"We do not say that a statutory rule can enlarge the meaning of section 10; if a rule goes beyond what the section contemplates, the rule must yield to the statute. We have, however, pointed out earlier that section 10 itself uses the word 'remuneration' in the widest sense, and rule 5 and form I are to that extent in consonance with the section." We would have fully agreed with the contention of the learned. Government Pleader, but for the fact that rule 27(10), in terms, provides for payment of tax in accordance with the modified or revised rate depending upon the gross income capacity where there is a change. This is in contrast to the position which existed before the amendment of the rule on 21st November, 1984. It is also to be noticed that though sub-section (6) of section 5 provided for upward revision of the tax when there is an increase in the gross income capacity, there is no provision either expressly or by necessary implication in regard to the reduction that might be granted on the decrease in the gross collection capacity, nor is there any prohibition in that sub-section against allowing reduction when there is a fall in the gross income capacity. So long as there is no prohibition against granting the reduction in tax depending upon the reduction in the gross income capacity, and so long it does not run counter to any statutory provision or any rule made thereunder, it would be within the right of the rule-making authority to make such a provision. The rule-making authority, for giving effect to the intention of the legislature, having framed the rules, the Government cannot be heard to say that the rules are ultra vires the section, and that they would not be bound by the rules. The rules are not ultra vires section 5; nor can the Government put forward a plea that they would not be bound by executive orders or rules made for effectuating the intention of the legislature where there is no other provision made for that purpose. Of course, in the absence of any prohibition in the statute in that direction or the rule does not run counter to any rule already made, it shall be open to the rule-making authority to make such rules as are found necessary and expedient under section 16(k) of the Act to make statutory provision meaningful. In this connection, we have been referred to a decision of the Supreme Court in J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. State of U.P. it has been held as follows :
"In applying the rule, however, we have to remember that to harmonise is not to destroy. In the interpretation of statutes the courts always presume that the legislature inserted every part thereof for a purpose and the legislative intention is that every part of the statute should have effect. These presumptions will have to be made in the case of rule-making authority also."
9. So, it could not be said that the rule-making authority did not understand the natural and plain meaning of the language used in the rule, or that the respondent is not bound by the rule.
10. We are satisfied that in view of rule 27(10) of the Rules, as it stood during the material time, i.e., between 22nd June, 1985 and 3rd April, 1986 the petitioner was entitled to pay tax at the reduced rate of Rs. 5,761, and, therefore, the notice of demand for payment of the differential amount of Rs. 34,920 is not justified.
11. 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 under section 5 of the Act. The Entertainment Tax Officers are directed to allow this relief to the respective petitioners. Notices of demand, if any, issued for collection of the differential amount during the period when the reduced rate is applicable, shall stand quashed. The writ petitions are disposed of in the above terms. There will be no order as to costs. Advocate's fee Rs. 200 in each.
12. Writ petitions allowed.