Madras High Court
K.J.Saravanan vs The Chief Secretary To Government Of ... on 29 October, 2015
Author: R.Mahadevan
Bench: R.Mahadevan
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 29.10.2015
CORAM:
THE HONOURABLE MR.JUSTICE R.MAHADEVAN
WP.No.4349 of 2015
MP.No.2 of 2015
K.J.Saravanan Petitioner
Vs
1.The Chief Secretary to Government of Tamil Nadu
Secretariat, Fort St. George, Chennai 600009
2.The Secretary to Government of Tamil Nadu
Home (Cinema) Department, Secretariat, Fort St. George,
Chennai 600009
3.The Principal Secretary to Government
Commercial Tax & Registration Department
Secretariat, Fort St. George, Chennai 600009
4.The Principal Secretary/ Commissioner
Commercial Tax Department, Ezhilagam, Chennai-5
5.The Chairperson and Managing Director
Inox Leisure Limited, Mumbai 400093
6.Multiplex Association of Tamil Nadu, Agaja
Flat 4B, New No.13, Raman Street, Chennai-17 Respondents
Prayer:- This Writ Petition is filed to issue a Writ of Certiorarified Mandamus to call for the records in Circular No.14/2014 Acts Cell IV/13086/2014, dated 6.5.2014 issued by the 4th Respondent and to quash the same and to direct the 2nd Respondent to fix the rate of tickets for admission in each class in each Theatre within the State of Tamil Nadu such that the admission rate prescribed is inclusive of Entertainment Tax and consequently when the tax is exempted, the reduced price of admission after giving the benefit of the tax exemption to the viewer should be printed on the tickets and used by Theatre owners only after getting them sealed by the entertainment tax officer so as to ensure that the Theatre owners reduce the price charged on the consumers proportionate to the exempted tax amount and consequently direct the 5th Respondent to refund the excess sum of Rs.107/- collected from the Petitioner in ticket numbers 034389, 03490, 03491 purchased from the 5th Respondent for the movie 'Kayal' on 25.12.2014 with interest 9% p.a. from the date of purchase of the ticket.
For Petitioner : Mr.P.Wilson, SC for Mr.Richardson Wilson
For Respondents : Mr.A.L.Somayaji, AG assisted by
Mr.T.N.Rajagopalan, SGP-RR1&2
Mr.V.Haribabu, AGP-RR3&4
Mr.Gupta and Ravi RR5&6
ORDER
The Circular No.14/2014 Acts Cell IV/13086/2014, dated 6.5.2014 issued by the 4th Respondent, in respect of collection of entertainment tax under Section 4 of the Tamil Nadu Entertainment Tax Act, 1939, has been challenged in this Writ Petition.
2. The brief facts of the case are that based on the impugned circular, the benefit of exemption from the entertainment tax is not being passed on to the viewers and the Theatre owners collect huge sums and appropriate themselves. The Petitioner had gone to the 5th Respondent Theatre to view the movie Kayal, to which an exemption from entertainment tax has been granted by the Government. Despite the exemption, Rs.120/- per ticket was collected by the 5th Respondent. On enquiry, the Petitioner was informed that the 5th respondent is only following the instructions in the impugned circular. Aggrieved and agitating that the exemptions are granted to promote the viewers and the benefit must be passed on to the viewers, this Writ Petition has been filed, challenging the above said circular of the 4th Respondent.
3. In reply, the respondents have independently filed their courter affidavit and sought for dismissal of this Writ Petition, raising the following objections:-
(a) The Government only fixes the minimum and maximum rates and it is only the licensing authority, who decides on the rate of tickets and the licensee cannot alter the rates.
(b) The exemptions are granted to uplift the movie industry and promote Tamil culture and not to the viewers.
(c) Without challenging the Government Orders, based on which the circular was issued, this Writ Petition is not sustainable,
(d) There is no provision under the Entertainment Tax Act, permitting the licencee to sell the tickets at a lesser rate than fixed by the competent authority.
(e) The issue has been already dealt with by the First Bench of this Court
f) The entertainment tax Officers are strictly monitoring the Theatres and the Theatre owners are not collecting any amount up and over the admission rates fixed.
(g) The Petitioner is seeking to rewrite the provisions of the Entertainment Tax Act, which is impermissible.
(h) The availability or non-availability of exemption or the rate of entertainment tax does not alter the admission rate.
(i) The licencees are acting as per the licensing conditions.
4. Mr.P.Wilson, the learned senior counsel appearing for the Petitioner painstakingly contended that the proprietor or the owner of the Theatre is only an agent to collect the tax from the public and remit the same to the Government, as evident from Section 7 of the Tamil Nadu Entertainment Tax Act. The power to grant exemption vested in Section 8 can only be meant to be for the benefit of the viewers and the Section is very clear without any room for any other interpretation than that the tax is to be collected from the viewers. The 3rd Respondent, for the reasons best known, is taking a different stand now in this writ petition contrary to the earlier stand. The learned senior counsel, referring to various Government Orders, pointed out that initially exemption was granted with regard to films with Tamil title. Later, it was extended to old films and subsequently, few conditions were imposed in GO.Ms.89, dated 21.07.2011. The conditions would imply that the exemption was to attract more viewers and for promoting Tamil and Tamil Culture. The learned senior counsel also countenanced the contentions of the respondents that the admission rate cannot be varied by the licencee, by relying upon Rule 83 (1) (A) (c) of the Tamil Nadu Cinema Regulation Rules, 1957 and also relied upon Condition No.6 to the Form C licence. By placing reliance upon a chart, it was also contented by the learned senior counsel that the ticket price collected from the Petitioner and others is constantly Rs.120/- notwithstanding the exemption and the rate of tax, which is illegal and contrary to the object of the Act. Relying upon the decisions of the Honourable Supreme Court in 1997 (5) SCC 536 (Mafatlal Industries Limited and others Vs. Union of India and others), 2000 (2) SCC 705 (Union of India and others Vs. Solar Pesticides P Limited and another), 2004 (11) SCC 1 (Indian Bank Association, Bombay and others Vs. Devikala Consultancy Service and others), 2009 (8) SCC 235 State of Maharashtra and others Vs. Swanstone Multiplex Cinema Limited), AIR 1961 Mad 525 K.Vishwanathan Vs. The State of Madras by Commissioner of Commercial Taxes Board of Revenue, 1985 (2) SCC 544 State of MP Vs. Vyankalal and another, 1999 (6) SCC 104 K.S.Sathyanarayana Vs. V.R.Narayana Rao), the learned senior counsel sought for allowing this Writ Petition as prayed for.
5. Per contra, Mr.A.L.Somayaji, the learned Advocate General, assisted by Mr.T.N.Rajagopalan, the learned Special Government Pleader for the Respondents 1 and 2 and Mr.V.Haribabu, the learned Additional Government Pleader for the Respondents 3 and 4, contended that the exemption granted is only for the benefit of the Theatre owners and not for the viewers. The learned Advocate General also contended that the tax quotient in the tickets are borne by the Theatre owners and not collected from the viewers and therefore, necessarily when the benefit is granted, the benefit of exemption is enjoyed by them. The exemption is for promoting Tamil movies. Referring to Section 4 of the Tamil Nadu Entertainment Tax Act,1939, the learned Advocate General submitted that the Entertainment Tax is to be calculated at 30% for new films and 20% for the old films, on each admission and the admission rate is determined by the licensing authority under the Tamil Nadu Cinema Regulations Act. The learned Advocate General contended that the issue has been categorically put to rest by the decisions of the First Bench of this Court made in Cont.P.No.1798 of 2014 and WP.Nos.29757/2013, batch etc., as the Government orders have not been challenged. The learned Advocate General also pointed out that the stand of the 3rd respondent in the earlier counter is incorrect and only the current stand that the exemption is for the benefit of the Theatre owners is to be considered. It was also submitted that the Officers of the Commercial Taxes Department are monitoring the Theatres as to whether the ticket charges are collected as per the rates indicated by the licencing authority and tax, whenever there is no exemption, is promptly paid. Placing reliance upon the Judgement reported in 1981 (8) ELT 892 (Mad) (Government of India Vs. Madras Aluminium Co. Limited, Coimbatore), the learned Advocate General sought for dismissal of this Writ Petition.
6. Mr.Gupta Ravi, the learned counsel for the Respondents 5 and 6, contending in the same lines as that of the learned Advocate General, submitted that the exemption is granted for the benefit of the Theatre owners, who exhibit Tamil Films, which satisfy the conditions prescribed. The learned counsel also submitted that no amount purporting to be by way of tax is independently collected from any viewers and whenever there is no exemption, the tax at prescribed rates are paid by the Theatre owners to the Government. The learned counsel also submitted that the admission rate charged on the viewers cannot be varied irrespective of the percentage of the entertainment tax. It was also urged that what is challenged is only a circular and not the Government Orders, based on which the circular has been issued. The learned counsel further alleged that the case has been filed on a misconception and misinterpreting the provisions, so as to rewrite the object, which cannot be permitted. It was further contended by the learned counsel that the ticket rates include the tax and the provisions only contemplate levy on the Theatre owners and not on the viewers and naturally, the benefit of exemption is also available only to the Theatre owners. The learned counsel also placed upon a similar chart to show as to how the rate is arrived at and sought for the dismissal of this Writ Petition.
7. This court heard and considered the submissions made by the learned counsel on either side and also perused the materials placed on record.
Heard all the parties.
8. Upon considering the rival contentions of the learned counsel on either side, the point that arises for determination is as to whether the benefit of exemption is to be passed on to the viewers or not?
9. The learned senior counsel for the Petitioner has contended that since the tax portion is included in the price of ticket paid by the viewer, the benefit of exemption must also be passed on to the viewers. The learned counsel also submitted that the provisions are very clear and hence, the Petitioner is entitled to claim refund. In support of his contentions, the Petitioner has placed reliance upon the following judgements.
10. In 1997 (5) SCC 536 (Mafatlal Industries Limited and others Vs. Union of India and others), the Honourable Supreme Court has held as under:-
108. The discussion in the judgement yields the following propositions. We may forewarn that these propositions are set out merely for the sake of convenient reference and are not supposed to be exhaustive. In case of any doubt or ambiguity in these propositions, reference must be had to the discussion and propositions in the body of the judgement.
(i) Where a refund of tax/duty is claimed on the ground that it has been collected from the Petitioner/ Plaintiff whether before the commencement of the Central Excise and Customs Laws (Amendment) Act, 1991 or thereafter by misinterpreting or misapplying the provisions of the Central Excises and Salt Act, 1944 read with Central Excise Tariff Act, 1985, or Customs Act, 1962, read with Customs Tariff Act or by misinterpreting or misapplying any of the rules, regulations or notifications issued under the said enactments, such a claim has necessarily to be preferred under and in accordance with the provisions of the respective enactments before the authorities specified thereunder and within the period of limitation prescribed therein. No suit is maintainable in that behalf. While the jurisdiction of the High Courts under Article 226 and of this Court under Article 32 cannot be circumscribed by the provisions of the said enactments, they will certainly have due regard to the legislative intent evidenced by the provisions of the said Acts, and would exercise their jurisdiction consistent with the provisions of the Act. The Writ Petition will be considered and disposed of in the light of and in accordance with the provisions of Section 11B. This is for the reason that the power under Article 226 has to be exercised to effectuate the rule of law and not for abrogating it.
The said enactments including Section 11B of the Central Excises and Salt Act and Section 27 of the Customs Act do constitute law within the meaning of Article 265of the Constitution of India and hence, any tax collected, retained or not refunded in accordance with the said provisions must be held to be collected, retained or not refunded, as the case may be, under the authority of law. Both the enactments are self contained enactments providing for levy, assessment, recovery and refund of duties imposed thereunder. Section 11B of the Central Excises and Salt Act and Section 27 of the Customs Act, both before and after the 1991 (Amendment) Act are constitutionally valid and have to be followed and given effect to. Section 72 of the Contract Act has no application to such a claim of refund and cannot form a basis for maintaining a suit or a Writ Petition. All refund claims except those mentioned under Proposition (ii) below have to be and must be filed and adjudicated under the provisions of the Central Excise and Salt Act or the Customs Act, as the case may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal which is not a departmental organ but to this court, which is a civil court.
(ii) Where, however, a refund is claimed on the ground that the provision of the Act under which it was levied is or has been held to be unconstitutional, such a claim, being a claim outside the purview of the enactment, can be made either by way of a suit or by way of a Writ Petition. This principle, is however, subject to an exception: Where a person approaches the High Court of the Supreme Court challenging the constitutional validity of a provision, but fails, he cannot take advantage of the declaration of unconstitutionality obtained by another person on another ground; this is for the reason that so far as he is concerned, the decision has become final and cannot be reopened on the basis of a decision on another person's case; this is the ratio of the opinion of Hidayatullah,C.J. In Tilokchand Motichand (1969-1-SCC-110) and we respectfully agree with it.
Such a claim is maintainable both by virtue of the declaration contained in Article 265 of the Constitution of India and also by virtue of Section 72 of the Contract Act. In such cases, period of limitation would naturally be calculated taking into account the principle underlying clause (c) of sub-section (1) of Section 17 of the Limitation Act, 1963. A refund claim in such a situation cannot be governed by the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be, since the enactments do not contemplate any of their provisions being struck down and a refund claim arising on that account. In other words, a claim of this nature is not contemplated by the said enactments and is outside their purview.
(iii) A claim for refund, whether made under the provisions of the Act as contemplated in Proposition (i) above or in a suit or writ petition in the situations contemplated by Proposition (ii) above, can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of the duty or to the extent he has not so passed on, as the case may be. Whether the claim for restitution is treated as a constitutional imperative or as a statutory requirement, it is neither an absolute right nor an unconditional obligation but is subject to the above requirement, as explained in the body of the judgement Where the burden of the duty has been passed on, the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is only that person who can legitimately claim its refund. But where such person does not come forward or where it is not possible to refund the amount to him for one or the other reason, it is just and appropriate that that amount is retained by the State, i.e., by the people. There is no immorality or impropriety involved in such a proposition.
The doctrine of unjust enrichment is a just and salutary doctrine. No person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his purchaser at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law. The power of the Court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to the State. State represents the people of the country. No one can speak of the people being unjustly enriched.
11. In 2000 (2) SCC 705 (Union of India and others Vs. Solar Pesticides P Limited and another), it has been held thus:-
17. The use of the words "incidence of such duty....." is significant. The words "incidence of such duty'' mean the burden of duty. Section 27(1) of the Act talks of the incidence of duty being passed on and not the duty as such being passed on to another person, To put it differently the expression "incidence of such duty" in relation to its being passed on to another person would take it within its ambit not only the passing of the duty directly to another person but also cases where it is passed on indirectly. This would be a case where the duty paid on raw material is added to the price of the finished goods which are sold in which case the burden or the incidence of the duty on the raw material would stand passed on to the purchaser of the finished product. It would follow from the above that when the whole or part of the duty which is incurred on the import of the raw material is passed on to another person then an application for refund of such duty would not be allowed under Section 27(1) of the Act.
18. Section 27(2) of the Act, as already noticed, deals with the cases where application for refund had been made prior to the amendment of the Act in 1991. Sub-section (a) of the proviso is similar to the provisions contained in Section 27(1) of the Act i.e. refund of duty paid by the importer will be allowed if he had not passed on the incidence of such duty to any other person. Section 28C of the Act would have reference to those goods which are cleared and would undoubtedly have no application to the cases of the captive consumption. It is in respect of those goods which are cleared that Section 28C requires a person clearing the goods to indicate the amount of duty paid thereon which will form part of the price at which such goods are to be sold. It is not possible to accept the contention that because Section 28C of the Act cannot be applied in the cases of goods imported for captive consumption, therefore, the principle of unjust enrichment would not be applicable in such cases. As we have already indicated, Section 27 of the Act has been re-cast with the amendments made in 1991 and the said section does not necessarily have to be read in conjunction with Sections 27C and D of the Act. If the incidence of duty paid on the imported raw material has not been passed on to any other person, then by virtue of proviso to Section 27(2) of the Act in the case where application for refund had been made prior to 1991, refund due on the duty paid would be given to the applicant.
20. We are of the opinion that the aforesaid observations would be applicable in the case of captive consumption as well. To claim refund of duty it is immaterial whether the goods imported are used by the importer himself and the duty thereon passed on to the purchaser of the finished product or that the imported goods are sold as such with the incidence of tax being passed on to the buyer. In either case the principle of unjust enrichment will apply and the person responsible for paying the import duty would not be entitled to get the refund because of the plain language of Section 27 of the Act. Having passed on the burden of tax to another person, directly or indirectly, it would clearly be a case of unjust enrichment if the importer/seller is then able to get refund of the duty paid from the Government notwithstanding the incidence of tax having already been passed on to the purchaser.
12. In 2004 (11) SCC 1 (Indian Bank Association, Bombay and others Vs. Devikala Consultancy Service and others), it has been held thus:-
18. In the event, the contention of the appellants is accepted, the same would give rise to incongruous results. Such an interpretation, as is well-known, must be avoided, if avoidable. Furthermore, a statutory impost must be definite. Having regard to Article 265 read with Article 366(28) of the Constitution of India nothing is realizable as a tax or by way of recovery of tax or any action akin thereto which is not permitted by law.
21. Increase in rate of interest in terms of Section 26C of the Act, thus, has a direct nexus with the statutory impost. The action on the part of the appellants in rounding up of the interest, thus, was wholly unjustified. Once it is held that increase in interest in a justifiable manner pertains to passing of the burden of tax, the contention that the same had been done by the bank in exercise of its contractual power must be rejected. A taxing statute must be construed reasonably. Nothing can be realised by way of tax or akin thereto which has not been authorised by the Parliament.
22. The Executive cannot levy tax. It, for the said purpose, therefore, cannot even take recourse to the process of interpretation of a statute.
13. In 2009 (8) SCC 235 (State of Maharashtra and others Vs. Swanstone Multiplex Cinema Limited), it has been held thus:-
22. We may hereto below notice the method of computation which the respondent themselves showed vis-`-vis the correct method of computation and entertainment duty as per the State:
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Particulars of Ticket rate Corrected method of Tickets as per ticket computation of issued by the entertainment duty Petitioner as per Government Resolutions
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A) Net rate of tickets 93.05 93.05 B) Entertainment Duty 41.95 10.46 C) Service Charges Nil Nil D) Gross rate of ticket 135.00 103.51"
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In view of the aforementioned admitted situation, the State is entitled to raise a contention that whether the respondent was entitled to keep the entire gross receipt for the first three years and 75% of the tax payable for the next two years thereafter is the question. Respondent itself has shown the net rate of tickets which they charged by way of admission charges, entertainment duty separately. Respondent had indisputably been collecting 45% of the amount of admission fee by way of entertainment duty, i.e., the full duty payable in terms of the provisions of the said Act and the Rules.
24. Section 3(13)(a) of the Act uses two different terms, viz., duty and admission. They must be held to have different meanings. It is one thing to say that in terms of the Rules they were not liable to show the rate of tax collected from the cinema-goers but it is another thing to say that although they had collected the full rate of tax from the cinema-goers, they would be entitled to retain the benefit thereof. Whether a statute expressly confers power on an assessee to realize the amount of tax payable to the State from its customers or not, in our opinion, is wholly immaterial. The fact remains that it has to collect such taxes which are to be collected from the consumers and are required to be levied.
25. Once the taxes are levied, Section 3 of the Act entitles the State to collect the same from the owner of the multiplex theatre complex, subject, of course, to the concession which had been given to them. The term "concession" is a form of privilege. {See V. Pechimuthu v. Gowrammal (2001) 7 SCC 617]; P. Ramanatha Aiyar, Advanced Law Lexican (New Delhi: Wadhwa & Company, Nagpur, 2005) Vol. 1 p. 944]. The term "exemption" is also a form of privilege. When a statute confers a privilege, the same must be confined only to the extent provided for therein.
26. A proprietor of a multiplex cinema theatre when collects tax by way of entertainment duty from the cinema-goers, it would be entitled to collect such tax which is subject to levy and collection by the State. The authority in this behalf is implicit. For the aforementioned purpose, only the statute provides for the mode and manner in which the tax is to be collected. Once it is held that the amount realizable from the cinema-goers by way of entertainment duty comes within the purview of the definition of `tax', we see no reason to justify the conclusion of the High Court that the State Government for all intent and purport conferred the retention benefit. If the State intended to provide for a grant, the same should have expressly been stated. Respondent cannot be granted a huge amount by a welfare state indirectly which it cannot do directly.
31. In absence of any express statutory provision, allowing the proprietors of the multiplex theatre to retain the benefit, it is difficult for us to arrive at such an inference. The State has power to impose tax. The State has a power to grant exemption or concession in respect of payment of tax. It has no power in terms of the provisions of the Constitution or otherwise to allow an assessee to collect the tax and retain the same. We will assume that to that effect the provisions are not very clear but the superior courts will not interpret the statute in such a way which will confer an unjust benefit to any of the parties, i.e., either the taxpayer or tax collector or the State. The statute must be interpreted reasonably. It must be so interpreted so that it becomes workable. Interpretation of a statute must subserve a constitutional goal.
33. We are passing this order keeping in view the peculiar situation as in either event it was cinema-goers who had lost a huge amount. It would be travesty of justice if the owners of the cinema theatre become eligible to appropriate such a huge amount for its own benefit. To the aforementioned extent, doctrine of unjust enrichment may be held to be applicable. A person who unjustly enriches himself cannot be permitted to retain the same for its benefit except enrichment. Where it becomes entitled thereto the doctrine of unjust enrichment can be invoked irrespective of any statutory provisions.
14. In AIR 1961 Mad 525 (K.Vishwanathan Vs. The State of Madras by Commissioner of Commercial Taxes Board of Revenue), it has been held thus:-
5. Section 4(1) States thus:
On such payment for admission to any entertainment, there shall be levied and paid to the State Government (except as otherwise expressly provided in this Act), a tax (hereinafter referred to as the entertainments tax) calculated at the following rates... Provided that in the case of cinematography exhibitions the tax shall be calculated at the rates specified above on each payment of admission, after excluding from such payment the amount of the tax (the rest of the section is omitted as unnecessary. Section 7(1) states:-
The entertainments tax shall be levied in respect of each person admitted on payment, and shall be calculated and paid on the number of admissions. Sub clause (2) states:-
The entertainments tax shall be due and be recoverable from the proprietor. It will be seen that under the provisions extracted above the management of a cinema for example is made the collecting agent for the tax. The amount so collected is a tax on the individual attending the entertainment. It being a tax will be due to the Government and not to the proprietor of the cinema. There is however no evidence in this case to show whether the Appellant collected the tax by adding the sum of one anna to a four anna ticket, or by collecting five annas in lump sum from the picture goes undertaking to pay whatever tax that may be duo thereon to the Government from out of the collections. Ex.B1 is a typical statement of the tickets sold. That gives only particulars of the number of tickets sold, total amount collected and tax due thereon at one anna per ticket. It does not show that one anna was collected from each member of the audience on the representation that it was for entertainment tax. But the learned trial judge has observed in his judgement thus:
Further it will be seen that the collections of tax at the rate of one anna per ticket of 5 annas was made by holding out that it was payable to the Government. The seal or stamp on the ticket bears that the tax payable is one anna. The correctness of this statement has not been challenged in the grounds of this appeal. It would follow that although no five annas ticket during the relevant period has been produced in this case, the admitted case of both the parties was that those tickets contained an impression on it, that the entertainment tax payable thereon was one anna.
Thus there was a representation to the individuals who attended the cinema that out of five annas collected for each ticket one anna as collected as land for the entertainments tax.
It was this amount that was paid by the Appellant to the Respondent. The amount so collected from the persons who attended the cinema was for paying it over as entertainments tax to the Government. If that amount was in excess of what was legally due, namely, three pies on each ticket, the excess would belong to the individual who had paid the money and not to the Appellant, who merely collected the money on behalf of the State.
6. The management of a cinema is made by the statute an agent as it were for the collection of the entertainment tax; once the collection was made and the amount paid to the Government the agency would cease. The agent himself would have no interest in the amount collected and paid over to the Government.
7. The learned counsel for the Appellant contended that in the circumstances of the case it should be held that the sum of five annas collected in respect of each ticket was a consolidated sum; as the management did not allocate what was due to them, and what was due to the Government as and for the entertainments tax, the entire sum would belong to the management subject to the duty of the management to pay the proper amount of tax to the Government; if under these circumstances, an excess was paid as tax it must be out of the monies belonging to the management, who would therefore be entitled to recover the same on proving that there was a mistake of law in making the payment. We cannot however agree that what was collected in the instant case was a consolidated sum. While charging an individual picture goes five annas for a particular seat the management in the instant case intended to charge only four annas for itself and one anna for the entertainments tax.. While it may be accepted that what the Appellant paid was in excess of what was due, the excess payment was not of the Appellant's money but represented the excess collected from the various persons who attended the cinema shows during the relevant period by purchasing five annas tickets. The question whether a person entrusted by a statute with the duty of collecting a tax as a part of his business can be said to receive it as his business income, arose under the Madras General Sales Tax Act in Velayudhan Vs. Agricultural Income Tax and Sales Tax Officer, Perumbavoor, 1953 4 STC 338 (AIR 1953 Trav-Co 618). Subramania Iyer J while considering the question whether a tax realised by a dealer from his customer could be included in the dealer's turn over thereby subjecting it to further tax observed.
The sales tax collected by the Petitioner is immune from the levy of any sales tax as the collection was made by him for and on behalf of the State and his obligation was to make it over to the State on whose behalf he made the collection. This view was affirmed in Agricultural Income Tax and Rural Sales Tax Officer Perumbavoor Vs. Velayudhan 1954 5 STC 285. In K.M.Kunju Vs. State of Travancore Cochin, 1954 5 STC 462: AIR 1956 Trav Co 111,it was held that any amount collected by a registered dealer from his customers by way of tax due to the Government regardless of the fact whether the tax so collected was actually due on the sales or not was a collection which had to be handed over to the State. In Deputy Commissioner of Commercial Tax, Coimbatore Vs. Krishnaswami Mudaliar MANU/TN/0369.1954 : AIR 1954 Mad 856, a Bench of this Court holding that there could be no levy of sales tax on sales tax collected by a dealer observed that, The dealer did nothing to the goods sold in order to enable him to earn the tax that is levied upon the sale. It is an obligation imposed by the State upon transactions of sales which liability is to be borne by the purchaser and the amount is to be collected by the seller not because he is entitled to it in his capacity as seller, but because an obligation has been enjoined upon him to make the collection under the statute. We have already referred to the relevant provisions in the Madras Entertainments Tax Act which shows that what is collected by the person providing the entertainment is a tax for being paid over to the Government. The circumstance that such tax is collected along with the admission fee for the particular entertainment cannot alter the nature of what is collected on behalf of the Government or of the obligation on the part of the person so collecting to transfer the entirety of the amount so collected from the public.
The amount thus collected not being the income of the person providing the entertainment would not form his property so that he can in case there is any payment by mistake recover it back. What was paid to the Government was what was collected on its behalf; if there was an excess collection made, the person aggrieved is the person who had paid. The Appellant could have no cause of action in respect of such excess collection which was made and paid over to the Government.
8. Agreeing with the lower court, we are of the opinion that the excess amount of tax paid to the Government by the Appellant was not his property so as to entitle him to recover such excess payment from the Government. The appeal fails and is dismissed with costs.
15. In 985 (2) SCC 544 (State of MP Vs. Vyankalal and another), it has been held thus:-
14. The principles laid down in the aforesaid cases were based on the specific provisions in those Acts but the same principles can safely be applied to the facts of the present case inasmuch as in the present case also the respondents had not to pay the amount from their coffers. The burden of paying the amount in question was transferred by the respondents to the purchasers and, therefore, they were not entitled to get a refund. Only the persons on whom lay the ultimate burden to pay the amount would be entitled to get a refund of the same. The amount deposited towards the Fund was to be utilised for the development of sugarcane. If it is not possible to identify the persons on whom had the burden been placed for payment towards the Fund, the amount of the Fund can be utilised by the Government for the purpose for which the Fund Was created, namely, development of sugarcane. There is no question of refunding the amount to the respondents who had not eventually paid the amount towards the Fund. Doing so would virtually amount to allow the respondents unjust enrichment.
16. In 1999 (6) SCC 104 (K.S.Sathyanarayana Vs. V.R.Narayana Rao), it has been held thus:-
8. It was a case where instead of going into a protracted trial, trial court could have decreed the suit of the plaintiff against the 1st defendant as well at the stage of Order X (Examination of Parties by the Court) of the Code of Civil Procedure. After the 1st defendant admitted having received rupees one lakh from the plaintiff he could not retain that money on the spacious plea that there was no privity of contract between him and the plaintiff. Amount of rupees one lakh had been given to him by the plaintiff as he wanted to purchase ground floor of his property. The agreement to sell for the purpose was entered into through the 2nd defendant whom the 1st defendant had authorised to enter into any such agreement on his behalf. The plaintiff could not have paid to the 1st defendant rupees one lakh but for the agreement to sell in respect of ground floor of his property. It is only on the basis of this agreement (Exh.P-2) which is entered into by the 2nd defendant on the strength of Exh.P-1 that the plaintiff paid rupees one lakh each to the 1st and 2nd defendants. If we accept the pleadings of the 1st defendant then the amount of rupees one lakh had been given by the plaintiff under some mistake. In any case, it was not a payment gratuitously made. Doctrine of undue enrichment would squarely apply in the present case and the plaintiff would be entitled to restitution. In this connection Sections 70 and 72 of the Indian Contract Act, 1872 may be referred to, which are as under:-
"70. Obligation of person enjoying benefit of non-gratuitous act.- Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered.
72. Liability of person to whom money is paid, or thing delivered, by mistake or under coercion.- A person to whom money has been paid, or any thing delivered, by mistake or under coercion, must repay or return it."
17. In 2011 (8) SCC 161 (Indian Council for Enviro Legal Action Vs. Union of India and others), it has been held thus:-
151. Unjust enrichment has been defined as: "A benefit obtained from another, not intended as a gift and not legally justifiable, for which the beneficiary must make restitution or recompense." See Black's Law Dictionary, Eighth Edition (Bryan A. Garner) at page 1573. A claim for unjust enrichment arises where there has been an "unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience."
152. `Unjust enrichment' has been defined by the court as the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience. A person is enriched if he has received a benefit, and he is unjustly enriched if retention of the benefit would be unjust. Unjust enrichment of a person occurs when he has and retains money or benefits which in justice and equity belong to another.
153. Unjust enrichment is "the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience." A defendant may be liable "even when the defendant retaining the benefit is not a wrongdoer" and "even though he may have received [it] honestly in the first instance." (Schock v. Nash, 732 A.2d 217, 232-33).
154. Unjust enrichment occurs when the defendant wrongfully secures a benefit or passively receives a benefit which would be unconscionable to retain. In the leading case of Fibrosa v. Fairbairn, [1942] 2 All ER 122, Lord Wright stated the principle thus :
"....(A) Any civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from another which it is against conscience that he should keep. Such remedies in English law are generically different from remedies in contract or in tort, and are now recognized to fall within a third category of the common law which has been called quasi-contract or restitution."
155. Lord Denning also stated in Nelson v. Larholt, [1947] 2 All ER 751 as under:-
"It is no longer appropriate, however, to draw a distinction between law and equity. Principles have now to be stated in the light of their combined effect. Nor is it necessary to canvass the niceties of the old forms of action. Remedies now depend on the substance of the right, not on whether they can be fitted into a particular frame-work. The right here is not peculiar to equity or contract or tort, but falls naturally within the important category of cases where the court orders restitution if the justice of the case so requires."
176. The above principle has been accepted in India. This Court in several cases has applied the doctrine of unjust enrichment.
18. In Manu/TN/2301/2008 (P.Rajaji Vs. The State of Tamil Nadu), it has been held thus:-
34. Reliance was first placed on the judgement of the Constitution Bench of the Supreme Court in the case of Sant Ram Sharma Vs. State of Rajasthan (AIR 1967 SC 1910). In paragraph 7 at page 1914 of the report Justice V.Ramaswami, speaking for the Bench,laid down that even without framing statutory rules, the government can issue administrative instructions regarding the principle to be followed in promotions of the officers concerned to selection grade posts. The learned Judges held that administrative instructions cannot amend or supersede statutory rules, but if the rules are silent on any particular point government can fill up the gaps and supplement the rules and issue instructions not inconsistent with the rules already framed.
19. In AIR 2007 Mad 317 (P.Sankara Narayanan Vs. State of Tamil Nadu), it has been held as under:-
10. In spite of the valiant efforts made by the learned Special Government Pleader, we are not impressed by the submission made on behalf of the State justifying the imposition of entertainment tax at a higher rate for the films dubbed in Tamil. First of all it has to be remembered that burden of entertainment tax is ultimately borne by movie goer rather than by a Producer, distributor or film exhibitor. The taxing event under the Act is on the entertainment of the movie goer. The rate of tax is determined on the basis of the amount collected from such person. We fail to see any reason as to why a person who sees a film dubbed into Tamil would be required to pay more than a person who watches an original Tamil film.
11. Even assuming that it is the producer who has to pay the tax, discrimination is writ large on the face of it an we fail to see any rational for the purpose of payment of entertainment tax at different rates. A producer, who produces a film in Tamil and dubs such film in other language such as Telugu, English or Hindi and exhibits such film within Tamil Nadu is not required to pay at the rate of 50%. Similarly, a producer, whether within Tamil Nadu or without, produces a film in any other language such as Telugu, English or Hindi and exhibits such films within Tamil Nadu are also not required to pay entertainment tax at higher rate. Only a producer who produces a film in any other language such as Telugu, English and Hindi and subsequently dubs such film in Tamil and exhibits the same within Tamil Nadu will be affected by such imposition of entertainment tax at a differential rate.
17. As we had already noticed, the burden of taxation is ultimately passed on to the movie goers and the producers or distributors or exhibitors are merely collecting agents. From the point of view of a movie goer, it makes any difference to him, whether a film good, bad or indifferent, is made originally in Tamil or such a film made in any other language is subsequently dubbed in Tamil. It is very difficult to fathom as to why a movie goer, who is very interested in watching a film should be subjected to pay higher rate of entertainment tax merely because the film which he wants to view was originally produced in some other language and was subsequently dubbed in Tamil. From the view point of such a person, obviously the provisions of the (3rd Amendment) Act are discriminatory.
20. Per Contra, the judgement in 1981 (8) ELT 892 (MD) (Government of India Vs. Madras Aluminium Co. Limited, Coimbatore) was relied on behalf of the respondents. In paragraphs 12 and 13, it has been held as under:-
12. A somewhat similar question arose for consideration before a Division Bench of the Delhi High Court in Modi Rubber Ltd. v. Union of India, 1978 E.L.T. (J 127). There, the court was concerned with the scope of notification GSR 409(C), dated 16th June 1976, issued under rule 8(1) giving 25 per cent exemption from the payment of excise duty on the articles listed in the table at the end of the said notification. Tyres and tubes were items 18 and 19 in the said schedule. The exemption provided in the notification was to the following effect. In respect of the goods listed in the table at the end of the notification and cleared from one or more factories in excess of the base clearances by or on behalf of a manufacturer from so much of the duty of excise leviable thereon as in excess of 75 per cent of such duty. The base clearance is the clearance of excisable goods, which is liable to payment of full excise duty. The exemption of 25 per cent is available only on that clearance which is in excess of the base clearance during the basic period. If the base clearance is to be found out with reference to the value of the goods as if to be done in respect of tyres and tubes manufactured by the manufacturer, then the method set out in paragraph 2(1)(b) of the notification is to be followed which is as follows :-
"For the purpose of determining the basic period, where the clearance of all specified goods are compared in terms of value as specified in column (4) of the said table, such value shall be value as determined under S. 4 of the Central Excises and Salt Act, 1944..... As adjusted with reference to the average index number of wholesale prices in India for manufacturers."
There also the excise authorities had taken the view that since the benefit of exemption had to go to the consumer, the manufacturer was not entitled to the benefit of adjusting the actual money value of the goods in terms of the normal wholesale price with the index number for wholesale price manufactures current for the relevant years in India. The stand of the excise authorities was questioned in a writ petition before the High Court. The manufacturer contended that the benefit of paragraph 2(1)(b) of the notification requiring the actual value of the goods manufactured by the manufacturer under S. 4 modified by adjustment with the index under the wholesale price manufactures for the relevant years under paragraph 2(2)(b) was not in consonance with the object of the notification. The contention of the excise authorities was that the petitioner would be entitled to the benefit of the duty rebate only if it reduces the price proportionate to the reduction in duty so as to pass on the benefit of reduction of duty to the purchasers of tyres and tubes. The Division Bench after referring to the various provisions of the Central Excises and Salt Act, observed -
"When we turn to the First Schedule column 3, we find that the duty is imposed either ad valorem or according to the weight or measurement. It could also be according to the number of the goods. Reading the Act with the schedule, it would appear that while the duty is imposed by the statute on the goods as they re produced the assessment of the question of the duty is made in the schedule. The value of the goods is not the only criterion for such assessment. Even the value may be either the normal wholesale price or a fixed tariff value and different tariff value may be fixed for different articles as is made clear by S. 3 itself. S. 3. itself does not refer to the clearance of the goods, from the factory. The time and the manner of payment of duty is stated by rule 9 and it is there that it is stated that no excisable goods shall be removed from the factory or godown of a factory until excise duty thereon has been paid in such a manner as is prescribed in the Rules. The contention of the respondents that the effective rate of duty is chargeable only on value of the goods at the time of the clearance of the goods from the factory does not, therefore, fix the point of the incident of the duty. It only fixes the point of the assessment of the duty. It is true that Section 4 of the Act refers to the value of the goods which is the normal selling price of the goods and ordinarily the producer of the goods would add the excise duty leviable on the goods to his cost of production and the margin of profit before fixing tariff wholesale price of the goods. But Section 4 is not the charging section. That is Section 3. Section 4. is the manner of the levy of duty according to selling price. It is true that in assessing the duty the Government would take into consideration either the selling price or the weight or the volume or the number or the tariff value of the goods. Nevertheless, this does not mean that the excise duty is imposed on the selling price of the goods. This is demonstrated by the fact that it may be imposed only on the weight or volume or number irrespective of either the selling price or the tariff value.
Further, it is quite open to the Government to grant an exemption subject to conditions. If the object of the Government in granting an exemption is to benefit the consumer by the reduction of the selling price of the goods, then the Government notification granting the exemption should itself say so. For instance, notification GSR 1089, dated 29th April, 1969 expressly stated that the benefit of the exemption was to be available only to those manufacturers who produce the proof to the satisfaction of the Collector that such benefit has been passed on by them to whom they have sold the goods. Such a condition has to be a part of the exemption notification. For the notification is 'law'. But after enacting the law, such a condition cannot be imposed by administrative directions, guidelines or press note. These administrative acts cannot go contrary to the statutory notification."
On the question as to how the exemption provided for the in the notification has to be worked out, the Bench pointed out :
"In order to determine the excise duty leviable on the items produced by the petitioner, it is necessary first to determine the assessable value under S. 4 of the Act. It is only after the assessable value is determined that the excise duty leviable thereon is ascertained. It is erroneous to suggest, as is done by the Government, that assessable value will have to be again determined after taking into consideration the relief and exemption granted under the notification, dated 16th June, 1976. It is neither intended by the notification nor is it practicable that the assessable value should be determined after giving effect to the relief and the exemption contemplated under the said notification. This is effect should be the stand of the Government by its insistence that it is only when the benefit of the rebate in duty is passed on by the manufacturer to the consumers that the manufacturer becomes entitled to the benefit of exemption from duty. In other words, if the price to the customer inclusive of duty remains the same and the duty leviable thereon is calculated and thereafter the relief permissible under the notification is reduced, as the Government intends to do, then according to the suggestion in the show cause notices, the assessable value would thereafter have to be recalculated and it would be higher than the assessable value in which the excise duty leviable was calculated in the first instance. Having arrived at this assessable value, if the duty is then to be calculated it would not be the same as before and in this manner the calculation would keep on changing. Such a procedure would lead to an absurd situation."
The learned Judges also pointed out that any other interpretation of the notification would lead to discrimination in that the benefit of rebate of duty is required to be passed on to be consumers only in cases where the duty is to be calculated on the basis of the assessable value determined under S. 4 of the Act and not in cases where the duty is calculated on the basis of fixed tariff values or weight or number. With respect, we are inclined to agree with the view taken in that case.
13. The plain wording of the notifications indicates that from the excise duty leviable certain are to be made. We do not see how the notification could be interpreted as applicable only in cases where the excise duty is reduced from the wholesale price and the benefit of exemption is passed on to the consumers. As already pointed out the number in which the exemption notification is interpreted by the excise authorities involves the application of the notification twice, while the method adopted by the petitioners in the writ petitioners is a simple method giving due effect to the notification which provides for deduction of the portion of the excise duty from the total liability for excise duty.
21. In Cont.P.No.1728/14 batch etc., the Division Bench of this Court has held as under:-
4.Number of concerns which have been expressed by the respective petitioners, in our view, stand redressed if the G.Os. are read in the context of the Circular. The solution is crystallised in terms of para 9 of the Circular which reads as under:-
9.While so, it is vital to monitor the implication of the said Government Order, issued for each Tamil titled movie that:
(i) Up to the date of issue of Government Order granting exemption, entertainment tax was properly collected from the viewers and remitted to the State exchequer, in accordance to the provisions of the TNET Act, 1939.
(ii) From the date of issue of Government Order granting exemption from payment of entertainment tax, the theatre owners had not collected any amount towards entertainment tax, explicitly showing the quantum of tax in the tickets issued for admission. The Entertainment Tax Officers shall initiate action as prescribed under the provisions of section 14 of the TNET Act, 1959 against the theatre owners in cases where violations of the above conditionalities are seen. However, before taking any action in this regard, with reference to the provisions of Section 11 and 12A, the Entertainment Tax Officer shall make an inspection of the theatre situated within their jurisdiction and obtain a written deposition from the owner or the authorized person in charge of the theatre available at the time and also from the viewers of that particular show. Further, the theatre owners should not have charged and collected any amount beyond the rate prescribed by the competent authority for admission in to these shows- (i.e., in case of Chennai Corporation - by the Commissioner of Police and in all other places by the District Collectors of the Revenue District concerned) with reference to the provisions of Rule 83- 1A (a) of the Tamil Nadu Cinemas Regulation Rules, 1957.
5. We are of the view that if there is any individual grievance qua exemption granted to a particular film or any infraction of the G.Os. as explained by the Circular, then that particular aspect should be assailed before the Court rather than through these petitions now.
6.Learned Counsel for the petitioners have also submitted that exemptions have been granted inappropriately to certain films for which they have made representations. If such representations had been made, the concerned body dealing with the same will examine the worth of the representations and take a decision on the same within a time bound manner. We would consider a time period of one month suffice to consider such representations.
22. Before going into the rival contentions, upon perusal of the orders of the Division Bench of this Court, it is clear that the petitions, in which the Government orders that were challenged, were not decided on merits and the same was left open to be decided in appropriate cases, as the various Government orders have culminated into the impugned circular. Hence, this court is of the view that the order of the Division Bench of this Court does not prevent this court from deciding the dispute on merits.
23. Section 4 of the Tamil Nadu Entertainment Tax Act reads as follows:-
4. Tax on payment for admission to entertainments. (1) There shall be levied and paid to the State government, a tax (hereinafter referred to as the entertainments tax) calculated at the following rates, namely:-
(A) at the rate of 2 [thirty] per cent of the gross payment for admission inclusive of the amount of the tax for new film; and (B) at the rate of 2 [twenty] per cent of the gross payment for admission inclusive of the amount of the tax for old film.
A reading of the above Section indicates two acts. One is levy and the other is the payment to the state Government, implying that the Theatre owners collect the taxes from the viewers and remit it to the authorities. There cannot be any second opinion about the same. This court is of the view that the judgements relied upon by the counsel for the Petitioner in 2009 (8) SCC 235, AIR 1961 Mad 525 and AIR 2007 Mad 317 cited supra would be applicable and the judgement relied upon on behalf of the respondent in 1981 (8) ELT 892 cited supra is not applicable because it is a case relating to exemption on customs duty wherein the value of the goods were enhanced to nullify the exemption and the provision of law, which warrants interpretation are completely different.
24. The mode of calculation for levy and payment is provided under Section 7 of the Act which reads as under:-
7. Manner of payment of tax:- (1) The entertainment tax shall be levied in respect of each person admitted 7 [or deemed to have been admitted] on payment, and shall be calculated and paid on the number of admissions.
(2) The entertainment tax shall be due and be recoverable from the proprietor.
(3) Where the payment for admission to an entertainment is made wholly or partly by means of a lump sum paid as a subscription of contribution to any institution or for a season ticket or for the right of admission to a series of entertainments or to any entertainment during a certain period of time, the entertainment tax shall be paid on the amount of the lump sum, but where the 8 [State] government are of opinion that the payment of a lump sum or any payment for a ticket represents payment for other privileges, right or purposes besides the admission to an entertainment, or covers admission to an entertainment during any period during which the tax has not been in operation, the tax shall be levied on such an amount as appears to the 8[State] Government to represent the right of admission to entertainment in respect of which the entertainment tax is payable.
25. It can be seen that the tax is to be calculated on each admission, implying that on the number of seats occupied and not on the total seats. The power to grant exemption is derived from Section 8, which reads as under:-
8. Power to exempt or remit tax:-
(2) The State Government may, subject to such conditions as they deem fit, by general or special order, exempt any entertainment or class of entertainments from liability to the entertainments tax payable under this Act.
26. The chart produced and accepted by both parties is quoted below for reference:-
Break Up of Ticket Price at Rs.120/-
Unexempted New Tamil Movies Net Rate of Admission Rs.83.30 Entertainment Tax @ 30% of Rs.119 Rs.35.70 Maintenance Charge Rs.1/ Total Ticket Price paid by Viewer Rs.120/-
Unexempted Old Tamil Movies Net Rate of Admission Rs.95.20 Entertainment Tax Rs.23.80 Maintenance Charge Rs.1/-
Total Ticket Price paid by Viewer Rs.120/-
Exempted Tamil Movies Net Rate of Admission Rs.119/-
Entertainment Tax Nil Maintenance Charge Rs.1/-
Total Ticket Price paid by Viewer Rs.120/-
27. The admission amount is indisputably paid by the viewers. The rate of tax is to be calculated based on the admission amount and not on the number of seats. Therefore, the theatre owners cannot even have any control over the tax amount, as the very calculation itself depends upon the viewers who visit the theatre. If the contention of the respondents are agreed, it would mean that the theatre owners pay entertainment tax at full rate of occupancy even if there are only some viewers. The said contention is fallacious and far from truth. The chart produced by both the parties are similar and it clearly reflects that when no exemption is granted, the tax portion is borne by the viewer. Further, from the chart, it can be seen that whenever there is no exemption, the admission fee is Rs 83.30 for New Movies and Rs 95.20 for Old movies and the Entertainment tax is 30% or 20% on the admission rate. This rate is arrived by the Theatres keeping in view the ticket rate prescribed by the licencing authority @ Rs 120/- per admission, which is gross payment as contemplated under Section 4. Therefore, it is only with the tax amount collected from each viewer, the gross admission rate is reached. It is not the case that the theatre owners collect Rs 83.30 or Rs 95.20 Plus maintenance charge and pay the tax out of their pocket when no exemption is granted.Therefore, when they are entitled to collect taxes, when no exemption is granted, then when an exemption is granted, the same must be passed on to the viewers.
28. It is also pertinent to mention here that by amendment to the TNCR Act, with effect from 01.01.2007, only the maximum and minimum rates were prescribed and a provision was also made for general revision of rates either suo motu or on an application from licensees. It is also relevant to refer to GO.Ms.89 Commercial Taxes and Registration (C1) Department, dated 21.07.2011, which reads as under:-
Extract Tamil Nadu Entertainments Act, 1939 Films Giving Entertainment Tax exemption to films titled in Tamil Amending basic eligibilities order issue:-
Commercial Taxes and Registration (C1) Department GO.No.89 Dated: 21.7.2011 Read:
1.GO (Standing) No.72, Commercial Taxes and Registration Department, dated 22.7.2006.
2.GO (Standing) No.147, Commercial Taxes and Registration Department, dated 20.11.2006.
3.GO (Standing) No.85, Commercial Taxes and Registration Department, dated 30.3.2007.
4.GO (Standing) No.159, Commercial Taxes and Registration Department, dated 22.8.2007.
Order In the G.O. read first above, total exemption was given to new films titled in Tamil. In the second G.O. read above, the entertainment tax exemption was extended to old films also. In the third G.O read above, entertainment tax exemption was extended to those possessing copy right for Tamil films. In the fourth G.O read above, a committee was constituted to review and recommend whether the Tamil title of old and new films screened were in keeping with Tamil culture and dignified.
2. Just because films were titled in Tamil, it could not be ensured that the core of the stories of such films were in keeping with Tamil culture and dignified. Moreover, some films without standard get tax exemption just because they are titled in Tamil.
3. In the above circumstances, along with the condition that the films should be titled in Tamil for getting entertainment tax exemption, the following stipulations are determined and order issued.
1.Such a film should have obtained 'U' certificate from the Film Censor Board.
2.The core of the story of the film should be suitable for the development of Tamil language and culture.
3.Except for the scenes using other languages in consideration of the necessity of the film, mostly the dialogues of the film should be in Tamil.
4.If violence and obscenities are found more,such a film will lose eligibility for tax exemption.
The above stipulations will be applicable for pending applications seeking entertainment tax exemption for films. Further the Government orders that a new special committee will be formed for viewing films fulfilling conditions stipulated for giving entertainment tax exemption and recommend. The order of constituting such a new committee will be issued separately.
(By order of the Governor)
29. Upon careful consideration, it can be seen that the grant of exemption has devolved from mere title to the development of Tamil Language and culture. It also limits use of other languages, violence and obscenities. It is also to be noted that the exemption is granted only to the films and all the conditions are imposed keeping the viewers in mind. The duties of the theatre owners are only to display, whereas it requires certain actions from the film makers to comply with the conditions. The purpose of the exemption, as this court has already pointed out, is mainly to develop and promote Tamil Culture. The object can only mean that by viewing the movies, which comply with the conditions, the viewers would develop further liking towards the Tamil language and Culture. Therefore, it can be safely said that the exemptions are to woo more viewers and therefore, the benefit of an exemption is only for the viewers, who bare the tax burden. An exemption is not a right. It is only a grant. The authority, granting the same, has powers to impose any conditions. Section 8 of the Act has to be read along with Section 4 of the Act and the provisions of the TNCR Act. In the judgement reported in AIR 2007 MAD 317, the Division Bench of this Court, holding that the tax is borne by the viewers, struck down the levy at different rates for Original Tamil movies and Dubbed movies. Hence, the contention of the respondents that the orders of exemption are for the benefit of the industry and the Theatre owners and not passed on to the viewers is rejected. It is also worthwhile to mention here that the earlier stand of the 3rd respondent in W.P No 31064/2014 would be correct stand. It is also unfair and arbitrary to contend that when there is no exemption, the tax would be borne by the viewer and when there is exemption, the theatre owners would appropriate it.
30. In so for as unjust enrichment is concerned, as rightly contended by the learned senior counsel for the Petitioner, the collection and retention of tax against the provisions of law is unjustifiable and would amount to unjust enrichment. As evident from the various cases relied upon by the learned senior counsel for the Petitioner above, once it is found that the tax is collected against the statute, the same is liable to be refunded. Any levy of tax or any amount in the like nature would be amenable to Article 265 of the Constitution of India. This court has already held that what is paid by the 5th Respondent is only the amount collected from the Petitioner and other viewers. Hence, the Petitioner is entitled to refund of Rs 107/-. In so for as any similar claim, since it is not possible to refund the sums, the amounts shall be remitted to the Respondents 3 and 4.
31. The impugned circular reads as under:-
Circular No.14/2014 Office of the Principal Secretary Acts Cell IV/13086/2014 Commissioner of Commercial Taxes, Chepauk, Chennai-5 Dated: 6.5.2014 CIRCULAR Sub: Tamil Nadu Entertainment Tax Act, 1939 Collection of Entertainments Tax under Section 4 of the TNET Act,1939 certain clarification issued reg.
Ref: 1. GO.Ms.No.72, Commercial Taxes and Registration (C1) Department, dated 22.07.2006.
2. GO.Ms.No.147, Commercial Taxes and Registration (C1) Department, dated 20.11.2006.
3. GO.Ms.No.159, Commercial Taxes and Registration (C1) Department, dated 22.08.2007.
4. GO.Ms.No.89, Commercial Taxes and Registration (C1) Department, dated 21.07.2011.
I invite kind attention to the references cited.
During the budge session for the year 2006-07 Government announced many concessions to encourage the film industry in general and also to promote Tamil culture in particular. One of these concessions was to grant exemption to Films produced in Tamil Language in Tamil Titles, with effect from 22.7.2006.
2. Accordingly, the Government issued orders in GO.Ms.No.72, Commercial Taxes and Registration (C1) Department, dated 22.07.2006 exempting new films with Tamil titles from payment of entertainment tax.
3. Subsequently, Government issued orders in GO.Ms.No.147, Commercial Taxes and Registration(C1) Department, dated 20.11.2006, extending the concession to old Tamil also, with Tamil titles. The Commissioner of Commercial Taxes was vested with the power to certify that the title of the film is in Tamil.
4. It was then brought to the notice of the Government that many Tamil films which were certified by Regional Censor Board with A or U/A certificates were also granted exemption from the payment of entertainment tax simply because the films had a Tamil Title. Further, most of the films which got exemption from entertainment tax by naming in Tamil names contained scenes of violence and adult only nature. Besides, whereas the granting of exemption had put financial burden on the Government, it has not helped the movie goers in any manner as the theatres continued to charge the same rates for films with a concession as in the case of other films. Substandard movies also got exemption from entertainment tax only for the reasons that the films were titled in Tamil.
5. Therefore, the Government issued orders in GO.Ms.No.159, Commercial Taxes and Registration (C1) Department, dated 22.08.2007, restricting the concession not to those old or new Tamil films bearing Tamil titles, but only to those conforming with Tamil culture and dignity.
6. In GO.Ms.No.89, Commercial Taxes and Registration (C1) Department, dated 21.07.2011, the following additional eligibility criteria were prescribed for grant of exemption from payment of entertainment tax, in addition to the titling of the films in Tamil.
i.The film should have 'U' certificate from the Censor Board of Film Certification.
ii.The story should have explicit elements promoting Tamil language and Tamil culture.
iii.The dialogue in the film should be in Tamil except these scenes which warranted usage of other language(s) depending upon the context.
iv.Vulgarity and violence beyond the tolerable level will make the film ineligible for exemption.
7. Government also ordered constitution of a Committee to watch films that they confined to the above criteria and to recommend entertainment tax exemptions.
8. Based on the recommendations of the committee, by invoking the provisions in sub section 2 of Section 8 of the Tamil Nadu Entertainment Tax Act, 1939, Government have grants exemption from payment of entertainment tax, from the date of issue of the order.
9. While so, it is vital to monitor the implication of the said Government order, issued for each Tamil titled movie that:
i.Up to the date of issue of Government Order granting exemption, entertainment tax was properly collected from the viewers and remitted to the State exchequer,in accordance to the provisions of the TNET Act, 1939.
ii.From the date of issue of Government Order granting exemption from payment of entertainment tax, the theatre owners had not collected any amount towards entertainment tax, explicitly showing the quantum of tax in the tickets issued for admission. The Entertainment Tax Officers shall initiate action as prescribed under the provisions of Section 14 of the TNET Act, 1959 against the theatre owners in cases where violations of the above conditionalities are seen. However, before taking any action in this regard, with reference to the provisions of Section 11 and 12A, the Entertainment Tax Officer shall make an inspection of the theatre situated within their jurisdiction and obtain a written deposition from the owner or the authorised per person in charge of the theatre available at the time and also from the viewers of that particular show. Further, the theatre owners should not have charged and collected any amount beyond the rate prescribed by the competent authority for admission in the these shows (i.e. in case of Chennai Corporation by the Commissioner of Police and in all other places by the District Collectors of the Revenue District concerned) with reference to the provisions of Rule 83 (1A)(a) of the Tamil Nadu Cinemas Regulation Rules, 1957.
32. Upon careful reading of the circular, this court is of the view that the circular per se is not bad in law, as it only lacks clarity. In view of the above finding that the exemption benefit must be passed on to the viewers, as the burden falls on them, there is no necessity to strike down the circular.
33. In the result, this Writ Petition is disposed of with the following directions:-
(a)The Respondents 1 to 4 shall ensure that the tax burden is not passed on to the viewers by the theatre owners in cases of exemption from the levy of entertainment tax by issuing appropriate orders within four weeks from the date of receipt of a copy of this order.
(b)The Respondents 1 to 4 shall take inventory of the tickets sold by the 5th Respondent and the members of the 6th respondent association to verify whether the exemption has been passed on to the viewers or not and if any violation is found out, initiate proceedings as per law.
(c)The 5th respondent shall refund the sum of Rs 107/- to the Petitioner.
No costs. Consequently, the connected MP is closed.
29.10.2015 Index:Yes/No Web:Yes/No Srcm To:
1.The Chief Secretary to Government of Tamil Nadu, Secretariat, Fort St. George, Chennai 600009
2.The Secretary to Government of Tamil Nadu, Home (Cinema) Department, Secretariat, Fort St. George, Chennai 600009
3.The Principal Secretary to Government, Commercial Tax & Registration Department, Secretariat, Fort St. George, Chennai 600009
4.The Principal Secretary/ Commissioner, Commercial Tax Department, Ezhilagam, Chennai-5 Note to Office:-
Issue on 2.11.2015 B/o Srcm R.MAHADEVAN, J.
Srcm Pre Delivery Order in WP.No.4349 of 2015 29.10.2015