2013 (8) TMI 456 - HC - VAT and Sales Tax

Exemption to Cinema Halls - the petitioner applied for construction of new cinema hall - Exemption granted by the S/G to the new cinema halls for a period of five years - manipulation of the documents by the Asstt. Entertainment Tax Commissioner - Held that - The entire initiation of the proceedings against the petitioner was with malafide intentions for availing exemption - The District Magistrate was falsely prompted by a manipulated report generated by the Asstt. Entertainment Tax Commissioner Aligarh who acted on his own in calling for report from the forensic laboratory on the questions prepared by him and the documents which were sought to be examined - If the Asstt. Entertainment Tax Commissioner was concerned about the backdating of the document he should also have sent the order of permission signed by his predecessor and the District Magistrate for examination by the forensic laboratory - Asstt. Entertainment Tax Officer had some score to settle with the petitioner and that he wanted the proceedings to be concluded against him and recovery be initiated. The question of overwriting on the date of the report of the Revenue Inspector was not relevant both on the ground that no such inspection was mandatory under Rule 3 or under the notification and further that the permission was granted by the District Magistrate - the writ petition was allowed and the order passed by the District Magistrate was set aside - the recovery certificate direct the State Government to initiate enquiry the Asstt. Entertainment Tax Commissioner for having acted with malafide intention against the petitioner and putting the petitioner to great harassment and inconvenience.

Summary

Issues Involved:
1. Legality of the order dated 10.07.2009 withdrawing the exemption of entertainment tax.
2. Legality of the recovery certificate No.197 dated 13.08.2012.
3. Alleged malafide actions by the Asstt. Entertainment Tax Commissioner.
4. Compliance with Rule 3 of the U.P. Cinematograph Rules, 1951.
5. Validity of the forensic examination of documents.

Issue-wise Detailed Analysis:

1. Legality of the order dated 10.07.2009 withdrawing the exemption of entertainment tax:
The petitioner challenged the District Magistrate's order dated 10.07.2009, which withdrew the entertainment tax exemption granted on 08.01.2001. The petitioner argued that the exemption was availed strictly per Government Orders dated 11.08.2000 and 09.01.2001. The District Magistrate's order was based on the claim that the inspection report was backdated from 17.01.2001 to 07.01.2001. However, the petitioner denied any manipulation and asserted that the construction and exemption were lawful. The court found that the permission granted on 08.01.2001 was based on reports available at that time, and there was no evidence of manipulation in the dates of these reports.

2. Legality of the recovery certificate No.197 dated 13.08.2012:
The recovery certificate was issued to recover Rs.5,71,35,671/- from the petitioner, following the withdrawal of the tax exemption. The petitioner contended that the recovery was based on a flawed order influenced by malafide intentions. The court scrutinized the records and found no substantial evidence supporting the withdrawal of the exemption or the subsequent recovery. Consequently, the recovery certificate was deemed unlawful and was set aside.

3. Alleged malafide actions by the Asstt. Entertainment Tax Commissioner:
The petitioner alleged that the Asstt. Entertainment Tax Commissioner, Shri Amrit Pal Singh, demanded a bribe and initiated proceedings to withdraw the exemption when the petitioner refused. The court noted that the Commissioner acted independently, without the District Magistrate's sanction, and sent documents for forensic examination. The court concluded that the proceedings initiated by the Commissioner were driven by malafide intentions, as evidenced by the manipulated report and the lack of proper authorization for the forensic examination.

4. Compliance with Rule 3 of the U.P. Cinematograph Rules, 1951:
Rule 3 governs the application process for constructing a cinema hall. The court highlighted that the rule does not mandate site inspections for granting construction permissions. The petitioner's application and subsequent permissions were found to be in order, with no requirement for the disputed inspection report. The court emphasized that the permissions granted on 08.01.2001 were valid and based on the necessary reports and building plans.

5. Validity of the forensic examination of documents:
The forensic examination was conducted to verify alleged overwriting on the inspection report dates. The court found that the Asstt. Entertainment Tax Commissioner acted without proper authorization in sending the documents for forensic analysis. Moreover, the court observed that the overwriting on the dates did not affect the validity of the permissions granted on 08.01.2001. The forensic report's findings were deemed irrelevant to the case's outcome.

Conclusion:
The court allowed the writ petition, setting aside the District Magistrate's order dated 10.07.2009 and the recovery certificate No.197 dated 13.08.2012. The court directed the State Government to initiate an enquiry against Shri Amrit Pal Singh for acting with malafide intentions and causing undue harassment to the petitioner. Additionally, the State Government was ordered to pay Rs.1 lakh in costs to the petitioner, with the option to recover this amount from Shri Amrit Pal Singh after the enquiry.