TMI Blog2010 (3) TMI 999X X X X Extracts X X X X X X X X Extracts X X X X ..... nema hall owners/licensees, and the cinema hall owners/licensees would be liable to pay the entertainment tax for the period of exemption. Even if the liability to pay entertainment tax as contemplated in the proviso to sub-section (3) of section 11 may be imposed on the producer and/or the distributor as they are also covered within the meaning of the word "proprietor", still it was open to the State Government to fix the liability on the cinema hall owner/ licensee, who is also covered within the meaning of the word "proprietor ".This is what has been done by the State Government while granting exemption by the Government order dated October 16, 2003 by including clause (3) in the said Government order wherein it was, inter alia, provided that in case of violation of any of the conditions contained in the said Government order, the entertainment tax would be imposed and realized in accordance with the Rules from the concerned cinema halls in respect of the entertainment tax exempted exhibition. W.P. dismissed. - 56, 101,276, 292, 427 (Tax) of 2005 - - - Dated:- 19-3-2010 - AGRAWAL R.K. AND MEHROTRA S.P. , JJ. The controversy involved in the aforesaid five writ petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led as annexure CA1 to the counter-affidavit filed on behalf of the respondents in the aforementioned Civil Misc. Writ Petition No. 56 (Tax) of 2005. It will be noticed that condition No. 1 in the aforesaid Government order dated October 16, 2003 provided that a maximum of 12 prints of the above film Zamin would be exhibited at one time in the entire State of Uttar Pradesh and only one print of the film would be exhibited at one time in a District. It further appears that the Entertainment Tax Commissioner, Uttar Pradesh, sent a communication dated December 6, 2003 to the State Government, inter alia, stating that the film Zamin was exhibited at the same time in more than one cinema hall in various districts mentioned in the said communication, and further, the said film was being exhibited at the same time in 23 districts, and, thus, Condition No. 1, as contained in the Government order dated October 16, 2003, had been violated. The Entertainment Tax Commissioner in the said communication recommended for consideration of the withdrawal of the exemption granted to the film Zamin by the said Government order dated October 16, 2003. Copy of the said communication dated De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... response to the said notice, the petitioner submitted its reply dated January 5, 2005, copy whereof has been filed as annexure 5 to the writ petition. Thereafter, the District Magistrate, Varanasi, passed an order dated February 8, 2005, inter alia, assessing entertainment tax as Rs. 47,668.94 in respect of the exhibition of the film Zamin during the period from November 21, 2003 to November 27, 2003 and directing the petitioner to deposit the said amount or else the same would be realized as arrears of land revenue under section 34 of the 1979 Act. Copy of the said order dated February 8, 2005 has been filed as annexure 6 to the writ petition. 2.. Civil Misc. Writ Petition No. 56 (Tax) of 2005 In Civil Misc. Writ Petition No. 56 (Tax) of 2005, a notice dated December 16, 2004 presumably under section 12 of the 1979 Act was issued by the District Magistrate, Allahabad, to the petitioner Raj Karan Palace, Allahabad proposing to impose Rs. 17,536.70 as entertainment tax for the exhibition of the film Zamin in the cinema hall of the petitioner during the period from December 19, 2003 to December 25, 2003 in view of the withdrawal of exemption from entertainment tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax, as contained in the aforesaid Government orders dated June 13, 2000, April 16, 2003 and May 17, 2003 was amended, and it was provided that in case of grant of exemption from entertainment tax, a maximum of 12 prints would be exhibited tax-free at one time in the entire State of Uttar Pradesh, and there would be no restriction on exhibition of more than one print at one time in a District; and that excepting exhibition of 12 tax-free prints, there would be no other restriction on tax-free exhibition. Copy of the said Government order dated February 17, 2005 has been filed as annexure RA 1 to the rejoinder affidavit filed on behalf of the petitioner in the said writ petition. It further appears that pursuant to the said Government order dated February 17, 2005, the petitioner moved an application dated February 23, 2005 before the District Magistrate, Gorakhpur, inter alia, praying for refund of the entertainment tax deposited by the petitioner. Copy of the said application has been filed as annexure RA 2 to the aforesaid rejoinder affidavit. By the order dated March 4/6, 2005 the District Magistrate, Gorakhpur, rejected the said application dated February 23, 2005 file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the period from November 14, 2003 to November 20, 2003 in view of the withdrawal of exemption from entertainment tax on account of violation of condition No. 1, as contained in the Government order dated October 16, 2003. Copy of the said notice dated December 15, 2004 has been filed as annexure 4 to the said writ petition. In response to the said notice, the petitioner submitted its reply dated December 22, 2004, copy whereof has been filed as annexure 5 to the writ petition. Thereafter, the District Magistrate, Varanasi, passed an order dated February 8, 2005, inter alia, assessing entertainment tax as Rs. 51,385.92 in respect of the exhibition of the film Zamin during the period from November 14, 2003 to November 20, 2003 and directing the petitioner to deposit the said amount or else the same would be realized as arrears of land revenue under section 34 of the 1979 Act. Copy of the said order dated February 8, 2005 has been filed as annexure 6 to the writ petition. We have heard Shri Govind Krishna, Shri Satish Chaturvedi and Shri Tarun Verma, learned counsel for the petitioners and Shri A.C. Tripathi, learned standing counsel appearing for the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited at one time in the entire State of Uttar Pradesh. Once more than 12 prints of the said film were exhibited at the same time in the State of Uttar Pradesh, condition No. 1 stood violated. It was not at all material that while 12 prints were being exhibited tax-free the remaining prints were being exhibited by charging entertainment tax as per the law, assuming the said allegations made in the writ petition to be correct. As noted above, along with rejoinder affidavit filed in Civil Misc. Writ Petition No. 101 (Tax) of 2005, the petitioner in the said writ petition has filed a copy of the Government order dated February 17, 2005 as annexure RA 1 to the said rejoinder-affidavit whereby the policy regarding exemption from entertainment tax as contained in the Government orders dated June 13, 2000, April 16, 2003 and May 17, 2003 was amended, and it was provided that in case of grant of exemption from entertainment tax, a maximum of 12 prints would be exhibited tax-free at one time in the entire State of Uttar Pradesh, and there would be no restriction on exhibition of more than one print at one time in a district; and that excepting exhibition of 12 tax-free prints, there would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational character; or (b) is provided partly for educational or partly for scientific purposes by a society not conducted or established for profit; or (c) is provided by a society not conducted for profit and established solely for the purpose of promoting public health or the interests of agriculture, or a manufacturing industry, and consists solely of an exhibition of articles which are of material interest in connection with questions relating to public health or agriculture or are the products of the industry for promoting the interest whereof the society exists, or the materials, machinery, appliances or foodstuff used in the production of such products; it may, subject to such terms and conditions as it may deem fit to impose, grant exemption to such entertainment from payment of tax under this Act: Provided that the State Government may cancel such exemption if it is satisfied that the exemption was obtained through fraud or misrepresentation, or that the proprietor of such entertainment has failed to comply with any of the terms or conditions imposed or directions issued in this behalf and thereafter the proprietor shall be liable to pay the tax which would have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or grant of exemption as laid down in the said policy was that a maximum of 12 prints of the film would be exhibited at one time in the entire State of Uttar Pradesh, and only one print would be exhibited at one time in a district. It has further been noticed above that by the Government order dated October 16, 2003, exemption from entertainment tax was granted in respect of film Zamin with immediate effect for a period of 90 days (three months) in exercise of powers conferred under section 11(1) of the 1979 Act subject to the three conditions mentioned in the earlier part of this judgment. Condition No. 1, as noted earlier, provided that a maximum of 12 prints of the above film Zamin would be exhibited at one time in the entire State of Uttar Pradesh and only one print of the film would be exhibited at one time in a district. The said condition was evidently in consonance with the above policy of the State Government of Uttar Pradesh. Clause (3) of the said Government order dated October 16, 2003 provided as under: The above clause (3), thus, inter alia, provided that in case any of the conditions laid down in the said Government order was violated, the facility o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted in respect of the film Zamin by the Government order dated October 16, 2003. Question arises as to whether in view of the withdrawal of exemption from entertainment tax granted to the film Zamin , it was open to the entertainment tax authorities to take action for computation and realization of entertainment tax against the petitioners, i.e., the cinema hall owners/ licensees for the relevant period during which the exemption from entertainment tax granted to the film Zamin was operative. In this regard, the learned counsel for the petitioners have made the following submissions: 1.. As the violation of the terms and conditions laid down in the Government order dated October 16, 2003 was committed by the distributor or the producer of the film Zamin , the cinema hall owners/licensees could not be compelled to pay the entertainment tax for the period of exemption. 2.. The petitioners did not collect the entertainment tax from the public during the exemption period, and, therefore, it would be harsh to require the petitioners to pay entertainment tax even though the violation of the terms and conditions had been committed by the distributor or the producer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. This evidently means that the cinema hall owner/licensee has been made responsible for payment of entertainment tax. In view of the said provisions of the 1979 Act, the liability to pay the entertainment tax for the period of exemption has been rightly imposed on the petitioners, i.e., the cinema hall owners/licensees. 2.. Clause (3) of the Government order dated October 16, 2003, inter alia, clearly provided that in case of violation of any of the conditions contained in the said Government order, the facility of the exemption from entertainment tax would be withdrawn, and the entertainment tax would be imposed and realized in accordance with Rules from the concerned cinema halls in respect of the entertainment tax exempted exhibition. In view of the fact that condition No. 1, as contained in the said Government order dated October 16, 2003, was violated, the petitioners, i.e., the cinema hall owners/licensees became liable to pay the entertainment tax for the period of exemption irrespective of the fact that they did not collect the entertainment tax from the public during the said period or the fact that the violation of condition No. 1 was committed by the distributo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... namely, the person who admits to the entertainment, i.e., the cinema hall owner/licensee. Even if the liability may be imposed on the producer and/or the distributor as they are also covered within the meaning of the word proprietor , still it was open to the State Government to fix the liability on the cinema hall owner/licensee, who is also covered within the meaning of the word proprietor . This is what has been done by the State Government while granting exemption by the Government order dated October 16, 2003 by including clause (3) in the said Government order wherein it was, inter alia, provided that in case of violation of any of the conditions contained in the said Government order, the entertainment tax would be imposed and realized in accordance with Rules from the concerned cinema halls in respect of the entertainment tax exempted exhibition. Let us now deal with the submissions made on behalf of the petitioners. The first submission made on behalf of the petitioners, as noted above, is that as the violation of the terms and conditions laid down in the Government order dated October 16, 2003 was committed by the distributor or the producer of the film Zamin , the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Act, there shall be levied and paid on all payments for admission to any entertainment, other than an entertainment to which (section 4 or section 4A or section 4B applies or a compounded payment is made under the proviso to this sub-section) an entertainment tax at such rate not exceeding (one hundred and fifty per cent.) of each such payment as the State Government may from time to time notify in this behalf, and the tax shall be collected by the proprietor from the person making the payment for admission and paid to the Government in the manner prescribed: Provided that a proprietor of a (cinema or cable operator) (in a local area having a population not exceeding one lac.) may, in lieu of payment under this sub-section, pay a compounded payment to the State Government on such conditions and in such manner as may be prescribed and at such rate (. . .) as the State Government may from time to time notify, and different rates of compounded payments may be notified for different categories of local areas. Explanation. (. . .) (2) Nothing in sub-section (1) shall preclude the State Government from notifying different rates of entertainment tax for different areas or fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scription charged from a subscriber in the vicinity of the hotel by the cable operator providing cable service in the hotel, and the tax shall be levied and paid on the basis of such subscription: Provided that where the cable operator himself is the proprietor of the hotel, the subscription for admission to each such entertainment shall be deemed to be equal to the amount of subscription charged from a subscriber in the vicinity of the hotel by any other cable operator. Explanation. For the purposes of this sub-section and clause (ee) of section 2, 'hotel' includes an accommodational unit wherein rooms are provided to the customers on rent, but does not include the units approved under the 'Paying Guest Scheme' of the Department of Tourism of the State Government. Sub-section (1) of section 3 of the 1979 Act, thus, lays down that there shall be levied and paid on all payments for admission to any entertainment, an entertainment tax at such rate not exceeding one hundred and fifty per cent of each such payment as the State Government may from time to time notify in this behalf. It is further provided that this tax shall be collected by the proprietor from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x shall be paid on the amount of such lump sum and on the amount of payment for admission, if any, made otherwise. Section 2 of the 1979 Act deals with definitions. The relevant portion of section 2 is reproduced below: 2. Definitions. In this Act, (a) 'admission to an entertainment' includes admission to any place in which the entertainment is held; (b) to (f) . . . (g) 'entertainment' includes any exhibition, performance, amusement, game, sport or race (including horse race) to which persons are admitted for payment and in the case of cinematograph exhibition, includes exhibition of newsreal, documentaries, cartoons, advertisement shorts or slides, whether before or during the exhibition of a feature film or separately; (h) to (k) . . . (l) 'payment for admission' includes (i) any payment for seats or other accommodation in any form in a place of entertainment; (ii) any payment for a programme or synopsis of an entertainment; (iii) any payment made for the loan or use of any instrument or contrivance which enables a person to get a normal or better view or hearing or enjoyment of the entertainment, which without the aid of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment for admission . According to sub-clause (iv) of clause (l) of section 2, payment for admission includes any payment, by whatever name called for any purpose whatsoever, connected with an entertainment, which a person is required to make in any form as a condition of attending, or continuing to attend the entertainment, either in addition to the payment, if any, for admission to the entertainment, or without any such payment for admission. Therefore, whatever payment a person is required to make as a condition of attending, or continuing to attend the entertainment, the same shall be included in payment for admission . Clause (m) of section 2 of the 1979 Act defines the word proprietor . Accordingly, proprietor in relation to any entertainment includes the following: (i) Any person connected with the organization of the entertainment. (ii) Any person charged with the work of admission to the entertainment. (iii) Any person responsible for, or for the time being in charge of, the management of the entertainment. Clause (p) of section 2 of the 1979 Act defines the word tax . Accordingly, tax means entertainment tax, betting tax or the totalizator tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt with a ticket in the prescribed form denoting that the proper tax payable under section 3 has been paid. 7.. Restriction on entertainment. No person (other than a person who has some duty to perform in connection with the entertainment, or duty imposed upon him by law, or a person authorised by the State Government in this behalf) shall enter or obtain admission to an entertainment without being in possession of a proper ticket as required under section 6. Section 6 of the 1979 Act, thus, lays down that no person shall be admitted to any entertainment, except with a ticket in the prescribed form denoting that the proper tax payable under section 3 has been paid. Section 7 of the 1979 Act provides that no person shall enter or obtain admission to an entertainment without being in possession of a proper ticket as required under section 6 of the said Act. Reading sections 2(q), 6 and 7 of the 1979 Act together, it is evident that proprietor contemplated in sub-section (1) of section 3 is the cinema hall owner/licensee and such proprietor is required to ensure issuance of a ticket denoting that the proper tax payable under section 3 has been paid. This conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys down that the proprietor of an entertainment in respect of which tax is leviable under section 3 of the 1979 Act shall intimate in writing to the District Magistrate the rates of admission, excluding tax, to various classes, and the rates of different kinds of tickets for each class, the amount of tax and the surcharge if any, leviable and extra charges realisable on each kind of ticket and the total value of the ticket. Sub-rule (3) of rule 3 lays down that the entertainment tax and surcharge, if any, levied and extra charges realized under the 1979 Act shall be collected by the proprietor from every person obtaining admission to an entertainment along with the charge for admission by issuing a ticket for each such payment. The requirements of sub-rules (1) and (3) of rule 3 make it evident that the word proprietor in the said sub-rules refers to the cinema hall owner/ licensee. Rule 4 of the 1981 Rules deals with the form of ticket. Rule 5 of the 1981 Rules deals with the issuance of tickets, and provides as under: 5. Issue of tickets. (1) The proprietor of an entertainment shall issue the outer and middle counterfoils of ticket to the purchaser thereof a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rietor of every entertainment shall prepare separately for each show a return in form B in duplicate with ball pen and double side carbon showing the number of each kind of ticket issued for various classes, gross amount received from the sale of tickets and the amount of entertainment tax and surcharge leviable and extra charges realisable under the Act, collected. (2) The account in form B shall be completed within one hour from the commencement of the show or ten minutes before the commencement of the interval, whichever is earlier (in case of English films or other shows of short duration within 30 minutes from the commencement of the main features film or the show, as the case may be) and shall be kept readily available for inspection in the manager's office, if it is situated on the ground floor or, if there be no manager's office or where manager's office is not on the ground floor, in the booking office which shall be treated as manager's office for the purpose. (3) No ticket shall be sold after the account in form B has been prepared. (4) Where it may be necessary to make corrections in the Form B no overwriting or correction in the figures shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entertainment, it shall refund to the proprietor, the amount of the tax paid in respect of such entertainment: Provided that refund of entertainment tax shall be allowed where the State Government is satisfied that (i) the refund of such tax has been claimed in a case where the incidence of such tax has been actually passed on to the persons who have made payment for admission; or (ii) the refund of such tax has been claimed in respect of entertainment for which grant-in-aid has been received from the State Government under any incentive scheme and the proprietor has committed violation of any condition of such grant: Provided further that claim for refund of tax shall not be entertainable unless it is made within three months from the date when such refund becomes due: Provided also that where any amount of such tax is realized by a proprietor of an entertainment from a person admitted to entertainment in contravention of the provisions of Act or the Rules made thereunder the said proprietor shall be required to deposit the entire amount so realized in the manner as may be prescribed. Sub-section (1) of section 9, thus, lays down that where the Assistant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were right in taking action for computation and realization of entertainment tax against the petitioners, i.e., the cinema hall owners/licensees for the relevant period during which the exemption from entertainment tax granted to the film Zamin was operative. The first submission made by the learned counsel for the petitioners cannot, therefore, be accepted. Let us now consider the second submission made on behalf of the petitioners, namely, that the petitioners did not collect the entertainment tax from the public during the exemption period, and, therefore, it would be harsh to require the petitioners to pay entertainment tax even though the violation of the terms and conditions had been committed by the distributor or the producer of the film Zamin and not by the petitioners (cinema hall owners/licensees). As noted earlier, clause (3) of the Government order dated October 16, 2003, inter alia, provided that in case of violation of any of the conditions contained in the said Government order, the facility of the exemption from entertainment tax would be withdrawn, and the entertainment tax would be imposed and realized in accordance with Rules from the concerned ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms and conditions. Again, as noted above, the word proprietor in the context of section 3 of the 1979 Act means the cinema hall owner/licensee and, therefore, in view of the withdrawal of exemption from entertainment tax in respect of the film Zamin , the petitioners, i.e., the cinema hall owners/licensees became liable to pay entertainment tax in respect of the period of exemption. This liability of the cinema hall owners/licensees is not dependent on the question as to who committed violation of the conditions, as contained in the said Government order dated October 16, 2003. As regards reliance placed by the learned counsel for the petitioners on the language of the proviso to sub-section (3) of section 11 of the 1979 Act, it is noteworthy that the said proviso, inter alia, provides provided that the State Government may cancel such exemption if it is satisfied that . . . the proprietor of such entertainment has failed to comply with any of the terms or conditions imposed or directions issued in this behalf and thereafter the proprietor shall be liable to pay the tax which would have been payable had not the entertainment been so exempted . Thus, the proviso contem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used'. To this may be added a rider: in a case of reasonable doubt, the construction most beneficial to the subject is to be adopted. But even so, the fundamental rule of construction is the same for all statutes, whether fiscal or otherwise. 'The underlying principle is that the meaning and intention of a statute must be collected from the plain and unambiguous expression used therein rather than from any notions which may be entertained by the court as to what is just or expedient.' The expressed intention must guide the court. Another rule of construction which is relevant to the present enquiry is expressed in the maxim, generalia specialibus nonderogant, which means that when there is a conflict between a general and a special provision, the latter shall prevail. The said principle has been stated in Craies on Statute Law, 5th edition, at page 205, thus: 'The rule is, that whenever there is a particular enactment and a general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under (paragraphs 27 and 29 of the said AIR, at pages 100 and 111 of 37 STC): 27. The construction which we have placed on these provisions of the 1953 Act does no violence to the familiar principle, which, in Cape Brandy Syndicate v. Commissioner of Inland Revenue [1921] 12 Tax Cas 358 at page 366 was expressed thus by Rowlatt J.: 'In a taxing statute one has to look at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.' This principle was approved and adopted by this court in several decisions: A.V. Fernandez v. State of Kerala [1957] 8 STC 561; [1957] SCR 837; AIR 1957 SC 657, Commissioner of Income-tax, Bombay v. Provident Investment Co. Ltd. [1957] 32 ITR 190 (SC); [1957] SCR 1141; AIR 1957 SC 664, Commissioner of Income-tax, Madras v. Ajax Products Ltd. [1965] 55 ITR 741; [1965] 1 SCR 700; AIR 1965 SC 1358, Commissioner of Income-tax, Gujarat v. B.M. Kharwar [1969] 72 ITR 603 (SC); [1969] 1 SCR 651; AIR 1969 SC 812, Commissioner of Income-tax, West Bengal v. Vegetable Products Ltd. [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ging provision clearly imposes the obligation'. (emphasis Here italicised. supplied) In the present case, as noted earlier, an examination of the various provisions of the 1979 Act and the 1981 Rules framed thereunder shows that the liability for collection and payment of entertainment tax has been imposed under section 3 of the 1979 Act, i.e., the charging section, on the proprietor, i.e., the cinema hall owner/licensee. In view of the clear provision contained in the charging section, it is not open to the petitioners, i.e., the cinema hall owners/licensees to contend that they may be absolved of the liability as the violation of the condition No. 1, as contained in the Government order dated October 16, 2003, was committed by the distributor or the producer of the film Zamin and not by the petitioners, i.e., the cinema hall owners/licensees. As the charging section of the 1979 Act clearly imposes the obligation to collect and pay entertainment tax on the cinema hall owner/licensee, the petitioners, i.e., the cinema hall owners/ licensees were rightly saddled with the liability to pay entertainment tax for the period of exemption, and there is no room for resorting to equi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncluded by the passing of title from the seller to the buyer, for it cannot, at that stage, be passed on to the purchaser. According to him the seller collects the sales tax from the purchaser on the occasion of the sale. Once that time goes past, the seller loses the chance of realising it from the purchaser and if it cannot be realised from the purchaser, it cannot be called sales tax. In our judgment this argument is not sound. From the point of view of the economist and as an economic theory, sales tax may be an indirect tax on the consumers, but legally it need not be so. Under the 1947 Act the primary liability to pay the sales tax, so far as the State is concerned, is on the seller. Indeed before the amendment of the 1947 Act by the amending Act the sellers had no authority to collect the sales tax as such from the purchaser. The seller could undoubtedly have put up the price so as to include the sales tax, which he would have to pay but he could not realise any sales tax as such from the purchaser. That circumstance could not prevent the sales tax imposed on the seller to be any the less sales tax on the sale of goods. The circumstance that the 1947 Act, after the amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entry, and in State of Madras v. Gannon Dunkerley Co. (Madras) Ltd. [1958] 9 STC 353 (SC); [1959] SCR 379; AIR 1958 SC 560, a tax on the supply of materials in a contract for the construction of works simpliciter on the footing of a sale was held to be outside the entry, and the legislation which imposed such a tax was struck down as ultra vires. But where the transaction is one of sale of goods as known to law, the power of the State to impose a tax thereon is plenary and unrestricted subject only to any limitation which the Constitution might impose, and in the exercise of that power, it will be competent to the Legislature to impose a tax on sales which had taken place prior to the enactment of the legislation. . . . 13.. And then it is argued that a sales tax being an indirect tax, the seller who pays that tax has the right to pass it on to the consumer, that a law which imposes a sales tax long after the sales had taken place deprives him of that right, that retrospective operation is, in consequence, an incident inconsistent with the true character of a sales tax law, and that the Validation Act is therefore not a law in respect of tax on the sale of goods, as recog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of the law, is cast upon the seller. The buyer is under no liability to pay sales tax in addition to the agreed sale price unless the contract specifically provides otherwise. See Love v. Norman Wright (Builders) Ltd. [1944] 1 KB 484. If that be the true view of sales tax then the Bihar Legislature acting within its own legislative field had the powers of a sovereign Legislature and could make its law prospectively as well as retrospectively.' (pages 1378-1379 (of SCR): (page 463 of AIR): (pages 284 and 285 of 9 STC). (3) In Commissioner of Sales Tax v. Qureshi Crucible Centre [1993] 89 STC 467 (SC); AIR 1994 SC 25, the question involved was as to whether the levy of interest under section 8(1) of the U.P. Sales Tax Act, 1948 was justified on the facts and in the circumstances of the case. The Supreme Court laid down as under (pages 468-469 of STC; paragraphs 2 and 3 of the said AIR): 2. In this case, the dealer filed a return for the assessment year 1975-76. The goods in which he was dealing fell within the category of unspecified goods. For unspecified goods, the rate of tax prior to 1-12-1973 was 3.5 per cent. With effect from the said date, however, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 SCC 39. However, the declaration of invalidity was on and from April 1, 1997. Therefore, up to and inclusive of March 31, 1997, the said notification dated March 7, 1991 continued to be effective and operative. In Devi Dass Gopal Krishen Ltd. v. State of Jammu and Kashmir [2001] 121 STC 388 (SC); AIR 2001 SC 272, the argument was that during the period prior to April 1, 1997, the appellants had been realizing sales tax at four per cent. and since it had not been realized at eight per cent., the appellants should not be required to deposit the balance, namely, the remaining four per cent. of the sales tax. Rejecting the argument, the Supreme Court held as follows (paragraph 11 of the said AIR and STC): 11. In view of the discussion held above in our view it is not a case for interference with the orders passed by the High Court of Jammu and Kashmir and to issue any such direction to the respondents not to realize the balance amount of the sales tax for the reason that it had not been realized by the appellants, nor due to the fact that exemption granted to the local manufacturers was quashed but with effect from a prospective date, viz., April 1, 1997. It has also been n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer in the State Government to grant exemptions both under section 15 of the RST and section 8(5) of the CST in the public interest, the State Government was competent to modify or revoke the grant for the same reason. Thus what is granted can be withdrawn unless the Government is precluded from doing so on the ground of promissory estoppel, which principle is itself subject to considerations of equity and public interest. (See: Sales Tax Officer v. Shree Durga Oil Mills [1998] 108 STC 274 (SC); [1997] 10 JT 155 (SC); [1998] 1 SCC 572). The vesting of a defeasible right is therefore, a contradiction in terms. There being no indefeasible right to the continued grant of an exemption (absent the exception of promissory estoppel), the question of the respondentcompanies having an indefeasible right to any facet of such exemption such as the rate, period, etc., does not arise. 27.. In any event, the High Court erred in fact in holding that J.K. Synthetics had a vested right to the benefits of the scheme. Clause 4 of the scheme clearly provides that the benefits under the scheme were subject to the sanction of the Screening Committee. No sanction has been issued to J.K. Synthetics til ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal from the High Court's order their rights thereunder were precarious (See: Union of India v. West Coast Paper Mills Ltd. [2004] 135 STC 265; [2004] 2 JT 183 (SC); [2004] 2 SCC 747, at page 753). 36.. The mere circumstances that the respondent-companies having availed of the exemption scheme were prohibited from collecting the tax from its customers or that they had not collected the sales tax from their customers (which assertion is strongly disputed by the appellants), is of no consequence. The primary liability to pay the sales tax is on the seller. The seller may or may not be entitled to recover the same from the purchaser. The State Government is entitled to recover the same from the respondent-companies irrespective of the fact that the respondent companies may have lost the chance of passing on their liability to pay sales tax to their purchasers. (emphasis Here italicised. supplied) 6.. In Commissioner of Trade Tax, U.P. v. Kajaria Ceramics Ltd. [2005] 141 STC 406 (SC); AIR 2005 SC 2968, the Supreme Court considered the question regarding the extent of the entitlement of the respondent to the benefit of exemption from payment of trade tax granted under a n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of passing on their liability to pay sales tax to their purchasers.' 77.. We see no reason to differ from this view. Indeed the Act itself envisages a situation where a dealer may be called upon to pay the tax which it may not have collected from its customers . . . 80.. Therefore, even if the dealer under the fear of punishment under section 15A(1)(qq)(viii) does not realize amount by way of tax on the sale of its goods in compliance with the provisions of section 8A(2) during the period it is exempt from paying tax, it would still have to pay the tax under sub-section (4) of section 4A if it is found that it was not entitled to such exemption. The overriding nature of this consequence follows not only from the use of the imperative word 'shall' in sub-section (4) but also from the non obstante clause with which section 4A opens. Given the clear language, it is not necessary for us to express any view on section 29A of the Act or the industrial policy underlying section 4A or the 1991 notification. (emphasis Here italicised. supplied) These decisions thus show that even if the petitioners, i.e., the cinema hall owners/licensees did not collect the entertai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od of exemption, and once they failed to discharge the said responsibility resulting in the withdrawal of exemption, they are required to bear all the consequences which followed the withdrawal of such exemption. It is not open to the petitioners to resile from their liability by shifting the blame on the licensing authority. Hence, in our view, there was no duty or responsibility of the licensing authority to inform the petitioners regarding violation of condition No. 1, as contained in the said Government order dated October 16, 2003, by the distributor or the producer of the film Zamin nor was it open to the licensing authority to permit the petitioners to collect entertainment tax from the public despite the existence of the exemption. Let us now consider the fourth submission made by the learned counsel for the petitioners, namely, regarding interpretation of the proviso to sub-section (3) of section 11 of the 1979 Act. It is submitted that under sub-clause (i) of clause (m) of section 2 of the 1979 Act, the word proprietor includes any person connected with the organization of the entertainment. Therefore, the distributor as well as the producer of a film are inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertainment. Therefore, the word proprietor includes the producer, the distributor as well as the exhibitor (cinema hall owner/licensee) of a film. Violation of the terms and conditions regarding exemption from entertainment tax by any of the persons covered within the meaning of the word proprietor , would result in the withdrawal of exemption and in the imposition of the entertainment tax for the period of exemption in view of the proviso to sub-section (3) of section 11. Such tax would, evidently, be realized from the proprietor, who is liable to pay the entertainment tax under the Scheme of the 1979 Act, namely, the person who admits to the entertainment, i.e., the cinema hall owner/licensee. There is yet another aspect of the matter. Even if the liability to pay entertainment tax as contemplated in the proviso to sub-section (3) of section 11 may be imposed on the producer and/or the distributor as they are also covered within the meaning of the word proprietor , still it was open to the State Government to fix the liability on the cinema hall owner/ licensee, who is also covered within the meaning of the word proprietor . This is what has been done by the State Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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