TMI Blog2008 (10) TMI 704X X X X Extracts X X X X X X X X Extracts X X X X ..... ner along with other ancillary reliefs. 2. The petitioner is interalia engaged in the business of operating a multiplex theatre named as FAME ADLABS in the city of Mumbai at Andheri. It is the petitioner's contention that on the basis of the statements and objects of the Ordinance and on the basis of Section 3 13(a) of the Bombay Entertainment (Amendment) Act, 2001 (Mah II of 2002), the petitioner applied for exemption and setting up the multiplex for which the petitioner invested huge capital, time and efforts. On the assurance of the respondent Nos. 1, the petitioner went ahead and set up the multiplex on the clear understanding that the nature of exemption was retention benefit whereby the petitioner was entitled to collect the entertainment duty from the patrons and not to pay the same to the State during the exemption period and, therefore, according to the petitioner, respondent No. 4 by virtue of the aforesaid incentive granted to the proprietors of multiplex is estopped from demanding entertainment duty as set out in the impugned orders / impugned notices. 3. The State of Maharashtra has enacted the Bombay Entertainment Duty Act, 1923 (for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of entertainment duty on payment for admission which is fixed by the proprietor. On perusal of the table under Section 3(1)(c), it is important to point out that the amount paid for admission to the Multiplex theatre is to be fixed by the proprietor of the Multiplex. For the sake of convenience Table below Section 3(1)(c) is reproduced which is as under: Serial No. Area Rate of entertainment duty on payment for admission by the proprietor 1 Within the limits of Brihan Mumbai Municipal Corporation 45 percent 2 Within the limits of all other Municipal Corporations and Cantonments 40 percent As such, the rate of entertainment duty must be on the payment for admission fixed by the proprietor. Therefore, it is clear that the rate of entertainment duty can only be on net price after which the gross is arrived at. Further, Section 4 sets out the manner in which the enterta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ental and connected matters and facilities, and multi-entertainment activities and other facilities as specified by Government in this behalf, by notification in the Official Gazette. 7. Bombay Entertainment Duty (Amendment) Act, 2001 (Mah. II of 2002), which is the statute on the basis of which Entertainment Duty is levied on the petitioner's Multiplex Complex known as FAME ADLABS (Multiplex) which levy and assessment is the subject matter of this petition. (i)The principle statute that governs Entertainment Duty in the State of Maharashtra is the Bombay Entertainment Duty Act, 1923 (BED Act). Section 3 of the said BED Act, inter alia, stipulates the rate of Entertainment Duty on payment for admission fixed by the Proprietor. The prescribed rate of Entertainment Duty on the payment for admission fixed by the Proprietor within the city limits of Brihanmumbai Municipal Corporation is 45% and for other Municipal Corporations and Cantonments the rate of Entertainment Duty is 40% and the other areas have a rate as prescribed under the aforesaid Section. (ii) The growth of Multiplex Theatres can be traced in an Ordinance dated 17th August ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the proprietor of a Multiplex Theatre Complex the duty in respect of any such complex as follows, namely: (i)For the first three years from the date of commencement of the Multiplex Theatre Complex, no duty. (ii) For the subsequent two years, at the rate of twenty-five percent of the rate of duty leviable under Clause (b) and Clause (c) of Sub-section (1) or, as the case may be, for Sub-section (3) (iii) From the sixth year, full amount of duty leviable at the rate specified in Clause (b) and Clause (c) of Sub-section (1) or, as the case may be, Sub-section (3) Provided that, the duty leviable shall also be subject to the provisions of Sub-section (2), wherever applicable. (iv)Explanation: For the purposes of this Sub-section, (i) The date on which the Multiplex Theatre Complex is opened to the public for admission shall be deemed to be the date of commencement of the Multiplex Theatre Complex; (ii) The change in the management of Multiplex Theatre Complex, or the change in the name of the complex shall not be construed as a fresh commencement of the Multiplex Theatre Complex. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is important to point out Clause 5 (E) (i) of the said GR which set out that the Applicant would be eligible to get exemption from paying Entertainment Tax. For the sake of convenience reproduced herein below is Clause 5(E) (i) of the said GR. The Applicant will be eligible to get the exemption from paying entire Entertainment Tax for the period of first three initial years from the date of commencement of the complex, whereas he will be admissible for exemption from paying 75 percent of the Entertainment Tax due for the further two years. The Applicant must pay the Entertainment Tax at the prescribed rate from the sixth year . Exhibit C to the Petition is a copy of the Government Resolution dated 4th January, 2003 being Resolution No. ENT-1099/ Pra.Kra.76/T-1. 11. It is important to mention that in order for an Applicant to be eligible for exemption from payment of Entertainment Duty on the basis of the Act read with the said GR, all Applicants were required to submit applications to Respondent No. 3 from 17th August, 2001 to 16th August, 2002 to be considered for such exemption. In the light of Section 3(13)(a) of the said B.E.D. Act, read with Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion period is over. The fact that there are no guidelines for the pricing of the cinema tickets and that the same can be fixed by the Proprietor is also evidenced on a perusal of the table set out under Section 3(c) of the said B.E.D. Act which clearly provides that the payment for admission is to be fixed by the Proprietor. 14. It is the case of the petitioner that the petitioner is in its 4th year of operations of the Multiplex and liable to pay 25% of the normal rate of Entertainment Duty leviable from 7th June, 2005. The entertainment duty is payable at the rate of 25% of the rate of duty leviable (i.e.25% of 45%) as per the provisions of the Section 3(13)(a)(ii) of the said B.E.D. Act. The rate of entertainment duty payable under the Act can be determined on the basis of payment for admission fixed by the proprietor. 15. It is the case of the petitioner that from 7th June 2005, the petitioner has duly made payment of the entire Entertainment Duty to respondent No. 3 in accordance with the Act read with the G.R.s issued pursuant thereto. 16. On 1st June, 2005, the petitioner addressed a letter to the Principal Secretary, Revenue De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he notice of the Multiplex Association and its Members, It is important to point out that in the meeting, the Revenue Secretary asked the representatives of the petitioner and IMAX-ADLABS as to why the Association was not present, to which the representatives of the petitioner and IMAX-ADLABS contended that no Notices have been issued of the aforesaid meeting to the Multiplex Association i.e. MAI. Exhibit G to the petition is a copy of the Minutes which have been made available by respondent No. 1 to the petitioner under a letter dated 21st September, 2005 and Exhibit G-1 to the petition is the copy of the said letter. 19. On 5th December, 2005, the petitioner received a Notice No. 1 from respondent No. 4 calling upon the petitioner to make a payment of ₹ 1,16,95,846/-being Exhibit A-1 to the petition. In response to the aforesaid Notice of respondent No. 4, the petitioner addressed a letter dated 10th December, 2005 to respondent No. 4 in which the petitioner contended the following: (i) First, the petitioner was unclear as to how respondent No. 4 had arrived at the Duty of ₹ 1,16,95,846/-. It was also unclear how the 24% interest wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and reiterated all that was stated in its letter dated 10th December, 2005 at Exhibit H . 22. On the 5th January, 2006 respondent No. 1 by an executive act issued a Government Circular bearing No. MTC/1005/CM/359/T-1 (the said Circular). By the said Circular, respondent No. 1 referred to the amendments made in pursuance of the Ordinance dated 29th November, 2005 which was converted into an Act on 27th December, 2005 which was converted into an Act on 27th December, 2005 as the Bombay Entertainment Amendment Act, 2005 (Act No. 54 of 2005). In addition thereto, the Circular, in paragraph 3.2 (ee) thereof, interalia states that: a) The Multiplex Proprietor is not entitled to collect Entertainment Duty and retain the same'; and b) Multiplex Theatres are not to show the tax amount in their tickets for the first three years from the date of eligibility and in subsequent two years they will show only 25% of the rate of duty as the tax amount and not more than that. It has been stated that these instructions must be passed on to the Owners of Multiplex Theatre Complexes. It is pertinent to point out that this clarification ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter dated 31.05.2005. 25. The main contention of the respondents is that the petitioner cannot retain the taxes and duties which have to be paid to the Government and further, it is contended that entertainment duty is leviable on the net amount of ticket rate and there is no restriction on the upper limit on the proprietor to charge the net rate of ticket and by way of illustration, they have given the method of computation of entertainment duty which is reproduced as under: A) Net rate of ticket: (B) Entertainment Duty: 25% of the rate of duty leviable ( i.e. 45% prevailing rate) (C) Service Charges: (D) Gross rate of ticket: (A + B + C) Particulars of Ticket Ticket rate as per ticket issued by the petitioner Correct method of computation of entertainment duty as per G.R. A) Net rate of tickets 93.05 93.05 B) Entertainment Duty 41.95 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overs the issue relating to the subject matter of the above petition and it is on issuance of the Circular, the petitioners have themselves taken remedial measures and stopped 'retaining' any amount collected by them as entertainment duty since 20.01.2006. Therefore, according to the respondents, the petitioners have recovered the amount of entertainment duty at the rate of 45% from the audience and only 25% (1/4th) of that amount has been paid to the Government. Though notice has been issued to the petitioner for recovery of entertainment duty of 75% which is retained by the petitioner, the petitioner has paid only 25% entertainment duty amount collected by them. Therefore, according to the respondents, Section 9 B of the said B.E.D. Act of 1923 provides that where the proprietor fails to pay the amount of duty due under Section 3 within the period prescribed, he shall be liable to pay to the Government, in addition to the amount of duty so payable, a penal interest at the rate of 18% per annum for the first 30 days and at the rate of 24% per annum thereafter on such amount from the date such amount became or becomes payable till the amount and interest is fully paid. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition and the petitioner was complying therewith. They say that if this clarification was given earlier, no problem would have arisen and the petitioner would not have come before this Hon'ble Court. The change in the printing / contents was brought about only by the 5th January, 2006 Circular and that is prospective. However, by such circular, the effect of Section 3 (13) cannot be done away with. 29. Therefore, it is the case of the petitioners that the respondents in substance are demanding the entire entertainment duty from the petitioner at the full rate of 45%, ignoring the fact that the petitioner is entitled to get the exemption from paying 75% of the Entertainment Duty for the fourth and fifth years, by virtue of the Eligibility Certificate, received by the petitioner from respondent No. 3 under the said B.E.D. Act of 1923. 30. The respondents in the additional affidavit have tried to state that the petitioners have an alternate and efficacious remedy of the Appeal under Section 10 A of the said B.E.D. Act of 1923 and, therefore, the court ought not to have entertained the Writ Petition. 31. The key issue which is called for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary to make exemptions available to such Multiplex Proprietors / Operators to invest a huge amount of capital and as such, the recipient of this benefit was the Proprietor / Operator and not the patron / customer. 34. It is further contended that when the intention of the legislation is to provide an exemption to the patron/customer, Section 6 of the said B.E.D. Act enables the State Government by a special order under sub Section 3 of Section 6 to exempt any entertainment or class of entertainment from the liability of Entertainment Duty. It is by virtue of the aforesaid Section 6 that cinemas are made tax free where the benefit of such exemption is for the patrons. As such, if the intention of the legislation was to make the exemption available to the patrons, Section 3(13)(a) would not have been introduced by virtue of the Act. It is therefore, contended that the introduction of the exemption into Section 3 of the said B.E.D. Act itself clearly indicates that the exemption was for the benefit of a Multiplex Proprietor/Operator and not the patron. The fact that the exemption was from payment of entertainment duty is clearly evidenced by reading Clause 5E(i) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as entertainment duty on the admission ticket from the petitioner. 38. Mr. Tulzapurkar, the learned Senior counsel for the petitioner submitted that accordingly the petitioner has correctly filed his return and has duly paid the entertainment duty which was levied and required to be paid i.e. 25% of the duty and this was as specified in the rules. It is submitted that the period for which the entertainment duty is sought to be recovered is hardly of two months which came to be corrected as soon as the Government issued a notification to that effect which they claim to be clarificatory in nature which is evident from the minutes of the meeting held on 23.08.05 which was called to discuss the method of computing Entertainment Duty to be levied on Multiplex Theatre Complex and from the date of the Government Resolution dated 05.01.2006, the petitioners immediately reflected on its admission ticket the entertainment duty which they were liable to pay and was levied during the period of concession. It is submitted that the G.R. itself clarifies that it was issued for implementation of the provisions of the Bombay Entertainments Duty (Amendment) Act, 2005 and Clause said B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fees and B and E statements from the Chartered Accountants. And thereafter the said Chartered Accountant shall issue the certificate in writing for the same and accordingly, the petitioners Chartered Accountant has duly filed B and E statement which clearly goes to show that during the period when the petitioner was liable to pay 25% of the entertainment tax they have recovered entertainment tax @ 45%. Mr. Nair submitted that the petitioner cannot take advantage of their own wrong and cause loss to the revenue and they will have to pay entertainment duty collected from the patrons. 42. Mr. Nair submitted that it is a settled law that refund of duty wrongly realised from a taxpayer cannot be retained as it clearly amounts to unjust enrichment without any specific provision of law to that effect and that Article 265 of the Constitution of India clearly lays down that no tax shall be levied or collected except by authority of law and as held in the case of Mafatlal Industries Ltd. v. Union of India and Ors. Sales Tax Cases 1998 Vol III 467 that the mandate of the Constitution is lucid and clear and must be taken to mean what it says. No tax takes in every type of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 sugarcase. 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 allowing the respondents' unjust enrichment. 45. In the case of Amar Nath Om Parkash and Ors. v. The State of Punjab and Ors. 1986 Sales Tax Cases Vo.62 Page 130 it has been held as under: Another submission of the learned Counsel was that while the legislature was competent to enact a law for the levy of a fee and matters incidental and ancillary thereto, it was incompetent to legislate providing for the retention by any authority of fee illegally levied. For this purpose, reliance was placed by the learned Counsel on the decision of this Court in Abdul Quader Co. v. Sales Tax Officer [1964]6SCR867 . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue relates to the period sub Clause 3 (13)(a)(ii) i.e. for the subsequent two years, at the rate of twenty-five per cent of the rate of duty leviable under Clause (b) and Clause (c) of Sub-section (1) or, as the case may be, Sub-section (3). Therefore, the question is as to whether the state can levy more than 25% of the rate of duty leviable under Clause (ii) or as the case may be, Sub-section (3) of the said B.E.D. Act from the petitioner. 49. It is a well settled principle of interpretation that unless there is anything contrary in the Act and Rules, if there are two interpretations possible then it is that interpretation which sub serves the object and purpose should be accepted. 50. The Bombay Entertainment Duty (Amendment) Bill, 2001 came into force on 17.08.2001 wherein for the first time in the definition Clause i.e. Section 2 of the said B.E.D. Act of 1923, the definition of Multiplex Theatre Complex came to be inserted after Clause (f), namely, (f-a) Multiplex Theatre Complex means an entertainment-cum-cultural center which provides (i) within the limits of Municipal Corporation of Brihan Mumbai not less than four theatres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions that in the Brihan Mumbai Municipal Corporation Area there should be minimum four theatres in a complex with the total minimum seating capacity of 1,250 and elsewhere in the State not less than three theatres with minimum total seating capacity of 1000. (b) Special concession is offered as an incentive for a period of five years in the entertainments duty subject to certain conditions. (c) Power is taken to specify by notification in the Official Gaxette, the facilities and conditions including multi entertainment activities such as providing one theatre for Stage Performances, Family Entertainment Centre, Art Gallery, etc. which are to be provided by the Proprietor in a Complex and the Proprietor is not to discontinue any of such facilities without prior permission of the Government. (d) The proprietor is prohibited from collecting service charges during the concession period and also prohibited from charging lower admission fee than the prevalent rate in the district where the complex is situated and it is also made incumbent upon him to continuously run the complex for a period of ten years. (e) Power is also ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lzapurkar, the learned Sr.counsel rightly submitted that this is not a case that these incentives were provided to the patrons of multiplex theatre complexes and should not be misconstrued as an exemption provided under Section 6 of the said B.E.D. Act of 1923 of which the object and purpose is totally different. Section 3 clearly provides that entertainment duty shall not be levied on payment for admission to any entertainment where the Collector is specified for the reasons given in Clause a, b and c. There is one other distinguishing feature in this regard and i.e. there is no cap provided on the maximum admission fee which can be charged to a patron whereas sub Section 13 of Section 3 Clause b (i) provides that during the period of concession covered by Clause (a) above, the minimum rates of admission in a multiplex shall be determined by the Collector. Such minimum rates of admission shall not be less than the prevailing highest rate, excluding the rates of the highest priced fifty seats, in any of the cinema theatres in the District in which multiplex is situated and accordingly such minimum rates of admission may be different for morning, matinee and other shows. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner's case, therefore, is squarely covered in so far as their liability to pay entertainment duty for the said period is concerned when they were eligible to enjoy 75% tax exemption. Therefore, whether they have shown 45% of the admission fee as entertainment tax or 25% on the ticket issued to patrons, their liability to pay entertainment tax / duty would be to the extent of 25% of the entertainment duty and during the period of 75% of tax exemption, the State is not entitled to recover from them entertainment tax / duty to the extent of 45% which was the standard entertainment tax / duty leviable as entertainment tax / duty under the Act, as they were exempted to the extent of 75% of the entertainment tax / duty during the said period and obviously, this cannot be read as a case of unjust enrichment. 56. During the course of arguments, the aforesaid illustration was cited by the learned Counsel for the petitioner in respect of Cine Planet IV from the communication received from the Entertainment Duty Officer to the A Panel Counsel i.e. Mr. Nair representing the State of Maharashtra and Ors. The learned A Panel Counsel for the respondents is not able to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been sought to be specified in the notification. The measure of tax is the gross receipt on the basis of which the person is saddled with the liability to pay tax. There fore, it is clear that there is no uncertainty or vagueness in the incentive scheme provided in the legislation. 60. So even though the petitioners have shown entertainment tax / duty in the computerised ticket by calculating at the rate of 45%, it can only be held liable to pay to the extent of 25% of the 45% as was also the case before the Supreme Court in the case of Abdul Quader Co. v. Sales Tax Officer where the dealer has collected duty / tax from a purchaser which is not authorised by the taxing law and it was held that it is a matter between him and the purchaser, and the purchaser may be entitled to recover the amount from the dealer. But unless the money so collected is due as a tax, the State cannot by law make it recoverable simply because it has been wrongly collected by the dealer. This cannot be recovered for the reason that it is not a tax at all within the meaning of Entry 54 of List II nor can the State Legislature under the guise of incidental or ancillary power do indirectl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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