TMI Blog2023 (7) TMI 1012X X X X Extracts X X X X X X X X Extracts X X X X ..... mption period by the multiplex owners, also included in element of tax. This assumption, in the opinion of this court is flawed because there could have been no collection which amounted to tax. Furthermore, multiplex/theatre-owners were under an obligation to file monthly returns in terms of the enactment. This would have taken care of any allegation of abuse. The state s additional argument was that since the element of tax was notionally included in the collections by multiplexes, -during the exempted period, a further amount equivalent to the tax collectable had to be added. As the High Court concluded- and in the opinion of this Court correctly so, this contention was bereft of any logic and was plainly unreasonable. There is concededly, a gap in the manner how tax exemption limits can be discerned. Undoubtedly, the law is now settled that exemption notifications have to be interpreted strictly, and against assesses in case of ambiguity. A reasonable method of calculating benefit of tax exemption, for the purpose of considering (whether the 100% limit equivalent to capital expenditure) was reached or not is to notionally determine the tax amounts payable during the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation issued by the State on 20.12.1995. The relevant part of the judgment is extracted below: 2. Since Civil Appeal No. 6478 of 2009 was taken as the lead matter, facts relating thereto are dealt with in detail hereafter. On 20-12-1995 the Government of Gujarat announced a policy named New Package Scheme of Incentives for Tourism Projects, 1995-2000 (hereafter referred to as the Scheme ) with a view to make available all fiscal and non-fiscal incentives, reliefs and concessions enjoyed by industries to tourism which was accorded the status of an industry, in order to give a boost to tourism sector by attracting higher investment in the areas with tourism potential and to generate employment opportunities. Under Clause 2, the Scheme came into operation on 1-8-1995 and was to remain in force for a period of five years up to 31-7-2000. Under Clause 3, to be eligible, a new tourism unit ought to be registered after 1-8-1995. Clause 4.7 dealt with effective steps which such unit was expected to undertake. Under Clause 5, after taking initial effective steps a tourism unit could apply to the Director of Tourism for registration. All projects had to conform to the specifications ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not available. (b) Only those goods which are sold at the first stage of sale by eligible unit will attract sales tax exemption. (c) No exemption is available on purchases of any goods such as building materials, equipments or any other goods to be purchased for setting up of tourism project. 8.1 Period of Eligibility\ The quantum of incentives shall not exceed 100% of eligible capital investment. If the limits of incentives expire before the eligible period, the unit cannot avail of any further benefit. The eligible units will be made available a tax holiday for the period mentioned against each category of tourism unit as tabulated below: Sr. No. Category of Tourism Units No. of years of tax holiday 1 Prestigious Tourism Units 10 Years 2. Large scale Tourism Units 8 Years 3. Small sale Tourism Units 6 Years 4. Tiny Tourism Units 5 Years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure incurred by him for providing the facilities in the unit. The amount of Rs. 5O/- recovered by way of entertainment tax is required to be notionally adjusted against the amount of eligible capital investment till the amount of Rs. 10 crores gets exhausted or till the expiry of a period of ten years whichever is earlier. 8. The same contention was urged before the High Court which recorded as under: 57. Mr. Nanavati further contended that even on merits, the impugned Circulars deserve to be quashed and set aside. Form 17 which is the form of register of tickets not being complementary tickets, issued when tax is payable under Section 3 of the Act, clearly stipulates mention of price of ticket including entertainment tax under Column 2, which also goes to show that the entertainment tax is payable on the gross receipt and there is no question of notionally calculating the tax. The returns submitted by few members of Multiplex Association would show that they have been showing the price of the ticket inclusive of tax and seeking exemption on the basis of the rate applicable by calculating tax on the receipt. Since beginning, the members of the Association have been filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the present case, is not collected by virtue of the provisions of the Act, tourism policy 1995- 2000, and notification). .. 5.10 It is respectfully stated that if any entertainment unit is desirous of availing any benefit of the policy and notifications then in that case, the entertainment units will have to fall in line with the requirements provided in the said policy and notifications. The entertainment units will have to strictly adhere to the conditions mentioned in the notification and once having accepted the terms and conditions of the said notification for the purpose of availing of the tax exemption, they cannot now back out under the guise that what the entertainment units are charging towards entertainment tax cannot be recovered by the State Government. It is respectfully stated that any breach of any condition or non-compliance of any of the provisions of the statute, notifications and circulars would result in termination of exemption granted. At the cost of repetition, I say that to illustrate if Rs.100/- is charged for admission, then it has to be treated as a payment for admission to entertainment excluding tax. When the rate of tax is 50%, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arging section, it has to be strictly construed and, therefore, liability to pay tax cannot be enlarged beyond what is provided in the Act. The multiplex cinemas in the ticket issued show that nothing' is received in the name of or on account of entertainment tax from the viewers. Therefore, in case of multiplex cinemas, the amount would be taxed under Section 3. In the tickets issued, payment of admission is shown as admission to entertainment, tax is shown as O , service charges shown as 0 and total amount recoverable by and payable to the proprietor is Rs.100/ , Tax liability has to be, therefore, calculated on this amount i.e. Rs.100/- which would be at 50% payment for admission received from the viewers. Under the incentive, there is no special method of calculation of the tax liability prescribed as a condition of exemption for the purpose of setting off such tax liability against the incentive limit. This method is prescribed for the first time by the impugned Circulars in November/December, 2000. The final directions in this regard are as follows: 111. In view of the above discussion, we are of the view that the respondent-State is not ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public interest but would amount to unjust enrichment. 12. It was submitted that the impugned judgment is in error in not appreciating that under Section 29 any entertainment or class of entertainment can be fully and partially exempted from payment of tax and that tax exemptions are given for a particular period, and multiplex and theaters owners were not allowed to collect taxes. The inclusion of element of tax, meant that they were allowed to retain such amounts. Therefore, the state was justified in urging the method of calculation whereby the tax element was added to the amount already collected, for the purpose of determining the exemption units. 13. Mr. Maninder Singh, learned counsel for the respondent(s)/multiplex owners on the other hand urged that in the absence of any mechanism to determine the limit of exemption i.e. equivalent to 100% of the capital investment: which is an objective determinable fact, - having regard to the books of accounts and the documents available with the multiplex owners, a feasible and reasonable method had to be taken into account. The only feasible method therefore was to notionally determine (only for the purpose of grant of exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictly with certain exceptions depending upon the settings on which the provision has been placed in the statute and the object and purpose to be achieved. If exemption is available on complying with certain conditions, the conditions have to be complied with. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, thought at times, some latitude can be shown, if there is failure to comply with some requirements which are directory in nature, the non-compliance of which would not affect the essence or substance of the notification granting exemption. 17. This was followed, later, in another five judge bench decision (Commissioner of Customs (Import), Mumbai vs. Dilip Kumar and Company Ors 2018 (9) SCC 1 ). In the present case, the situation is peculiar, because the grant of exemption, and the terms of such relief (in terms of time, and monetary limits) are unambiguous. However, the procedure for calculation of the monetary limit is not prescribed at all. Therefore, the present case is not one of ambiguity, but instead, one of a clear gap, which if not construed appropriately, would defeat the intention of the notification. 18. It has often bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory in nature and some are mandatory in nature. A distinction between the provisions of a statute which are of substantive character and were built in with certain specific objectives of policy, on the one hand, and those which are merely procedural and technical in there nature, on the other, must be kept clearly distinguished... Doctrine of substantial compliance and intended use 32. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably be expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the essence or the substance of the requirements. Like the concept of reasonableness , the acceptance or otherwise of a plea of substantial compliance depends upon the facts and circumstances of each case and the purpose and object to be achieved and the context of the prerequisites which are essential to achieve the object and purpose of the Rule or the Regulation. Such a defence cannot be pleased if a clear statutory prerequisite which effectuates the object and the purpose of the statute has not been met. Cer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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