2009 (7) TMI 755 - SC - VAT and Sales Tax

Whether the petitioner although having collected the entertainment duty at 45 per cent, i.e., 100 per cent of the duty during the period, it was eligible to enjoy exemption from entertainment duty, i.e., from June 7, 2005 to January 19, 2006 to the extent of 75 per cent, i.e., concessional rate being 25 per cent of 45 per cent? Whether the State can levy more than 25 per cent of the rate of duty leviable under clause (ii) or as the case may be, sub-section (3) of the said BED Act from the petitioner? Held that - Appeal allowed. 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 intents and purposes conferred the retention benefit. If the State intended to provide for a grant, the same should have expressly been stated. The respondent cannot be granted a huge amount by a welfare State indirectly which it cannot do directly. Direct that the State shall realize the amount to the extent the respondent had unjustly enriched itself and pay the same to a voluntary or a charitable organization, which according to it is a reputed civil society organization and had been rendering good services to any section of the disadvantaged people and in particular women and children. We would request the honourable Chief Minister of the State to take up the responsibility in this behalf so that full, proper and effective utilization of the amount in question is ensured.

Issues Involved:
1. Legality of the impugned notices and orders demanding entertainment duty.
2. Nature of the exemption granted under the Bombay Entertainments Duty Act, 1923.
3. Calculation of entertainment duty payable by multiplex theatre owners.
4. Application of the doctrine of unjust enrichment.

Detailed Analysis:

1. Legality of the Impugned Notices and Orders:
The petitioner sought to quash the impugned notices and orders demanding entertainment duty, arguing that they were entitled to an exemption under the Bombay Entertainments Duty Act, 1923 (BED Act). The court ruled that the impugned notices and orders (exhibits A-1, A-2, and H) were invalid as they demanded full entertainment duty without considering the exemption granted to the petitioner.

2. Nature of the Exemption Granted:
The petitioner contended that the exemption was a "retention benefit," allowing them to collect entertainment duty from patrons but not pay it to the State during the exemption period. The court agreed, stating that the exemption was intended to support the capital-intensive nature of multiplex theatres and was not meant to benefit the patrons. The exemption allowed multiplex owners to retain the collected duty for the first three years and pay only 25% of the duty for the next two years.

3. Calculation of Entertainment Duty:
The court examined the method of calculating entertainment duty under the BED Act. The petitioner argued that the duty should be calculated on the net ticket price, and they were liable to pay only 25% of the normal duty during the fourth and fifth years. The court upheld this method, stating that the petitioner correctly calculated and paid the duty as per the provisions of the BED Act and the Government Resolution (GR).

4. Application of the Doctrine of Unjust Enrichment:
The State argued that the petitioner unjustly enriched themselves by collecting full entertainment duty from patrons but paying only a portion to the State. The court rejected this argument, stating that the petitioner was entitled to retain the collected duty during the exemption period as per the BED Act. The court emphasized that the exemption was a legislative incentive for multiplex owners and not a case of unjust enrichment.

Conclusion:
The court ruled in favor of the petitioner, quashing the impugned notices and orders demanding full entertainment duty. The court affirmed that the exemption granted under the BED Act was a retention benefit for multiplex owners, allowing them to collect and retain the duty during the exemption period. The calculation of entertainment duty by the petitioner was deemed correct, and the State was not entitled to recover more than the prescribed duty during the exemption period. The appeal was allowed, and the petitioner was not held liable for unjust enrichment.

← Previous Next →