1988 (3) TMI 432 - HC - VAT and Sales Tax

Summary

Issues: Interpretation of Section 4 and Section 5-B(2) of the Tamil Nadu Entertainments Tax Act, 1939

In this judgment, the Honorable Court considered the interpretation of Section 4 and Section 5-B(2) of the Tamil Nadu Entertainments Tax Act, 1939. Section 4 of the Act pertains to the tax on payment for admission to entertainments, specifying the rates of tax based on the payment for admission. It also addresses the tax calculation for taxable complimentary tickets. Section 5-B(1) provides an option for the proprietor of cinematograph exhibitions to pay tax weekly. The Court analyzed whether the liability to pay tax under Section 5-B(2) arises only when shows are conducted in the cinema theatre.

The petitioner argued that tax liability under Section 5-B(2) arises only if shows are conducted in the cinema theatre. It was established that on certain days, no shows were conducted due to various reasons, including heavy rains and license suspension. The respondent contended that compounded tax is payable irrespective of the number of shows held, emphasizing the requirement of admission to any entertainment for tax imposition under Section 4. The Court emphasized that tax is levied on each payment for admission to entertainment, collected from cinema-goers by theatre owners as collecting agents.

The Government Advocate argued that the petitioner, as an assessee under Section 5-B, cannot contest the tax liability. However, the Court held that Section 5-B is subject to Section 4, which mandates admission to entertainment for tax collection. The Court concluded that the petitioner's argument aligns with the provisions of Section 4 and Section 5-B, and thus allowed the writ petition without costs. Additionally, the Court directed the refund of the tax amount paid by the petitioner, considering the interpretation of Section 4 regarding admission into the theatre.

In summary, the Court's decision centered on the interpretation of Sections 4 and 5-B(2) of the Tamil Nadu Entertainments Tax Act, emphasizing the requirement of admission to entertainment for tax imposition. The judgment clarified that tax collection is based on payments for admission to entertainment, with theatre owners acting as collecting agents. The Court's ruling allowed the writ petition, directing the refund of the tax amount paid by the petitioner in light of the interpretation of Section 4.