1991 (8) TMI 317 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of section 5 of the Andhra Pradesh Entertainments Tax Act, 1939.
2. Compliance with the procedural requirements under rule 27 of the A.P. Entertainment Tax Rules, 1939.
3. Authority of the Entertainments Tax Officer to demand tax under section 5 of the Act.

Analysis:
The petitioner, a cinema exhibitor, had been paying tax under section 4 of the Andhra Pradesh Entertainments Tax Act, 1939. An amendment was made to section 5 of the Act, allowing exhibitors to opt for a different tax payment system. The petitioner agreed to pay tax under the amended provision but raised objections when the Entertainments Tax Officer demanded tax under section 5 without following the prescribed procedure. The petitioner argued that without the issuance of permit form IV as per rule 27, they were only liable to pay tax under section 4, not section 5.

The Court examined the provisions of section 5, which allow exhibitors to choose to pay tax under that section instead of section 4. Rule 27 outlines the procedure for opting into this system, including applying in form III, verification by the Entertainments Tax Officer, and issuance of permit form IV. Since the procedural requirements were not met in this case, specifically the issuance of permit form IV, the Court agreed with the petitioner's contention that they were only liable to pay tax under section 4, not section 5.

Based on the failure to follow the prescribed procedure under section 5, the Court held that the Entertainments Tax Officer had no authority to demand tax from the petitioner for specific periods without proper compliance. As a result, the writ petition was allowed, indicating that the petitioner was justified in their position. No costs were awarded, but a Government Pleader's fee was specified.

In conclusion, the judgment clarified the procedural requirements for opting into the tax payment system under section 5 of the Act and emphasized the importance of compliance with the rules for the Entertainments Tax Officer in demanding taxes from exhibitors.