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1995 (1) TMI 370 - HC - VAT and Sales Tax
Issues:
Interpretation of the Rajasthan Entertainments and Advertisements Tax Act, 1957 regarding entertainment tax calculation and payment, Closure of cinema hall under lawful orders affecting tax liability, Claim for exemption from tax due to closure of cinema hall, Validity of circular regarding composition of tax and rebate conditions. Analysis: The petitioner, running a cinema in Jodhpur, challenged the demand for entertainment tax under the Rajasthan Entertainments and Advertisements Tax Act, 1957. The Act levies tax on payments for admission, even on complimentary tickets. The petitioner had compounded the tax payable for a fixed sum under section 6(3) of the Act. The closure of the cinema hall by the Additional District Magistrate led to the petitioner's claim of exemption from paying tax for the period of closure. The petitioner contended that since no shows were exhibited during the closure period, no tax should be payable for that time. The respondent argued that the petitioner was bound by the terms of the composition order, which included conditions for claiming rebate in case of closure for more than 30 days. The circular dated June 8, 1988, specified conditions for composition of tax, and the respondent maintained that the petitioner was not entitled to any reduction in the composition amount due to the closure of the last show. The respondent emphasized that the petitioner had voluntarily agreed to the terms of the composition order and could not challenge its conditions. The Court held in favor of the petitioner, noting that no entertainment tax was realized during the period of closure as no films were exhibited, and no tickets were sold. The Court found the order directing the petitioner to pay tax for the closure period unjust, especially considering there was no rationale for the 30-day closure condition specified in the circular. The Court quashed the order demanding tax payment for the closure period, stating that the petitioner should not suffer due to lawful closure orders. The judgment allowed the petitioner's claim for exemption from tax for the period in question, emphasizing that citizens should not be penalized for complying with lawful orders. In conclusion, the writ petitions were allowed, and the petitioner was granted the benefit of exemption from tax for the period of closure. No costs were awarded in the case.
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