1996 (3) TMI 519 - AT - VAT and Sales Tax

Issues Involved:
1. Constitutionality and validity of sub-sections (4) and (4a) of section 4A of the West Bengal Entertainment-cum-Amusement Tax Act, 1982.
2. Validity of Notifications No. 2100 F.T. dated August 16, 1991, and No. 953 F.T. dated April 8, 1994.
3. Alleged hostile discrimination and lack of guidelines in the fixation of tax rates.
4. Alleged violation of Article 14 (Right to Equality) and Article 19(1)(g) (Right to Practice Any Profession) of the Constitution of India.
5. Alleged confiscatory nature of the tax.
6. Authority of the Block Development Officer to close down the business for non-payment of tax.

Detailed Analysis:

1. Constitutionality and Validity of Sub-sections (4) and (4a) of Section 4A:
The Tribunal examined the constitutionality of sub-sections (4) and (4a) of section 4A of the West Bengal Entertainment-cum-Amusement Tax Act, 1982. It was argued that these provisions were unintelligible and unworkable. The Tribunal found that these provisions were constitutional and valid. The tax was levied on the commercial use of TV sets, VCRs, VCPs, and satellite transmission receivers (STRs) for transmitting performances, films, or other programs through a cable TV network to customers against payment. The Tribunal held that the provisions laid down sufficient guidelines and principles for the levy of tax and did not confer unguided power on the State Government.

2. Validity of Notifications No. 2100 F.T. dated August 16, 1991, and No. 953 F.T. dated April 8, 1994:
The applicants challenged the validity of these notifications which fixed flat rates of tax for different areas. The Tribunal held that the notifications were valid as they were issued in exercise of the powers conferred by sub-sections (4) and (4a) of section 4A. The classification based on area was found to be reasonable and rational, taking into consideration the capacity to pay and the volume of business in different areas.

3. Alleged Hostile Discrimination and Lack of Guidelines in Fixation of Tax Rates:
The applicants contended that the tax provisions treated equals unequally and suffered from hostile discrimination. They argued that the tax should have been levied based on the number of customers and the capacity to pay. The Tribunal rejected this contention, stating that the classification based on area was justified. The Tribunal noted that the capacity to pay and the number of customers were indirectly considered through the areawise classification. The economic superiority and density of population in the Calcutta Metropolitan Planning area (C.M.P. area) justified a higher tax rate compared to other areas.

4. Alleged Violation of Article 14 and Article 19(1)(g) of the Constitution:
The applicants argued that the tax provisions violated Article 14 (Right to Equality) and Article 19(1)(g) (Right to Practice Any Profession) of the Constitution. The Tribunal held that the classification based on area did not violate Article 14 as it had a rational nexus with the object of the statute, which was to raise additional revenue for the State. The tax was not found to be confiscatory or an unreasonable restriction on the right to practice any profession under Article 19(1)(g).

5. Alleged Confiscatory Nature of the Tax:
The applicants contended that the tax was confiscatory and would force them to close down their businesses. The Tribunal found that the tax was not confiscatory as the applicants had the option to adjust their charges and number of connections to cover the tax liability. The Tribunal noted that the tax was levied on the commercial use of the instruments and not on the income earned by the operators.

6. Authority of the Block Development Officer to Close Down the Business for Non-payment of Tax:
In the case of Bijan Ghosh (RN-205 of 1994), it was argued that the Block Development Officer had no authority to close down the business for non-payment of tax. The Tribunal agreed with this contention, stating that no provision in the 1982 Act conferred such power on any authority. The closure of the business was found to be void and unlawful.

Conclusion:
The Tribunal dismissed the applications, upholding the constitutionality and validity of sub-sections (4) and (4a) of section 4A of the West Bengal Entertainment-cum-Amusement Tax Act, 1982, and the impugned notifications. The areawise classification for tax rates was found to be reasonable and justified. The Tribunal directed that any amounts deposited by the applicants under interim orders should be adjusted against the taxes due or refunded according to law.

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