2002 (6) TMI 572 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the rejection of the petitioner's request for exemption from entertainment tax.
2. Interpretation of the time frame for obtaining and producing the exemption certificate.
3. Appropriate relief for the petitioner given the expiration of the three-year exemption period.

Issue-Wise Detailed Analysis:

1. Validity of the rejection of the petitioner's request for exemption from entertainment tax:
The petitioner, a proprietory concern engaged in exhibiting cinematography shows, challenged the order dated January 21, 2002, by the Entertainment Tax Officer, Sindhanur, which rejected the petitioner's request for a three-year exemption from entertainment tax. The rejection was based on the ground that the petitioner failed to produce the required exemption certificate within the stipulated period of 45 days from the date of the first cinematography show, as prescribed by the notification dated October 30, 1996.

2. Interpretation of the time frame for obtaining and producing the exemption certificate:
The petitioner argued that the 30-day period for obtaining the certificate from the Director should be interpreted as commencing from the date of issuance of the certificate by the Director, not from the date of the first cinematography show. The petitioner had applied for the certificate on August 18, 2000, four days after the first show on August 14, 2000, and received the certificate on February 24, 2001. The certificate was then submitted to the Entertainment Tax Officer on March 19, 2001. The court found merit in the petitioner's argument, noting that the petitioner had no control over the time taken by the Director to issue the certificate. The court emphasized that the objective of the notification was to encourage the construction of new cinema theatres, and a strict interpretation of the time frame would frustrate this objective. Thus, the court held that the time frame for producing the certificate should be understood as starting from the date of issuance of the certificate by the Director.

3. Appropriate relief for the petitioner given the expiration of the three-year exemption period:
Given that the three-year exemption period had expired and the petitioner had already collected entertainment tax from the public, the court considered the appropriate relief. The court concluded that the petitioner should not be deprived of the exemption benefit due to the authorities' failure to properly interpret the notification. The court directed the respondents to grant the petitioner an exemption from payment of entertainment tax for a period of three years from August 14, 2000, within a time frame to be fixed by the respondent. If the entertainment tax payable for the three-year period exceeded the amount collected, the petitioner was required to pay the additional differential tax.

Conclusion:
The court quashed the order dated January 21, 2002, by the Entertainment Tax Officer, Sindhanur, and directed the respondent to grant the petitioner a three-year exemption from entertainment tax, starting from August 14, 2000. The respondent was instructed to comply with this direction within one month from the receipt of the court's order. The petition was allowed, and the rule was made absolute, with no order as to costs.