2005 (12) TMI 550 - HC - VAT and Sales Tax

Issues Involved:
1. Jurisdiction of Panchayat Samiti and State Government to collect entertainment tax.
2. Double taxation and discharge of tax liability.
3. Legality of retrospective tax demands by the Commercial Taxes Officer (CTO).
4. Validity of tax collection by Panchayat Samiti.
5. Finality of Rajasthan Taxation Tribunal's judgment.

Issue-wise Detailed Analysis:

1. Jurisdiction of Panchayat Samiti and State Government to Collect Entertainment Tax:
The central issue was whether the entertainment tax collected by Panchayat Samiti under the Rajasthan Entertainments and Advertisements Tax Act, 1957, discharged the liability of the assessee under the Act, thereby preventing the State Government from demanding the same tax for the same period. The court noted that the Panchayat Samiti had been authorized under section 19A of the Act to collect the tax within its jurisdiction. Despite disputes over the exact location of the cinema house, the court held that the tax collection by Panchayat Samiti was not without authority of law.

2. Double Taxation and Discharge of Tax Liability:
The court examined whether paying the same tax to two different authorities constituted double taxation. It referred to the principle that if a tax has been paid to one authorized agency under the same enactment, the liability is discharged, and a second demand by another agency would amount to double taxation, which is impermissible. The court concluded that the assessee's obligation was discharged by paying the tax to the Panchayat Samiti, and the CTO could not demand the same tax again.

3. Legality of Retrospective Tax Demands by the CTO:
The CTO's demand for tax payment after January 6, 1982, was challenged. The court noted that the assessee had continued to pay the tax to the Panchayat Samiti in good faith due to ongoing confusion about the jurisdiction. The court found that the CTO's retrospective demand for the same period was unjustified, especially since the assessee had already paid the tax to the Panchayat Samiti.

4. Validity of Tax Collection by Panchayat Samiti:
The court held that the collection of tax by Panchayat Samiti was valid under section 19A of the Act. The court emphasized that the Panchayat Samiti's collection was not unauthorized, and the assessee's payment to the Panchayat Samiti fulfilled its tax obligation under the Act. The court rejected the argument that the Panchayat Samiti should transfer the collected tax to the CTO, noting that such a direction could not be issued without hearing the Panchayat Samiti.

5. Finality of Rajasthan Taxation Tribunal's Judgment:
The court acknowledged the finality of the Rajasthan Taxation Tribunal's judgment, which had ruled in favor of the assessee. The Tribunal had determined that the tax paid to the Panchayat Samiti discharged the assessee's liability, and this judgment had been upheld by the Division Bench of the High Court. The court held that it was not open for the Revenue to re-agitate the issue, and the Tax Board was justified in striking down the CTO's demand.

Conclusion:
The court dismissed the revision petitions filed by the Revenue, upholding the orders of the Tax Board and the Deputy Commissioner (Appeals). The court concluded that the assessee's payment of entertainment tax to the Panchayat Samiti discharged its liability under the Act, and no repetitive tax could be demanded by the CTO. The court emphasized that double taxation is not permissible and that the assessee should not be penalized for the administrative confusion between the two tax-collecting authorities.

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