2004 (2) TMI 678 - HC - VAT and Sales Tax

Summary

Issues:
1. Liability to pay tax under Bihar Entertainments Tax Act, 1948 during a curfew period.
2. Entitlement to deduct proportionate amounts from the compounding fee.
3. Interpretation of section 3B of the Act regarding compounding obligations.
4. Validity of penalty imposed for non-payment of compounding fee.

Analysis:
1. The writ petitioners, proprietors of cinema theatres, sought relief from paying tax during a curfew period when they were unable to exhibit films due to law and order issues. They argued that the closure was beyond their control and relied on a Supreme Court decision to support their claim for remission during such periods.

2. The petitioners contended that since they were compelled to close their theatres during the curfew period, they should be allowed to deduct proportionate amounts from the compounding fee they were required to pay under section 3B of the Act. However, the government counsel argued that the compounding fee was fixed and had to be paid irrespective of the number of shows or theatre closures.

3. The court analyzed the concept of compounding under fiscal statutes like the Act, emphasizing that once a licensee opts for compounding, the obligation to pay the compounding fee becomes absolute. Section 3B of the Act allows licensees to pay a fixed amount in lieu of tax, regardless of the actual number of shows held. The court concluded that once a licensee opts for compounding, they cannot claim remission based on show closures or other factors.

4. The court found that the petitioners' attempt to deduct amounts from the compounding fee was unauthorized and violated their obligation to pay the fee under the Act. As a result, the authorities were justified in imposing a penalty for non-payment. Section 16 of the Act empowers authorities to impose penalties for non-compliance, making the penalty imposition legal and within jurisdiction.

In conclusion, the court dismissed the writ petition, ruling that the petitioners were not entitled to any relief, affirming the authorities' actions regarding the compounding fee and penalty imposition.