2009 (12) TMI 888 - HC - VAT and Sales Tax

Demand of deposit a sum of ₹ 19,95,890 as the same was unauthorisedly realised by her from the cinema goers. Held that - A person who unjustly enriches himself cannot be permitted to retain the same for its benefit except enrichment. Such licensee/picture hall owners cannot and could not collect any entertainment tax from the cinema goers and if collected, they are liable to deposit the same with the State treasury, otherwise it would amount unjust enrichment. The petitioner is liable to pay the amount unauthorisedly collected from the cinema goers as entertainment tax as per the impugned demand notice. There is no merit in the writ petition.

Issues Involved:
1. Legality of the demand notice issued by the District Magistrate for the deposit of entertainment tax.
2. Interpretation of the Government Order (G.O.) dated August 11, 2000.
3. Applicability of the U.P. Entertainments and Betting Tax Act, 1979.
4. Doctrine of unjust enrichment.

Issue-wise Detailed Analysis:
1. Legality of the Demand Notice:
The petitioner challenged the order dated January 10, 2005, by the District Magistrate, Azamgarh, demanding Rs. 19,95,890, which was allegedly unauthorisedly collected as entertainment tax from cinema goers. The petitioner argued that there was no fault on her part as the statements of realisation of entertainment tax were duly submitted to the concerned officer without any objection. However, the court held that inaction by the officials does not entitle the petitioner to retain the unauthorisedly collected tax. The demand notice was justified as the petitioner was not authorised to collect and retain the entertainment tax.

2. Interpretation of the Government Order (G.O.) dated August 11, 2000:
The crux of the controversy was the interpretation of the G.O. dated August 11, 2000, which granted total exemption from entertainment tax to new cinema halls in areas with less than one lakh population. The petitioner contended that she was entitled to retain the entertainment tax collected. The court, however, noted that the G.O. did not permit cinema owners to collect entertainment tax from cinema goers. It was a conscious departure from earlier G.Os. that allowed such collection. The court emphasized that nothing could be added or subtracted from the G.O. through interpretative processes, and the petitioner, having established the cinema hall with full knowledge of the G.O., could not claim any entitlement to retain the tax.

3. Applicability of the U.P. Entertainments and Betting Tax Act, 1979:
Section 3 of the Act, which is the charging section, mandates that entertainment tax shall be collected by the proprietor from the person making the payment for admission and paid to the Government. The court highlighted that a proprietor is not entitled to pocket the entertainment tax. The G.O. under consideration was in conformity with this principle, and thus, the petitioner was not entitled to retain the collected tax.

4. Doctrine of Unjust Enrichment:
The court referred to the Supreme Court's judgment in the case of "State of Maharashtra v. Swanstone Multiplex Cinema (P) Ltd." to assert that allowing cinema owners to retain collected tax would result in unjust enrichment. The court held that the petitioner, having collected the tax unauthorisedly, must deposit it with the State treasury. The doctrine of unjust enrichment was applicable, and the petitioner could not retain the tax for personal benefit.

Conclusion:
The court dismissed the writ petition, holding that the petitioner was liable to pay the amount unauthorisedly collected as entertainment tax. The demand notice was upheld, and the petitioner was ordered to pay costs of Rs. 5,000.

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